Without understanding which guest segments are most profitable, hotels target the wrong audiences, misallocate their marketing budgets, and miss critical opportunities to boost revenue and profit.
NB: This is an article from Demand Calendar
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We explore why robust segmentation is essential for maximizing profitability, examine key segmentation criteria, and outline practical strategies to enhance data quality. By moving beyond default PMS fields and embracing a more rigorous segmentation approach, hotels can ensure that every marketing effort is precisely targeted to attract the right guests.
Segmentation Criteria for Hotels
To leverage segmentation effectively, hotels must define the criteria that best distinguish their guest base.
Before diving into these criteria, it’s important to note that while the Uniform System of Accounts for the Lodging Industry (USALI) does include segments for financial reporting, these are designed solely for accounting purposes. They do not provide the granular insights needed to understand guest behavior or preferences, which are critical for effective market segmentation.
Here are some key segmentation criteria to consider:
Reason for Travel
Segmenting guests by the purpose of their trip provides valuable insights into their needs and preferences. For example:
- Business Travelers: Prioritize efficiency and convenience, seeking amenities like high-speed internet and meeting spaces.
- Leisure Travelers: Value relaxation and experiences, favoring hotels with recreational facilities and local attractions.
- Group Travelers: This may require larger accommodations or meeting spaces, influencing room configurations and service offerings.
- Event-Driven Guests: Their needs are tied to specific events, such as conferences or weddings, which can dictate seasonal demand patterns.
Geographic Origin
Understanding where guests are coming from can inform targeted marketing strategies and operational decisions:
- Domestic vs. International: Domestic guests may have different travel habits and spending patterns than international visitors.
- Regional Differences: Guests from specific regions may respond better to localized offers or loyalty programs tailored to their unique needs.
Booking Channel
Analyzing the booking channel is critical for optimizing marketing spend and distribution strategy:
- Direct Bookings: Often more cost-effective, providing personalized promotions and loyalty rewards opportunities.
- Online Travel Agencies (OTAs) offer broader reach but may incur higher commission costs and less direct customer engagement.
- Travel Agents: Can deliver niche market segments, particularly for specialized travel such as corporate or luxury tourism.
Additional Considerations (Optional)
Beyond the primary criteria, several other factors can refine segmentation further:
