In this blog post, SnapShot’s Head of Education, Janel Clark, explores both traditional market segments, newer, more dynamic models, and how to develop the best pricing strategies.
Segmentation: Then and Now
In order to understand hospitality today, it is first necessary to understand how hotels segment their business. After a few minutes of trying to sort it out, a few of us might feel inclined to ask, “Why do we segment our markets in the first place?”
The answer is different guests want different things, and are willing to pay different prices to get what they want. Consequently, by properly segmenting potential guests, we can be more efficient with our booking and cash flow, and take a different approach in marketing, pricing, and demand generation for each segment we have.
To properly catorgize segments, variables like geography, demographics, and behavioral profiles can be correlated with guest booking for a clearer picture. In contrast, when we look at the old way of segmentation, it is not uncommon to find hotels with 60% to 70% of their business tracked under just one segment.
This is where the common market segmentation principle of MAAS (Measurability, Actionability, Accessibility & Substantiation) can be employed to broaden hotels’ segmentation. With booking behaviors and costs of acquisition factored in, hotels can better understand and acquire new guests in a profitable way. The key is to focus on the valid, profitable segments, and then to grow slowly.
Demand Segmentation: Tomorrow’s Benchmark
Next, let’s look at channels as they revolve around segmentation. First and foremost, hotel managers should know that achieving proper segmentation involves dealing with each channel separately. Once each channel is categorized it is far easier to optimize, and then later order by categories if needed.
This is especially important as it is how your hotel will eventually distribute rooms and rates, and how you will market your hotel.