Hotel segmentation is at the heart of any successful hotel operation.
NB: This is an article from Mews
It informs marketing strategy, helps tailor offers and reveals growth opportunities while optimizing revenue management strategy and profitability. By identifying where the business is coming from and what motivates guests to complete a purchase, you can better define effective pricing strategies and target your offer to meet their needs.
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We’ll look at hotel market segmentation in more detail – its benefits, the most common segments, steps to implement guest segmentation, and how smart hotel tech can make this possible.
What is hotel market segmentation?
Hotel market segmentation is the process of grouping guests into various categories based on shared characteristics and behavior. It helps to define revenue management strategies and better understand guest preferences, needs and demands. From there, you can tailor marketing strategies, services and offerings to meet the requirements of each segmented group.
What are the benefits of hotel market segmentation?
Using segmentation, hotels can optimize their operations, carry out targeted marketing efforts, enhance the customer experience through personalization and maximize revenue by creating targeted offers and experiences. You can also identify areas for growth and unexploited business opportunities within your market.
It enables properties to differentiate themselves from the competition by catering to specific audiences, helping to position themselves better for specific traveler profiles, thus creating a competitive advantage. You can also use this information to better forecast and adjust rates and budgets according to various target profiles.
What are the most common hotel market segments?
Hotel market segments may vary based on your property type, but there are five main categories.
Wholesale
The wholesale segment refers to those leisure guests or FITs (free independent travelers) who book through a wholesaler with special negotiated rates. The wholesalers get better rates by booking bulk room blocks, which they resell to third-party sites like tour companies, production crews, and both online and offline travel agencies.
Transient
Transient travelers are FITs or business travelers who typically book last minute directly through the hotel, travel agent, or an OTA. They may be walk-in guests, same-day bookings or guests who book a few days in advance. Find out the advantages of transient business.
Corporate negotiated
Corporate negotiated rates refer to corporate travelers with agreed-upon rates settled in advance by hotels and travel management companies. Hotels usually give these special rates in exchange for the business committing to a minimum number of nights per year.
Group
The group segment refers to guests traveling in a group that has blocked several rooms in advance at a special rate. Groups usually reserve at least six to ten rooms per night – they may be corporate, family, special events, MICE, and other types of groups. Find out how to attract group bookings to your hotel.
Other
The “other” segment is used for the rest of the guests. They are lumped together and could be military, government and complimentary rooms, employee or other industry rates.
