In today’s hotel landscape, we still often find hoteliers not being fully aware of the benefits of categorising their business into relevant segments. However, if you want to be successful in the way you manage your business and start applying sound revenue management practices, it is an essential step to have a clear idea of which consumer groups you should be targeting.
NB: This is an article from berner+becker, one of our Expert Partners
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Also you need to consider which distribution channels you should use for that. This goes hand in hand with the variety of buying behaviour among those consumer groups and channels to cater for different needs and budget levels. Simultaneously, it allows you to keep an eye on cost effectiveness in order to market your hotel in the best possible way.
With this article, we want to give you a bit of an insight into which kind of segmentation can be beneficial and feasible for you and which advantages will derive from that.
In the past, a lot of weight was given on market segments that were defined by the traveller’s purpose of travel, namely Leisure or Business. But let’s face it, nowadays it’s very unlikely that a hotel even knows who the client is let alone why the guest even booked the room – thanks to the ever-evolving booking landscape that is out there. And then we hear about words like “Bleisure” meaning a Leisure customer is combining his/her trip with Business or the other way around, adding confusion to all of this.
This actually means that hotels should focus not only on figuring out which market segments they should target their guests in but also make sure to know the distribution side by tracking the source of their business allowing flexibility in the way the business is analysed, influenced and managed. So, in essence, a well-defined set of market segments and the insight into distribution enables you to correctly apply pricing per segment as the base for successful Revenue Management. But let’s take a look now what’s behind all of this.
MARKET SEGMENTS
Relevant market segments for your hotel are still the foundation for setting your pricing strategy correctly. They are mainly defined by the different booking behaviours and the price sensitivity of a hotels’ customers. This allows you to uniquely price each segment according to the type of customer you are looking at. In addition, market segments allow you to specifically define and bundle sales and marketing efforts according to any trends and movements you can derive from the analysis of those segments. The ultimate goal with that is clearly to work towards an ideal market segmentation mix for your hotel.
Market segments can obviously be different depending on the type of hotel and the market it operates in, but quite generally a hotel sees “Transient” and “Groups” as main differentiators for customers booking habits. However, to make this more accurate and specific, there are market categories assigned to those indicators which then actually make up for the market segmentation.
