Hotel Market Segmentation

Saturday, 24 October 2009 00:00

One of the components needed to apply hotel revenue management is market segmentation. It allows you to target and market to a variety of consumer groups with different behavior with an offer that matches their needs and budget level.

Your hotel market segmentation shall help to identify the purpose of the trip: either business or leisure. The price does not decide of the market segmentation. Clear distinction must also be achieved between individual and group business.

The market segmentation shall help you identify the trends of your business:

Length of Stay
Day of Weeks stays
Total Revenue per room, Total Revenue per client
Lead Time
Cancellation %
No Show ratio

Today's ways of booking make it difficult to identify the purpose of the trip. Segment by default the individual bookings for short midweek stays as business. Identify as leisure the booking of a double room over the week-end.

And which market segment to apply to Internet bookings? You can also introduce the following question in the reservation process on your hotel website: Is your booking for business stay or leisure?

You may want to introduce sub-segments such as your pricing points such as BAR and how yieldable the segment is.