One of the components needed to apply a 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
Booking Lead Time
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 reservations of double rooms 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 reservation 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.
Here an example of a hotel market segmentation :
BAR Website – Best Available Rate sold throught the website
BAR Direct – Best Available Rate sold direct by phone, email, fax
BAR Indirect Commissionable – Best Available Rate sold trough commissionable online travel agencies
BAR Indirect Net – Best Available Rate sold trough net rate online travel agencies
Mobile; mobile websites offering sameday or lastminute discounts
Online Campaigns; internet publication offers and packages
Offline campaigns; print publication offers and packages
Special Event; packages and offers during holidays, festivals, concerts
Corporate Dynamic Rates
Corpororate Flat Rates
Conference / Banquet
Overbooking (from another hotel)
The above segmentation is a general guideline. You may find that for your hotel there are other segments which are not included, or a simpler segmentation would be more applicable. Each hotel has to decide what segmentation best fits their market and property.
As CEO and Founder of Xotels, Patrick Landman has made it his mission to turn independent hotels and resorts into local market leaders. Xotels´ diverse expertise and deep-knowledge across hotel management, hotel operator, asset management, hotel consulting, and revenue management services, enables them to drive results for independent boutique hotels, luxury eco-resorts, and innovative lodging concepts. Below you will find opinion articles written by Patrick Landman.