Hotel Market Segmentation: Lots of data means actionable insights

When we ask a hotel manager from an independent hotel who their clients are, they easily refer their top nationalities, age range, general preferences and they might even know a few loyal clients, but do they really target each customer segment individually based on those insights?

No, they don’t.

The truth is that independent hotels are missing out opportunities to deliver better experiences and to increase revenues by better pricing their rooms. We still find today that the majority of independent hotels treat booking data with no particular criteria, resulting in poor client’s information and consequently in a lack of a proper customer segmentation strategy.
In a scenario where the distribution rules change quickly (as the end of the rate parity) and the market is competitive, it is essential that independent hotels take advantage from all the knowledge they can gather about their past and future clients.

It is difficult to increase revenues if obsolete practices keep dominating the daily life of an independent hotel. One of the biggest problems of independent hotels is that they don’t know how to properly segment their clients.

How to segment hotel clients

In Climber Hotel we believe the market segmentation shouldn’t be a static process, so even if you think that your hotel already has a well segmented market or if the last time you segmented your market was 20 years ago, these pieces of advice are for you.

As you see, your booking history is powerful. It contains tons of useful data that you can and you should use to better get to know and target your clients. Start using this knowledge at your advantage.
Last but not the least, it is really important that you establish with your front desk and reservation team, the essential data to collect along the contact with clients (Reservation, Check-in, Stay, Check-out) and how they will resist it.

If the reservation team uses a different terminology from your front-desk team basically they are speaking different languages and this will not help further data analysis.

“Ok, now I have some interesting customer segmentation… what’s next?“

Now that you have your customer data well organized and you know insightful facts about your clients, keep registering precise and accurate customer information, analyzing booking patterns and trends you can capitalize on. It is really important that you run this process systematically, because your clients will have new needs and you will benefit from anticipating their habits.
Segmentation benefits don’t end up here.

By clearly identifying hotel market segments you should also set the hotel ideal market mix as a measure to better target your sales.

When analyzing the booking history (at least for the past 3 / 4 years), identify that there are more profitable segments than others. The definition of the market mix is related with the understanding of this pattern, by gathering the segments that are more profitable for the hotel along the time. Accordingly with the market mix for each month managers could take better decisions on how to distribute (right channels to sell the rooms), set the right price, what services will be more demanded and so on.
Regarding what has been said, it is also advisable to gather your team to brainstorm around the offers that can be made different for the market mix defined for each period. When studying your demand is natural that several actionable insights arise and new ideas to implement in your property start to take shape.
It is also advisable to the hotel to start communicating with the different segments separately.

By communicating with the different segments separately, you will be able to test new prices, packages or promotional offers with smaller group of clients without putting at risk all the segments.

Conclusion

At Climber Hotel, we strongly advise any independent hotel to better segment their customers by anticipating their behavior and deliver products that they are willing to pay for.
Proper segmenting is just the tip of the iceberg for better revenue management practices and to increase hotel revenue. We will be covering related topics, as pricing strategies, in the next posts that we would love to tell you about. Keep posted.