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If you run or manage a hotel or tourist accommodation, you will know the importance and challenges of revenue management for your hotel. Hotel market segmentation is one of the most important elements of this strategy. Thanks to this, you will be able to expand your guest base, reach new audiences and expand towards new markets. Of course, by offering them an added value adapted to their needs and their budget.

Finding the key target audience for your hotel is the first step to offer the best and most personalized experience to your guests. This is usually a decisive factor in your marketing strategy and in your revenue management. Knowing which factors make guests book a room and which aspects of your facilities or services attract potential guests will allow you to further develop your strengths and attract the right audience.

In this article, we are going to see what market segmentation for hotels is, how it can help you boost your business, and techniques to implement segments. Let’s start!

What are market segments for hotels?

Hotel market segmentation is a strategy that allows hoteliers to better understand consumers, their tastes, preferences and reasons why they travel (pleasure, business…) and why they choose one hotel or another.

Market segments for hotels can help you identify new trends in the hotel market and the hotel industry. This segmentation strategy will also allow you to keep up to date with the needs and demands of your potential guests, control the competitors and improve your guests’ experience.

Market segmentation for hotels will allow you to go one step further than the competitors since you will have more information about your potential guests. Segmenting can help you identify guest practices such as:

  • Average length of stay.
  • Days of the week that guests stay the most.
  • Total revenue per room.
  • Total revenue per guest.
  • Reservation channel.
  • Cancellation fee.

Segmentation involves a thorough analysis of the market, so it helps hotel owners to better understand their guests and their potential audience as a whole. In this way, it is easier to improve services and increase total revenue, since the pricing strategy is optimized.

This analysis is also useful to detect incidents or identify why certain phenomenon occur, such as a fall or rise in reserves at a given time.

With this data, hotel managers can make decisions related to sales, pricing, marketing strategies, the services they offer or their facilities, in order to increase ROI.

Hotel market segmentation step by step

To carry out a complete market segmentation, it is important that you know exactly what your goals are in order to make them coincide with the segments. Let’s see the keys to make a perfect segmentation.

How can I perform this segmentation?

  • Satisfaction surveys for your guests before and after the stay.
  • Invite guests to leave their reviews or comments on your social media profiles.
  • Analyze these reviews to understand what you can improve and what to enhance.
  • Be present on social media to interact as much as possible with your potential audience and guests. You can also segment thanks to the tools of each channel to learn more about your users.
  • Gather data about the services they hire, their demands and needs.
  • Use Google Analytics to create demographic and geographic groups.
  • Track your guest interactions using a CRM or other sales software tools.

Remember that your guests are the most complete source of information, so take advantage of it:

  • Know your guests. At this point you can use segments such as the booking method, the channel, the reason for the trip, services and the chosen room…
  • Identify the most profitable guests. Segment by amount spent by each guest, extra expenses and acquisition cost per guest.
  • Geographical segmentation. The place of origin of your guests is important, it includes countries and regions.
  • Demographic segmentation. Include age and gender in this segment.
  • Behavioral segmentation. For this part, surveys will be useful to find out the response of your guests to their experience in your hotel.

As you can see, to add value, adapt to changes, get closer to your public, attract new guests… In short, to anticipate the evolution of demand and apply correct dynamic pricing strategies, and therefore increase profitability, it is necessary to carry out a good hotel market segmentation.