Segmentation has been a buzzword in the hotel industry for quite some time now. But what exactly is it, and how can you use it to your advantage? In this series, we’ll explore market segmentation and suggest how your property can attract families, appeal to business travellers and get more bookings from millennials.
Ever heard the phrase “jack of all trades, master of none”? It’s used to describe someone who can do a lot of things, but none of them particularly well.
As far as marketing in the hotel industry goes, being a jack of all trades won’t get you very far. That’s because it’s virtually impossible to appeal to every kind of guest. It may seem obvious, but the simple reason is that different people look for different things when booking a trip. Families tend to want quieter accommodation with multiple rooms, business travellers lean towards properties close to conference centres and groups of millennials look for fast WiFi and a decent selection of nearby bars.
So you can’t please everyone – but what you can do is target a particular type of guest and pour all your efforts into making your property as appealing as possible to that guest profile.
With an even more attractive offer, you’ll get more bookings from people whose tastes fit with your property – and it’ll help you to develop a defined, coherent brand.
This process of identifying a particular group of guests is known as segmentation, or if you want to be more specific, market segmentation. It’s used by all kinds of businesses the world over – and it can really make a difference to your property’s fortunes.
How can I segment my guests?
If you promote your property via OTAs like Booking.com, chances are you’ll have a lot of guest information at your fingertips already. That’s because these platforms tend to have detailed guest analytics to help you identify who’s booking with you, how, when and why.
If you don’t have access to this data, it’s something you can observe yourself. Who are your guests, usually? Are they young couples, families with small children? Do they stay for a couple of nights, or do they tend to book for a couple of weeks? Are they domestic travellers or do they come from afar?
All this information will help you define who your property is already appealing to – and which people you should be trying to capture more of.
What if I want to attract a different kind of guest?
Now, there is another approach to this – one which is absolutely compatible with everything we’ve said so far. As well as focusing on your most frequent bookers, you might want to think about which of your guests are the most profitable from a purely revenue point of view.
That’s where RevPAR comes in. This term refers to the amount of revenue you make per available room – the higher it is, the more efficient your business is in monetary terms. And if you have the choice between pursuing guests who spend an average of USD 100 per night and guests who spend an average of USD 140 per night, which are you going to choose?
You’ll be able to find out which kind of guests spend more by checking a few factors. The first is the channels they tend to book through – do they book through your website (lower commission, therefore more profit for you) or through OTAs (higher commission, therefore less profit for you)? The second is length of stay – which guests tend to stay the longest? Where are they from, and which guest profile do they fit into? And finally, check who spends most on add-ons. Meals, parking and other services all add up in the end – and can often swing RevPAR in favour of one group or other.
What should I do once I’ve identified my guest segment?
You’ve crunched the data. You’ve chatted to your guests. You’ve worked out the recurring trends within your guest base, and who your most profitable guests are. Now you can set to work with tweaking your property, rates and promotions – and starting to build a brand around the type of guests that you know are interested in what you have to offer.
For example, if you’re looking to bring in more business travellers, you might consider making sure your property has free high-speed WiFi and soundproofed rooms.
If your target segment is people who tend to stay for a long time, try and find out what kind of activities they look for during their stay. You could try partnering up with a local tour or outdoor activities company, and offer guests a package. And if these guests happen to spend more on extras, how about a ‘pay for three nights, stay for four’ offer?
Ultimately, segmentation is about developing an effective use of your resources – both in terms of time and money. Investing in pursuing a group of guests who aren’t likely to book your property (or who give you less value for your own investment) simply doesn’t make sense.
By knowing who your guests are and identifying the most profitable segments, you can make your property even more attractive to a group of people who look for places like yours – helping you increase both occupancy and revenue. That way, you’ll avoid being a jack of all trades and a master of none.