In today's highly competitive hospitality landscape, maximizing revenue opportunities while minimizing costs is a top priority for hoteliers. One highly effective strategy by doing so is smart segmentation, a practice that allows hoteliers to tailor their offers, pricing, and distribution strategies to specific channels, guest profiles and behaviors. By leveraging segmentation, hotels can unlock new revenue streams and create a more profitable distribution model.

What Is Segmentation?

Segmentation in hospitality refers to the division of the market into smaller, more manageable groups based on specific criteria like guest profile, booking patterns, channels, and reason for travel. By adopting a tailored approach for each segment, hotels can optimize inventory allocation, pricing, and marketing strategies that match the unique needs of different guest groups.

For example, a corporate guest booking during the workweek has different expectations than a family booking during a holiday. Understanding and acting on these differences allows hotels to enhance the guest experience while improving profitability.

To maximize revenue, it's essential to understand the different ways segmentation can be approached. Here are few examples:

By Channel

Channels play a critical role in how rooms are distributed and sold, impacting Customer Acquisition Costs (CAC) and profitability.

This segment may include:

• Direct (Brand websites): This often seems more profitable but can involve high CAC when factoring in costs for ads, SEO, and design.
• Online Travel Agencies (OTAs): OTA commissions can be high but offer wider market reach.
• Global Distribution Systems (GDS): Ideal for corporate travelers or long-haul bookings, but also comes with fees.
• B2B Channels (wholesalers, tour operators, travel agents): These segments cater to specific needs and often help expand visibility at regional and local level.

Effective segmentation by channel helps balance inventory availability while keeping an eye on profitability, especially during peak and off-peak seasons.

By Reason for Travel

Understanding the motivation behind a guest’s travel is key to providing a tailored experience:

This segment may include:

• Transient: Individual travelers with varying booking patterns, primarily concerned with convenience.
• Groups: Often larger bookings, requiring careful inventory and space management.
• Corporate: Regular weekday bookings, often made last minute with higher frequency, benefiting from corporate contracts.
• Loyalty or Repeating Guests: These are your most valuable customers; targeted loyalty programs can maximize their value.

Identifying the reason for travel allows hotels to provide tailored services, improving guest satisfaction and boosting repeat bookings.

By Guest Profile

Tailoring the experience to guest demographics and preferences can also lead to improved satisfaction and loyalty. Profiles may include:

• Couples seeking romantic getaways
• Families with children needing more space or amenities
• Friends traveling together for leisure
• Nationalities who may have distinct travel patterns or preferences

This segmentation allows for a better customer experience and helps with room assignment based on guest needs and expectations.

By Booking Patterns

This segment may include:

• Day of the Week: Business travelers typically book weekdays, while leisure travelers prefer weekends.
• Seasonality: High and low seasons attract different segments, such as families during summer or business travelers during conferences.
• Events and Holidays: Bank holidays, local events, and festivals drive spikes in demand, allowing for increased rates and occupancy strategies.

Paying attention to these patterns is crucial to improving yield management and maximizing revenue.

Direct vs. Indirect

Segmentation plays a crucial role in optimizing channel distribution by balancing the advantages and costs of direct versus indirect bookings.

• Direct Bookings: While they may seem more profitable at first glance, the actual Customer Acquisition Cost (CAC) can be higher when factoring in advertising (PPC, Metasearch), web design, and other overheads. Studies show CAC for direct bookings often exceeds 20%, higher than many OTA commissions.
• Indirect Bookings: OTAs and other intermediaries come with commission fees but offer broader market reach and easier access to international guests.

The key lies in reducing distribution costs while maximizing profitability. A balanced approach leveraging both direct and indirect channels helps ensure better margins and reduces dependence on third-party intermediaries.

HyperGuest Marketplace: Smart Segmentation in Action

With HyperGuest’s B2B Marketplace, segmentation takes on a new level of sophistication. In traditional setups, onboarding a new distribution channel could take weeks. However, HyperGuest streamlines the process, enabling connections to new partners in a fraction of the time. For example, HyperGuest empowered Jaz Hotel Group to drive 600% growth by creating a specific promotion targeting Egyptians travelers.

Another noteworthy example is Starhotels, an Italian luxury hotel chain. By leveraging HyperGuest’s platform, combined with precise segmentation and tailored strategies, they successfully elevated the Average Daily Rate (ADR) of their B2B segment to become the second-highest across all segments / channels.

This system allows for more granular segmentation and targeted offers by:

• Geo-targeted promotions: Focus on specific regions or nationalities.
• Sub-channel categories: Customize offers within B2B channels.
• And more….

HyperGuest provides hotels with the flexibility to manage B2B distribution dynamically, ensuring that each segment is catered to with the right offer, at the right time, on the right channel.

If you’re looking to take your segmentation strategies to the next level, consider leveraging platforms like HyperGuest’s B2B Marketplace for targeted promotions and instant channel connections.