Hotel market segmentation is the process of grouping hotel guests into categories based on their booking patterns and travel habits.
NB: This is an article from Cvent
By segmenting hotel guests into market groups, hoteliers are able to identify where their business is coming from, spot new business in the area, and drive hotel revenue. We dig into the details of hotel market segmentation and how it works. We take a look at major hotel market segments, how hotels segment their markets, and the benefits of using hotel market segmentation to inform strategy.
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Unlock the benefits of hotel market segmentation
Through market segmentation, hotel professionals are able to group travelers based on their reason for travel and hotel preferences, as well as when and where guests book.
Major hotel market segments
There are three primary hotel market segments: transient, corporate, and MICE. Each of the three major segments can be broken down into smaller, more specific market segments that further detail customer travel patterns.
Below, we’ve detailed the major market segments, both the primary three and a handful of other smaller segments, that hoteliers track to identify guest booking trends and travel habits.
● Transient: Transient travellers are guests who book at non-group and non-negotiated rates. Transient travellers typically book short stays within a relatively small booking window, and they may be travelling for business or leisure purposes. They may book a few days in advance, be walk-in guests, or book same-day online reservations.
● Corporate Negotiated Rates (CNRs): CNRs represent business travellers who book at specified rates previously agreed upon by the hotel and travel buyers or planners for a national business. Hotels receive RFPs for corporate accounts from lead sourcing platforms, global distribution systems (GDSs), or as the result of brand agreements.
● Local Negotiated Rates (LNRs): Similar to CNRs, locally negotiated rates are established between the hotel sales or revenue manager and local businesses nearby. Hotels often locate LNRs by uncovering new business travel needs in their area. Local businesses may require hotel accommodations for annual meetings, conferences, audits, union negotiations, expansions, or other business activities that include out-of-town visitors.
● MICE: One of the largest hotel market segments, MICE business refers to a block of rooms, typically booked and coordinated by a primary MICE contact, reserved at a discounted rate. Hotels can book these travellers by receiving RFPs, contracting with travel agencies, and taking requests for MICE blocks directly. Youth sports, wedding blocks, and local events can drum up high MICE demand.
● Discount: While many hotel rate plans designate a discount off of the best available rate, the discount market segment typically refers to AAA discounts, credit card rewards, traveller programmes, online or mobile promotions, flash sales, online brand campaigns, holiday packages rates, and similar offers.
● Wholesale: Many large hotels offer bulk room blocks to tour operators or entertainment booking agents who require significant number of hotel rooms at a discounted rate. A market segment that falls into the group business category, wholesale business includes tours, symphonies, travelling musicals, bands, and production crews.
● Other: A hotel’s “other” category may include discounted brand or employee rates, complimentary rooms, or other industry rates. Some hoteliers choose to lump these outlier rate plans inside their discount market segment but doing so could lead to a lower-than-accurate representation of the segment’s revenue per available room or average daily rate.
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