Market segments

Defining market segments

Generally speaking, market segmentation can be based on this definition:

Division of the overall market according to specific criteria into groups or segments of buyers, which should be as similar as possible (homogeneous) and as different as possible (heterogeneous) in terms of their buying behavior or characteristics relevant to buying behavior.

main purpose Market segmentation is to uncover differences between buyers in order to draw conclusions for segment-specific marketing programs.

For the hotel industry, this means that we divide our guests into groups, each of which has common characteristics within a segment: Where do the bookings come from, what is the purpose of the trip and/or, for example, the length of stay. These groups then show different behaviours and accept different offers. In this way, marketing and prices can be directly coordinated with this.

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“General” classification of market segments

Books and doctoral theses have been written about market segmentation. There are many different approaches, which differ not only by sector. Often, the difference also lies in the depth of division.

Here, we would like to focus on presenting the most important segments in the hotel industry. We do not address the many sub-groups that may have been developed.

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Transient segment: These guests do not belong to any particular company and usually only stay a few nights. The hotelier can sell you the best available rate (BAR). Sometimes these can also be small groups, not just individual travelers.

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Corporate clients: These guests benefit from what has been agreed between the hotel and the company company rates.

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Groups: These guests may come from the leisure or business travel sector. They too have contractually agreed room rates. These include corporate events, incentive events or even a wedding party.

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It is also always recommended to include a segment of “Other” to develop and constantly monitor. Trends can be seen there that affect tour operators/booking agencies, for example.

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Benefits of market segmentation

The division into market segments offers significant advantages for hoteliers. We would like to explain a few of them in more detail here.

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Identify profitable areas
Segmentation shows which channels bring the “best” guests, which segment generates the most revenue and which rooms can be marketed the most profitably, for example.
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Identify trends
With hotel segmentation, you can see which days of the week are the most busy, whether there are segments with high cancellation rates or which guests book in advance. This helps the hotelier to adjust the offer: Restrictions can be used better

Identify guest potential/ optimize marketing
If you know the guest segments well, you can specifically increase customer satisfaction and optimize marketing measures.

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In summary, dividing guests into market segments can not only increase a hotel's earnings through a more targeted approach. In addition, the hotels are also able to offer their guests a very individual and therefore satisfying experience.

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