What Is Segmentation in the Hotel Industry & How to Segment a Hotel Market

To remain competitive in the hospitality industry, it is first and foremost important that you understand your customers.

Understanding what your customers like, what sort of services they’re looking for, what their travel habits are, and more, are vital pieces of information that contribute to the success of your hotel.

If you don’t understand your customer, how else will you meet and exceed their expectations?

In order to understand your customers, you must first segment them. There are a wide variety of types of travellers out there – from families to backpackers, to retirees – and each of them has different budgets and seeks different experiences.

This is what we call hotel target market segmentation – the process of understanding and defining your target markets, so you can invest in marketing that appeals to them, and henceforth meet and exceed their travel expectations.

Specified market segmentation in the hotel industry helps you gain a competitive edge.

Let’s take a deeper dive to help you define your hotel target market segments.

What Is Hotel Target Market Segmentation?

As mentioned, hotel target market segmentation is, essentially, the process of segmenting types of tourists into groups based on their characteristics.

Hotel target market segments include characteristics such as:

• Discretionary income
• Family status
• Life stage
• Interests
• Location
• Age
• Generation
• Beliefs & Values
• Etc…

What Is the Purpose of Segmenting Types of Tourists?

Hotel target market segmentation helps you to define exactly what your customers like and expect.

Segmenting types of travellers help with both marketing before their stay, and impressing them during their stay.

For instance, if you segment your market to retirees, you might find that this group of people are searching for relaxing hotels, where airport transfers and scheduled meals and activities are provided.

On the other hand, if you find that your hotel’s target market is young backpackers, this might mean that they’re likely searching for adventure, variability, and budget services.

By segmenting your hotel target market, you can angle your sales and marketing to the correct people, and not waste resources on travellers that don’t fit your property and services.  You can also discover which amenities and services you should provide to each segment, ensuring that your guests have an unforgettable stay.

What Are the Main Types of Hotel Target Market Segments?

There is a wide variety of hotel target market segments, some of which are broad, others more specified. Drilling down on the characteristics we mentioned above is how hoteliers define the various segments.

Hotel target market segments examples – types of travellers segmented into broad groups:

• Backpackers
• Retirees
• Families
• Solo travellers
• FIT’s (free independent travellers)
• Couples
• Vacationers
• Adventurers
• Medical tourists
• Business travellers
• Etc…

These are some of the main types of tourists you might segment into your hotel target market – each, of course, have many independent characteristics (e.g. location, income, etc.) that influence their travel trends and behaviours.

How to Identify & Define Your Hotel Target Market

When defining your hotel target market, you will need to do a deep dive to reach more specific target markets that fewer competitors are going after.

Explore the different types of tourist groups that we listed above to identify your main target markets and then drill down further to define specific segments.

Here are some examples of specified hotel target market segments using the groups above…

Specific hotel target market segments examples – segmented by individual details:

• Backpackers, aged 18-30, from New Zealand & Australia
• Retirees, aged 65-75, retired from wealthy careers, from America
• Families, with children aged 5-10, from England

As you can see here, these hotel target market segments are very detailed, which helps reach travellers who are looking for exactly what your property offers.

For example, if you’re a holiday resort with a kids club, defining your marketing reach to families with young children is likely to be more effective than say couples looking for a quiet, romantic getaway.

To find your ideal target market, research your current guests to determine who they are. You can do this through surveys, online reviews and feedback forms.

Once you define your target market, craft marketing campaigns that will appeal specifically to them – using language and images that help them relate to your property and services better.

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The hotel industry is constantly changing – be sure to explore all of your options when defining your key hotel target markets. And more than this, make sure to continuously review and refine your segments, because with changes to the market (like Covid-19) your target markets may change. Always stay on top of types of traveller trends and behaviours, so you know what your target markets are looking for.

Market Segmentation in the Hotel Industry is Competitive & Varied

As a hotelier, your main goal is to provide memorable travel experiences that exceed guest expectations. And the best way to do this is by understanding your customers.

Marketing your accommodation business to anyone and everyone may get you a few guests here and there (or maybe more), but will it get the guests who will be amazed by your service offering?

You can’t please everyone, but you can please a select few. Put in the time to segment your hotel target markets, find out what potential guests like and connect this with the services at your hotel.

For example, if you often get requests for connecting rooms, consider marketing to families. Or if you find many guests searching for child-friendly facilities and activities, target young families with children.

Remember that by catering to specific hotel target market segments, you are likely to gain loyal customers who will return year after year, because they feel their needs and preferences have been understood and catered for.

So, now that you understand the weight of hotel market segmentation and you know how to segment hotel markets, you can benchmark your market reach.

Final Thoughts

Hotel target market segmentation is an essential aspect of the hotel industry. By segmenting types of tourists, hoteliers can better understand their customers and cater to their specific needs and preferences. This not only helps with marketing efforts but also leads to more satisfied guests who are likely to return in the future.

With a wide variety of hotel target market segments, it’s crucial for hoteliers to continuously review and refine their segments to stay on top of changing market trends and behaviours. By understanding your customers, you can provide memorable travel experiences that exceed guest expectations, leading to loyal customers who will return year after year. So take the time to segment your target markets and tailor your marketing efforts accordingly – it will pay off in the long run.

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