Hotels Segmenting Strategies

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Image of a hotel concierge.
Image of a hotel concierge. (Image: Jupiterimages/Goodshoot/Getty Images)

Trying to be everything to everyone can sometimes result in a business becoming nothing special to anyone. Hotels that try to cater to business, vacation, upscale, budget-conscious, business, vacation, young and senior travelers won’t be able to develop a cohesive or believable brand. Trying to corner one distinct part of the marketplace is also difficult, according to research by Cornell University’s School of Hotel Administration. Learning how to segment the market can help small or independent hotel owners successfully compete with larger chains for market share.

Price Segment

One way to segment your market is by price. Upscale travelers are willing to pay more for nicer furnishings, carpeting, towels and amenities. This is especially true of business travelers. An investment in upgrading your hotel can pay off in the long run through higher revenues and margins. If you already have an upscale competitor, consider competing with a lower room rate, offering affordable accommodations without the extras. You might advertise a low base room rate, then offer individual amenities a la carte for those willing to pay extra. Offering one or two complimentary amenities for which your competition charges can help you attract more cost-conscious travelers. Survey your guests and ask them to rank the basic hotel features and amenities they want to get a feel for what you need to offer to attract your target customer.

Business Market

Another method for segmenting your market is to cater to business travelers. If you can’t afford to offer free in-room internet connections or wireless service, consider adding a business center with workstations, internet access and one or more printers and faxes. If you are near a convention center, contact its sales department to learn about becoming a recommended accommodations provider. This might require you to offer discounted rates to the center's attendees, but in turn the center might promote you year-round and provide free shuttle service to and from your hotel to the venue.

Meetings and Events

You can increase your bookings by becoming a meetings and events venue. You will try to attract not only the event business but also book rooms for guests who attend events. Options include weddings, trade shows, conferences, workshops, lunch and learns, seminars, family and high school reunions, banquets, charity fundraisers and sports awards nights. You will need to offer audiovisual, large room setup, entertainment and catering services. You can invest in ownership of these services and the related equipment or contract with local providers. Cross-promote your venue with churches, florists, wedding planners, disc jockeys, caterers, limousine services and photographers.

Vacation Travelers

If your hotel is near a vacation destination such as a beach, amusement park, historical attraction, national park or other venue that brings travelers to your area, consider developing a relationship with the attraction or using “ambush” marketing if you can’t afford a formal agreement. For example, to attract visitors to a state or national park to stay with you, provide concierge service that includes recommendations and coupons for restaurants, theaters, shopping, day care, pet sitting and other services and attractions. Offer free shuttle service to and from the destination each day if you think you will be able to book enough guests who are visiting the destination. If not, coordinate regular taxi pickup times at your hotel with a local provider. Look for tour groups that run their buses to or through your area; if their guests won’t be able to spend the night with you, they might need a rest and meal stop you can provide.

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