MARKET SEGMENTS
In the ultimate mass market, all customers would want the same products and the same services. The opposite would be a completely tailored product or service for each individual. The real world is somewhere in between. How similar are hotel customers? Do they all want a traditional room in a full-service hotel or do some want suites? Do others want a low cost room with limited services or do they prefer a luxury hotel with a full range of services and benefits? Obviously, there are a variety of types of hotel customers. This poses a challenge for the hotel managers. Which customers do you want to serve? Which customers can we best serve? How can we organize those customers into groups or segments, so they can be targeted through our services and marketing strategies? How can we achieve competitive advantage with our targeted customers?
A market segment is simply a group of customers who have common requirements for a product or a service. Different segments have different needs and requirements. Segments require evaluation and adjustment according to their responsiveness to your decisions. Segments also show different patterns of usage in terms of days of the week and seasons. Segments present opportunities for developing strategies which cater to the specific needs and requirements of that segment. Your team will be able to set operating budgets and make capital investments that can improve your levels of service selected attributes. This can help you target segments and result in improved occupancy and, if investments are made wisely, improved profitability for your hotel.
The eight market segments in the Hotel Business Management Training Simulation are:
- 1. Business
- 2. Small Business
- 3. Corporate contract
- 4. Families
- 5. Affluent Mature Travelers
- 6. International leisure travelers
- 7. Corporate/Business Meetings
- 8. Association Meetings
1. BUSINESS SEGMENT
Business segment includes people who travel for business reasons. Their travel expenses are usually covered by the companies they work for. Since they travel to conduct business, most of the time, they will travel during the week. However, a small portion (around 10 percent) may travel during the weekends too. The duration of their stay is one to two nights. Many are frequent travelers and represent opportunities for repeat buying. They tend to be the very demanding in terms of overall levels of services, but are generally willing to pay for added value. Travelers in this segment tend to generate around 15 percent of the demand for the hotels in the area.
Business Segment
Importance of Hotel Attributes and Amenities
As you can see from the chart above, quality of guest rooms is the most important criterion for this segment, but courtesy, guaranteed reservations, and the speed of check-in/out are also important. Golf course, concierge service, fitness center, business center, restaurants and bars are also important for this segment. If your team chooses to serve the Business segment, these attributes would be the target of your operating budgets and capital investments.
2. SMALL BUSINESS SEGMENT
People in this segment also travel for business reasons. However, travelers included in this segment tend to be owner of small businesses or work for small businesses with limited resources. Like business segment, they travel to conduct business. Most of the time, they will travel during the week. However, a small portion (around 15 percent) may travel during the weekends too. The duration of their stay is one to two nights. Since they travel on a budget, they are not as demanding as business travelers. Travelers in this segment tend to generate around 15 percent of the demand for the hotels in the area.
Small Business Segment
Importance of Hotel Attributes and Amenities
As you can see from the chart above, most important hotel attributes and amenities for this segment are guest rooms, and business center, but courtesy, guaranteed reservations, the speed of check-in/out and quality restaurants are also important. If your team chooses to serve the Small Business segment, these attributes would be the target of your operating budgets and capital investments.
3. CORPORATE CONTRACT SEGMENT
Like business segment, people in this segment also travel for business reasons. However, they are required to stay at hotels that have a contract with the company they work for. Many large corporations have contracts with hotels that guarantees a certain number of room nights in return for discounts. Most of the time, the level of discount they receive depends on the number of room nights they can guarantee to generate; higher the room night, higher the discount. Companies may have contractual rate agreements with more than one hotel in your area. Most of the time, travelers in this segment will travel during the week; only a small portion (around 5 percent) may travel during the weekends. The duration of their stay is one to two nights. Since they have limited options in terms of the number of hotels they can stay, they are not as demanding as business travelers. Travelers in this segment tend to generate around 5 percent of the demand for the hotels in the area.
Corporate Contract Segment
Importance of Hotel Attributes and Amenities
As you can see from the chart above, most important hotel attributes and amenities for this segment are guest rooms, guaranteed reservations, and the speed of check-in/out but courtesy, and concierge services are also important. They also value quality restaurants and business centers. If your team chooses to serve the Corporate Contract segment, these attributes would be the target of your operating budgets and capital investments.
4. FAMILY SEGMENT
Family segment includes families with and without kids who travel for pleasure and leisure activities and are the best segment for selling rooms on weekends (Friday, Saturday, & Sunday). Research suggests that around 80% of them travel during the weekend. Around 10% of the market demand is generated by family segment.
Family Segment
Importance of Hotel Attributes and Amenities
Family segment tend to place high value on guest rooms, guest check in/out, restaurants, room service, other recreational facilities such as pools, game rooms, etc., and courtesy. They also value courtesy golf course and spa. If your team chooses to serve the Family segment, these attributes would be the target of your operating budgets and capital investments.
5. AFFLUENT MATURE TRAVELERS SEGMENT
Affluent mature traveler segment includes mostly retired people with high disposable income. They are highly educated. They travel for pleasure and leisure activities such as spa, golfing and other high end activities. Most of them travel during the weekend (70%). Since some of them are retired they are also able to travel during the week (30). When they travel, they like to be pampered. They are very demanding. Around 10 percent of the market demand comes from this segment.
Affluent Mature Travelers Segment
Importance of Hotel Attributes and Amenities
As presented in the figure above, the most important criterion for them is the quality and comfort of the guest room. They also place great importance on courtesy, golf course and spa. Food and beverage and entertainment are also important for this segment. If your team chooses to serve the Affluent Mature Travelers segment, these attributes would be the target of your operating budgets and capital investments.
6. INTERNATIONAL TRAVELERS SEGMENT
This segment includes international traveler to your destination. These international travelers tend to be highly educated with higher than median income. They are very well traveled and very knowledgeable about travel products. Their length of stay is usually longer than domestic travelers. Since they are on a vacation, they are able to travel both during the week (50) and during the weekend (50%). Around 10 percent of the market demand comes from this segment.
International Travelers Segment
Importance of Hotel Attributes and Amenities
As presented in the figure above, most important attributes for this segment is quality and comfort of the room. They also value golf course, concierge service, courtesy, entertainment restaurants and spa. Other important attributes include reservations, check in/out and bars. If your team chooses to serve the International Travelers segment, these attributes would be the target of your operating budgets and capital investments.
7. CORPORATE/BUSINESS MEETINGS SEGMENT
People in this segment travel to attend corporate and/or business meetings. Most of the people in this segment hold middle to high level managerial positions in the companies they work for. Since they travel to attend business meetings, all of their expenses are covered by their companies. Most of them travel during the week (80%). Around 15 percent of the market demand comes from this segment.
Corporate/Business Meetings Segment
Importance of Hotel Attributes and Amenities
As shown in the figure above, meeting rooms and attention they receive from management and sales are extremely important for this group. They also place high importance on quality and comfort of the rooms, ease of check in/out, and the business center. They also value courtesy, golf course and banquet and catering services. If your team chooses to serve the Corporate/Business Meetings segment, these attributes would be the target of your operating budgets and capital investments.
8. ASSOCIATION MEETING SEGMENT
This segment includes people who travel to attend association meetings. Since attendance to association meetings are voluntary, most of them pays for their own expenses. These association meetings can be small meetings of as few as 30 to 40 people or enormous conventions with thousands of members attending. Most of these meeting are held during the weekend (80%). Around 10 percent of the market demand is generated by this segment.
When shopping for hotels for groups, eight of the ten attributes are considered to be most important:
- 1. Meeting rooms
- 2. Sales and management attention
- 3. Banquet and Catering
- 4. Guest Rooms
- 5. Check in/out
- 6. Courtesy
- 7. Reservations
- 8. Entertainment
If your team chooses to serve the Association Meetings segment, these eight attributes would be the target of your operating budgets and capital investments. The following chart reflects relative values of all attributes for this segment.
Association Meetings Segment
Importance of Hotel Attributes and Amenities
