Marketing has enabled market segmentation and the financial and organizational growth of hotel operators. The main objective is to increase value for both the organization and the customer, which results in better service, as it meets consumer expectations and needs.
The brand is responsible for providing certainty, which helps foster customer loyalty and excellent customer choice.
Unfortunately, branding and market segmentation can be a challenge for organizations with insufficient resources. Smaller operators find it extremely difficult to compete with larger competitors without the right branding strategies.
The modern hotel industry is competitive, and it is essential to implement strategies for market segmentation, conceptualization, and repositioning in order to grow.
Hotels must pay close attention to consumer power and redefine their supply chain model. The ultimate goal is to ensure guest satisfaction in order to increase brand value and strengthen customer loyalty.
Keep in mind that it is impossible to discuss marketing and branding without considering organizational and branding principles. It must be an approach aimed at improving the entire customer experience in order to achieve business success.
Table of Contents
Market Segmentation
Market segmentation requires identifying the hotel industry’s target markets and segmenting them, specializing in them, while also relying on pricing and reservation strategies.
It is essential to segment the market to identify the reasons behind a decline in reservations. Once you have this information, you can implement a sales and marketing strategy to increase reservations and revenue.
The main goal of market segmentation is to help you identify patterns in your business, such as:
- Length of stay
- Busiest days of the week
- Cancellation rate
- Days with the highest occupancy
- Total revenue per guest
- Total revenue per room
When you break down your hotel’s business into categories, your sales team can identify the behavior of each segment. This information will help you understand who is booking, what types of rates they’re booking, and their behavior.
Some of the most common market segments in the hotel industry are:
- Corporate – Theseare guests who book at discounted corporate rates.
- Individual — these are generally guests who are not affiliated with any group or company. These guests are looking for the best available rate.
- Wholesale— rates available to tour operators or reservation agents. This segment typically receives discounted rates for purchasing reservations in bulk.
- Group—these guests are part of a larger group or attending an event, and the available rates are flexible.
There are other market segments, such as staff rates, industry rates, complimentary rates…
Conceptualization
It is vital to understand that technology and changing consumer behavior are challenging the hotel industry. The COVID-19 pandemic has accelerated new trends, as hotel managers must move away from defining a hotel simply as a place to sleep and eat.
The truth is that a hotel’s value proposition needs to evolve. Whether you’re managing a small property or a hotel chain, it’s vital to develop a hotel concept.
Implementing a concept has many benefits, including:
- Aligning the shared vision
- A consistent and compelling guest experience
- Reduced marketing and public relations costs, as it’s easier to promote a hotel concept
- An opportunity for investors and partners when pitching the project
- Better room rates and amenities
Types of Accommodations in the Hotel Industry
It is essential to understand that the hotel industry is concerned with providing accommodations for guests. There are different types of accommodations. The most important ones are:
- Hotels—this is the most common type and refers to a place that provides lodging, meals, and other services.
- Motels—Motorists often prefer this type, asthey are usually located along the highway. Motels offer free parking.
- Inns—These are establishments that provide temporary lodging and sometimes offer food and drinks. Inns are smaller than hotels and offer fewer amenities.
- Bed and Breakfast— B&Bs are smaller than hotels and inns, and offer private rooms along with breakfast in the morning.
- Resorts— this type of establishment is similar to a hotel but offers various additional services and amenities. Guests have access to recreational activities, restaurants, bars, accommodations, etc.
- Hostels — —this type of lodging is usually inexpensive and offers rooms or apartments. Some hostels also have a bar and restaurant. Sometimes, the bathrooms are shared.
Repositioning
In the hotel industry, it’s a challenge to have a unique offering that attracts customers’ attention in order to be profitable. Hoteliers must choose a concept in which they want to specialize and, from there, create the most appropriate concept that reinforces that idea.
It is essential to understand that repositioning goes beyond the physical renovation of a property. Hotel managers must have a comprehensive plan to achieve financial, operational, and market growth.
Hotel managers must measure the effectiveness of the strategies they have implemented to ensure the overall satisfaction of employees and guests.
The main goal of repositioning a hotel is to align with the current market, the latent market, and in some cases the untapped market, in order to build strong relationships that meet the needs of its guests today and tomorrow. Methods such as trend analysis, conceptualization, day-to-day performance, and competitive market performance are key to delivering a wonderful guest experience.
