The growing popularity of luxury hotels globally is being driven by factors such as increasing consumer awareness, affluence, and changing lifestyles.
It is aided by a rise in web-driven branding and promotional activities.
Luxury hoteliers are focusing on these activities to raise awareness and gain better market share.
Other hotels are focusing on upgrading their services in order to meet potential luxury guests' demands.
Many consumers, who might not have previously considered the luxury hotel demographic, now have the income and inclination to spend their leisure time in this sector.
Hectic daily lifestyles fuel the desire for a complete break, maybe for a shorter period but with more attention to their needs.
What is the target market for luxury hotels?
Any hotel target market is a group of travelers who share similar wants and needs and will respond to certain marketing messages.
The luxury market is simply a subgroup of the overall market with similar behaviours and desires.
In this podcast
Patrick O’Flaherty neatly encapsulates how to segment travelers based on some of these behaviours.
In the luxury sector for example it is less likely that price is a consideration and more that fine dining is important.
The key for the hotel then is that they are able to control how to sell to that market. This applies to all departments whether it’s rooms, F&B, leisure or weddings & events.
Even for the luxury traveller, it is still vital to know why they are travelling and what their booking behaviour is.
What are market segments?
Hotel market segmentation means dividing potential guests into groups based on a set of common characteristics.
General market strategies point to four different groups:
- Geographic. Targeting specific guest groups according to their geographic locations
- Demographic. This group includes gender, lifecycle stage, age, income and social class. Also for example business or leisure guest.
- Psychographic. How a person thinks, feels, and behaves using personality, lifestyle and values as segmenting variables
- Benefit-oriented. The experiences guests aim to obtain using services offered by the hotel
What are the benefits of luxury hotel market segmentation?
Even if your hotel’s daily rate and facilities already attract a higher income demographic, you will drive further benefit through a more specific segmentation.
And the more specific it is, the easier you will find it to influence the segment in terms of booking behaviour (moving them to direct booking), increasing your room rate and cross-selling/upselling.
As a luxury hotelier, when you find your groups of guests who drive potentially higher revenue and profit:
- You can invest in highly valued features and upgrades which you already know guests will be interested in.
- You will attract more guests in the right sectors and increase per customer revenue.
- Your marketing and sales efforts will be more profitable and easier to measure.
- You'll be able to attract specific guests, and maintain and create brand loyalty.
How do you identify luxury hotel target market?
Here are some effective tips to define your hotel's target market.
These activities should include all the teams in your property.
1. Ask your guests
An easy way to get guest feedback is a survey that offers an insight of who is staying in your hotel.
And what attracted them to your property in the first place.
You can use text, email, or even better empower your reception staff to ask during check in or check out.
The key is to make it short and sweet - just five questions.
- Why are you travelling?
- How did you find and book with us?
- What was most enjoyable for you during your stay?
- What has influenced your decision to book with us?
- Would you recommend our hotel to others?
You may opt for written or multiple choice answers - it’s a good idea to have an "other section" with space to leave a comment.
2. Put yourself in your guests' shoes
Understanding your target market demographics is not just about listing income, age, or travel behaviour.
Look at your hotel through a guest’s eyes and try to imagine what they feel on their journey from booking to checking in and beyond.
What is good about it and what might be missing or could be improved?
3. Use Google Analytics
Google Analytics is a free tool and offers some valuable information, such as:
- Who visits your website?
- Where is each website visitor located?
- What did they click on?
- How long did they stay on each web page?
There's a lot of great data in Google Analytics that will help you to understand your direct bookings.
You can see who you are attracting to your website and whether or not you are able to engage and convert them to a direct booking.
4. Use sales and marketing CRM software
When it comes to finding your luxury hotel target market, data is the best way and a great CRM system is your best friend.
CRM software helps you get a better idea of your target market by logging and tracking every guest.
It will give you visibility on every stage of your sales process.
It allows you to send targeted offers on which you can accurately measure the return.
And a loyalty program will promote retention which is the key to growth.
5. Check social media posts
People love sharing their experiences and opinions on social media.
Instagram is a particular favourite with many properties highlighting “Insta ready’ locations or experiences.
Check that what guests are posting is congruent with what you are aiming for.
If you are going for a barefoot luxury crowd you don’t want posts bemoaning how crowded your resort is.
However, if the posts resonate with your target audience, share them across your platforms and website to create a positive feedback loop.