Friday, 24 September 2021

How To Target Luxury Hotel Market Segments


If you are a luxury hotelier, you know your hotel revenue management plays a crucial role in what is a very competitive industry.

This will help you to target new audiences, engage your current guests and expand your independent hotel business into new markets. 

The most effective way to do this is by setting a target market for luxury hotels

By setting a target market for your hotel, you can divide your audiences in to segments and finally decide who you’re targeting and why. 
 Luxury Hotel digital marketing with Aro

WHAT IS A TARGET MARKET FOR LUXURY HOTELS?

A luxury hotel target market is a group of people who have similar demographics like age and income, needs and demands.

Hotel target markets are often subgroups consisting of people who are most likely to be interested in your property and services.

Business travellers, tour groups, small conference groups and individual tourists are some examples of target customers of a hotel.

Hotels with suites are one of the major luxury hotel market segmentations, giving more space to guests with a separate living room in their hotel space. 

Business travellers, lawyers and company associates prefer suites as it allows them to conduct their meetings from a professional yet quiet environment in their hotel room.

In this podcast Patrick O’Flaherty neatly encapsulates how to segment travellers based on some of these behaviours.

The key advantage of the hotels market segmentation is that the hotels can control how to sell to that market. 

This applies to all departments whether it’s rooms, F&B, leisure, weddings or other such events.

Who are the target market for hotels?

The type of market segmentation for hotels depends on your market. Some hotel market segments examples include: 
  • Retirees
  • Families
  • Solo travellers
  • FIT’s (free independent travellers)
  • Couples
  • Business travellers
  • Adventurers
website design for luxury hotels with Aro


WHAT ARE MARKET SEGMENTS?

Market segmentation for hotels means dividing potential guests into groups based on a set of common characteristics.

Relevant hotel sales market segments are the foundation of your pricing strategy.

For your hotel market segmentation plan, you need to:
1. Identify your luxury target audience. You can use the behaviour of their booking to understand what they prefer. In this way you can also find the reason of travel of your guests.
2. Identify the most profitable guests. If you want to know which guests are the most profitable, check the amount of revenue brought in by each guest, their ancillary spends, and the cost of acquisition per guest.

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 hotel guest demographics, you can drive further benefit through a more specific segmentation.

And the more specific it is, the easier you will find it to influence the hotel target audience in terms of booking behavior (moving them to direct booking), increasing your room rate and cross-selling/upselling.

As a luxury hotelier, when you find your hotel target market segments who drive potentially higher revenue and profit:
  • You can meet your guests’ expectations better. You can invest in highly valued features and upgrades which you already know guests will be interested in. 
  • Your market competitiveness increases. You will attract more guests in the right sectors and increase per customer revenue. 
  • Marketing and sales efforts become profitable & easier to measure. 
  • Your hotel business focus improves. You'll be able to attract specific guests and maintain and create brand loyalty.
  • You will see a significant improvement in revenue. You don’t need to use a generic pricing model since you will get a clear idea of how your guests can up their sales.

HOW DO YOU IDENTIFY A 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. 

Here are some questions as hotel target market example.

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 hotel market segments is not just about listing income, age, or travel behavior. 

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?

For example, let’s say your property is a hotel with spa, and you have figured that one of my major target markets is couples travelling for recreational activities. 

For this target market, you can consider building couples packages for Spas, massages and other couple friendly activities offered by your hotel. 

3. CHECK SOCIAL MEDIA POSTS

People love sharing their experiences and opinions on social media. 

Instagram is particularly favourite with many properties highlighting “Insta ready’ locations or experiences. 

Check that what guests are posting online is congruent with what you are aiming for and your hotel target market. 

If you are going for a barefoot luxury crowd you don’t want posts to be moaning 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.

4. SEE ONLINE REVIEWS

Guests will often be speaking about: 
  • Why were they staying at your hotel?
  • What have they expected to experience?
  • What they loved the most about your location?

If you check these reviews, you will get a better picture of what your guest needs and want.

5. 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 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 you can engage your target market of a hotel and convert them to a direct booking.


6. USE SALES AND MARKETING CRM SOFTWARE 

When it comes to finding your luxury hotel 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 in hotel 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.
booking engine for independent hotels

What is Your Market Segmentation Source Data?

The data source you use for your target market of hotels is very important.

You must ensure the data you’re using to create and develop your segmentation is accurate.

The best way to do an accurate market segmentation is using a top-performing revenue management software system (RMS).

Once you are sure your data is verified, you should perform periodical re-evaluation to ensure all segments are accurate.

Conclusion

The growing popularity of luxury hotels globally is driven by factors such as increasing consumer awareness, affluence and changing lifestyles.

If you want to have the best target market for hotels, you need right information and use it wisely.

The more you understand who your guests are, the better you can attract similar guests.