Imagine a mountain resort that needs to boost business during a season of low occupancy. The marketing team decided to create two targeted email campaigns by segmenting prospects by market category and characteristics. They send one personalized promotion to a temporary couple, enticing them with an exclusive weekend getaway package. The marketing team also sends adventure-seeking travelers another promotion that provides information about interesting outdoor activities. result? By using this form of hotel guest segmentation, the resort has seen increased campaign conversion rates, a surge in bookings, and numerous positive reviews.
Revinate research shows that segmentation can improve overall email campaign performance by up to 425%.
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What is Hotel Market Segmentation?
Hotel market segmentation is an important strategy for hoteliers aiming to increase email marketing conversions and revenue. By segmenting your hotel's broad market into distinct groups based on demographic and geographic factors, as well as characteristics such as whether they are transient or business travelers, you can tailor your marketing efforts and make them more effective.
Hotel market segmentation allows you to personalize your campaigns in a way that resonates with guests who share characteristics such as the same booking patterns or lifestyle choices. Whether you're a family vacationer or a business traveler, personalized outbound marketing can help you build deeper relationships with your customers and prospects. That's why 64% of companies consider it a top priority.
Hotel Guest Segmentation Categories
It is important to define and understand the specific market categories that your property serves or could potentially serve. This is because it provides the basis for optimizing your marketing strategy.
transient
Transient travelers are mainly impulsive and on-the-go guests. These customers seek short, often urgent hotel stays and include guests such as spontaneous weekend explorers and business people traveling during the week. Tailoring your marketing efforts to temporary preferences will help your hotel consistently remain a top choice.
For example, to attract short-term travelers to your business, you could send a campaign highlighting a streamlined digital check-in process and easy access to workplace essentials like desks, printers, and privacy.
CNR (Corporate Negotiated Rate)
Business travel, historically a highly profitable segment for hotels, is on the rise again. Corporate Negotiated Rate (CNR) customers are business travelers who typically work for large corporations who have negotiated exclusive rates with the hotel, including specific room classes or special added benefits like high-speed Wi-Fi or parking.
By focusing on the professional needs of CNR travelers and promoting exclusive corporate benefits, you can build lasting relationships that help you continually generate revenue.
Locally Negotiated Rate (LNR)
Similar to CNR, locally negotiated rate (LNR) travelers are travelers who work for or are associated with a local company that negotiates special rates with hotel sales or revenue managers. Local businesses may need hotel conference rooms for annual conferences or union negotiations, as well as accommodations for out-of-town visitors. Hotels can grow their LNR market by hosting networking events and sending customized campaigns to local industry associations.
group
Not only business trips but also group travel is increasing. There were 12 million more group hotel room reservations globally in the first half of 2023 compared to the same period the previous year, an 18% increase.
Group travelers typically receive discounted rates for a block of rooms, and trips are arranged by external agencies or individual liaisons. Common types of group travel include sports teams, conventions, and wedding parties. Increase your group business by creating campaigns that showcase custom group packages and seamless event planning services, among other exclusive perks.
all
Wholesale travel agencies and travel agencies assemble packages and sell them to customers through retail travel agencies. A typical package tour may include flights, accommodation, sightseeing, and entertainment activities.
The wholesale hotel category involves selling rooms in bulk to these travel providers at discounted prices. Working with these behind-the-scenes collaborators can make you a valuable partner by helping you increase occupancy during down periods. You can boost your wholesale business by promoting custom packages that unlock revenue potential for both parties in a mutually beneficial relationship.
smurfs
SMERF is an acronym used to describe travelers belonging to different group-based hotel market segments, including social, military, educational, religious and fraternal travel groups. Common types of SMERF groups include alumni associations, spiritual organizations, college fraternities, and attendees at educational conferences. Attract SMERF business by targeting local organizations, partnering with event planners, and featuring event-specific products in email campaigns.
Hotel Guest Segmentation Characteristics
There are several characteristics that shape hotel market segments. From geographic differences to nuances of traveler behavior, understanding these different aspects can help you tailor your email campaigns for greater success.
geographical
Geographic segmentation involves segmenting customers based on their origin, which may consist of local, regional, national, or international. Tailoring your marketing campaigns to the unique preferences and cultural differences of specific geographic segments increases the likelihood that your personalized approach will resonate with each guest, increasing conversion rates and increasing profitability for your hotel.
For example, during the mid-week slump, you could set up a campaign to segment your database by location and promote an exclusive mid-week spa day to the drive-to-market.
demographic
To segment your guests by demographic, you need to group them based on key factors such as age, income, occupation, and family size. Tailored emails tailored to the needs and interests of each demographic segment help increase customer satisfaction and increase loyalty by ensuring each prospect receives a personalized message that truly speaks to them.
psychographics
Psychographic segmentation takes a closer look at your customers’ lifestyles and values. Whether you're targeting wellness enthusiasts, budget travelers, or those seeking environmentally friendly practices, understanding the psychological aspects that influence your customers' choices can help you focus your campaigns and take a sophisticated approach that's relevant to your customers' specific preferences.
For example, you could send a campaign to environmentally conscious travelers promoting your hotel restaurant's partnerships with local farmers and commitment to organic ingredients, or introducing water conservation and waste reduction practices.
action
While psychographics examines the lifestyle and psychological aspects that shape a customer's decision-making, segmenting customers based on behavioral distinctions refers to the actions and choices that potential customers make during their interactions with a hotel. This includes booking patterns (e.g. frequent or last minute bookings), use of amenities, responses to promotional offers and loyalty analysis.
To capitalize on impulsive travel preferences, consider customizing special promotions for guests who frequently book last-minute stays.
Hotel market segmentation and email customer segmentation
In summary, hotel market segmentation entails strategically classifying a hotel's larger number of customers into distinct groups based on categories and characteristics. Segmenting your audience in this way makes it easier to identify where your business is coming from and discover potential new avenues for business growth. This approach helps guide your overall marketing strategy and allows you to focus promotions on specific market segments.
In contrast, email customer segmentation magnifies the preferences, shopping patterns, and feedback of each customer in your database. This allows us to take a detailed approach to understanding the unique needs and desires of each customer.
Hotel market segmentation lays the foundation for targeted campaigns, while email customer segmentation helps you improve communications for more personalized interactions. By leveraging both types of hotel customer segmentation, you can create highly customized email campaigns for individual sections of your customer base.
For example, market segmentation can identify groups of transient travelers, while segmenting email customers within those groups can reveal preferences for room upgrades or desires for specific amenities.
The synergy between these two segmentation approaches is powerful for hotel email marketing campaigns. That’s because personalized emails based on broad market insights or individual customer behavior create more meaningful connections. This, in turn, contributes to increased customer engagement and loyalty, increased conversion rates, and ultimately increased revenue. In fact, fast-growing companies generate 40% more revenue from personalization than slow-growing companies.
If you want to learn more about hotel customer segmentation strategies and learn actionable insights to create more personalized campaigns, read Revinate's “The Ultimate Guide to Email Marketing.”