How to explore micromarket segmentation, its role in the hospitality industry, and its power to revolutionize customer service and marketing.
In the hotel industry, understanding the guest is fundamental. Market segmentation is one of the most effective ways to achieve this understanding. Market segmentation is a strategic process that divides a broad customer base into subsets of consumers with common needs, interests, and priorities. However, broad segmentation often falls short in today's dynamic and competitive landscape. To truly meet the needs of each guest, it is necessary to delve into the field of micro-market segmentation, says a study by Demand Calendar on the subject.
Here are the main analyses:
Advantages of Microsegmentation:
- Personalized marketing
- Increased guest satisfaction
- Optimized pricing strategies
- Improving operational efficiency
- Competitive advantage due to offering personalized experiences can differentiate a hotel in a competitive market.
STEP 1 – Understand the motivation for hosting
- Business travelers: These people generally seek comfort and efficiency. They may appreciate amenities such as in-room workspace, high-speed internet, express check-in and check-out, and proximity to business or convention centers.
- Leisure travelers: They tend to seek relaxation and unique experiences. Leisure travelers may value amenities such as spa services, recreational activities, or proximity to tourist attractions.
- Event attendees: Guests traveling to events such as weddings, conferences, or festivals can prioritize locations close to the event venue and consider group booking options.
- Travelers in transit: These guests, often on a stopover or an ongoing trip, typically prioritize easy access, flexible check-in and check-out times, and essential comfort.
Travel motivation significantly shapes guests' needs and expectations. This knowledge allows them to tailor their offerings and marketing strategies accordingly, attracting the right guests and meeting their needs.
STEP 2 – Know the origin of the travelers
Guests' geographic origins provide valuable information about their cultural background, economic situation, and even personal habits, which can significantly influence their expectations and preferences when staying at a hotel. Appropriate contexts include:
- Cultural: Some cultures place a strong emphasis on hospitality and personalized service, while others may place greater value on privacy and self-service. This understanding helps you adapt your service style to meet the expectations of different segments.
- Economic Situation: This influences travel budgets and hotel expectations. Guests from wealthier regions may be willing to pay more for luxury amenities and services, while guests from less affluent regions may prioritize accessibility and value.
- Personal habits: Food preferences, for example, are influenced by regional cuisine, sleep patterns are affected by time differences, and social habits are shaped by local customs.
- Distance traveled: Travelers from farther away tend to stay longer in a destination due to the time and cost involved in traveling. This means they are more likely to use hotel services such as laundry facilities, restaurants, and recreational activities. Short-haul travelers or weekend getaways may prefer hotels that offer flexible check-in and check-out times to maximize their stay.
STEP 3 – Segment the micromarkets
The process can be viewed as a tree structure, with each level representing a critical variable that influences guest behavior and preferences. The variables are:
- Reason for traveling to the destination: The first level of the segmentation tree is the reason guests travel to the destination. As discussed above, this could be for business, leisure, events, transit, etc. This reason informs many of the guest's basic needs and expectations regarding their hotel stay.
- Origin and duration of stay: Often influenced by distance traveled, it can affect how guests use hotel services and amenities.
- Reservation behavior: How and when guests book. This can include the booking channel (direct, OTA, agency, etc.) and lead time (early bird, last minute, etc.). This way, it's possible to anticipate customer needs and expectations and adapt marketing and pricing strategies.
The future of microsegmentation
- The expectation of personalization: Hotels that can individually identify and respond to these unique needs will differentiate themselves in a competitive market. This shift away from a one-size-fits-all approach indicates a growing demand for personalized and memorable experiences that resonate on a personal level.
- The role of technology and data: Hotels that can effectively leverage and interpret customer data will be better equipped to understand and meet their guests' specific needs, resulting in increased guest satisfaction and loyalty.
- Higher cost of customer acquisition: By understanding and meeting the specific needs of different guest segments, hotels can increase their appeal, boost booking rates, and reduce acquisition costs.
The future of the hotel industry lies in personalization, and micro-market segmentation is a crucial driver of this trend. By effectively leveraging technology and data and understanding the changing customer acquisition landscape, hotels can refine their segmentation strategies for a more targeted and efficient approach.
It's about creating experiences that have a personal impact and ultimately drive guest satisfaction, loyalty, and business success.