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Customer Micro-Segmentation: The Key to Direct Profit Growth

Most hoteliers already know what segmentation is and just how important it is in terms of getting the best out of your hotel. But how about taking it one step further? Micro-segmentation. This, I believe, is the key to direct profit growth for the modern hotel industry. 

Micro-segmentation is the process of dividing markets and customer pools into small, actionable groups with common characteristics and preferences which hotels can then use to tailor their offerings and marketing messages to each group. By categorizing your guests into smaller buckets, you’re able to yield each of them separately.

This blog is an excerpt from our latest special report, How to Boost Your Hotel’s Total Profitability. Download your copy here: 

The traditional segmentation method was based on USALI (Uniform System of Accounts for the Lodging Industry) guidelines, but the current method is more of a deep dive into channels and rate models. The most forward-thinking hotels focus deeper into these main clientele categories: Geo Source Market, Customer Persona, and Marketing Channels. 

Micro-segmentation is the easiest way to attract more guests to your hotel rather than to your competitors. Revenue managers can calculate the unconstrained demand by micro-segments (Geo Source, Channel, Membership tier, or how much money a client spent in the casino, etc) to create highly personalized packages that match the unique needs of these carefully selected segments. This means that revenue managers can gain a clear understanding of where the opportunities are for future dates and how best to capture them. 

The 5 Ws Of Hotel Customers

Revenue managers need to ask themselves the following questions: 

  • Who are the customers? 
  • Why are they traveling to the destination? 
  • Where will you find them? 
  • When will they come? 
  • What do they need from your property?


Collecting this data allows hoteliers to micro-segment customers easily and effectively.

Creating micro-segments is a critical step in personalizing offerings to hotel guests

Media, entertainment, and gaming led the way in showing us all how to use data to micro-segment customers to drive revenue. Netflix understood that we purchase faster if told what we might like to buy. They also understood that personalization isn’t just about initial purchases; it goes a long way to securing customer retention rates too. 

For most hoteliers, data remains an under-used and under-appreciated asset. Good data analysis comes from various sources to ensure that published rates take into account all of the data available to us. It’s vital to use clean and uniform data to micro-segment your customers, as this is the easiest way to attract more direct bookings among your competitors. Also, focus on your strategy and let the RMS plan for you. The combination of human and machine yields better results than any of those would do in isolation.

Discover more about pivoting your business strategy to total profitability in our latest eBook: How to Boost Your Hotel’s Total Profitability. Download your FREE copy today: 

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