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Revenue Strategy Pro Tip: Use as Many Segments as You Can Handle

We’re already aware that properly segmenting your hotel demand is the first step toward a successful property-wide Revenue Strategy. Now innovative revenue managers are pushing the envelope by diving deeper and segmenting their guests in finer detail.

For the most part, the more segments the better. That way, should you need to discover more about a trend or anomaly in your data, you can more quickly and easily pinpoint the issue.

For example, most hotels start with a similar core of segments, usually BAR or retail, discounted business, corporate, wholesale and group. But just by taking that OTA bucket and segmenting it further, maybe into your top three performing OTA channels, you could tell if a particular channel was spiking or, alternatively, dragging you down.

Deeper segmenting also allows better practice of Open Pricing, because the more granular level of data you have, the more adjustments you can make and the more price points you can utilize.

Segmenting should not be an exercise you do once or on a one-off basis to investigate a data issue. Instead, it should be done at the outset and should provide a framework for all of your data analysis moving forward.

For example, once you’ve determined the correct segments and sorted the data appropriately, all of your forecasting and reporting, such as daily pace reports, should be viewed within the parameters of these segments.


The Revenue Manager’s Guide to Advanced Guest Segmentation

What segments to gate and how many segments you should have vary greatly from property to property. A five-star luxury hotel won’t have the same need to segment its opaque business, for example, as a roadside branded hotel that might care deeply about that channel.

Practice Safe Segmenting

There are drawbacks to unnecessarily segmenting your business too deep, however.

At the end of the day, your segments need to match across various technologies and systems to be most effective. And while the revenue team and marketing team might care about the finer details of your demand, the finance team or the ownership group may not. Therefore you need to be able to translate your segments into more broad definitions for the different interested parties.

One example of this is FIT business. While it’s incredibly helpful for revenue managers to divide FIT business by static and dynamic rates, your financial team might just want to see FIT business overall.

Another example is the retail segment. Many hotel operators break the retail segment into OTA and categories. Under the discount segment, your deeper buckets could be AAA, government, qualified, etc. Much of this depends on how you want to view and report the data, as well as the unique demand generators for your business.

Should you choose to segment all of your business by individual channel, you could start to get a good look at customer acquisition costs and build a more effective channel management strategy.

When you’ve got a good handle on your segments, you can fill your hotel by layering in the right guests. Liken it to building a sandwich – some people might want to add a little more ham while others might want slightly more cheese. When you’ve bucketed your guests appropriately and are able to identify the segments that are performing best, you will master the proportions and create the perfect sandwich.


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