Market Segmentation

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Market Segmentation
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Market Segmentation

• The process of identifying a group of consumers
  with similar needs
• and producing a product that will
• meet those needs at a profit.

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Hotel Market Segmentation

• Forecasting by segment began in the airline
  industry
• Hotel Rates
• Retail Rates Available to anyone who asks
• Qualified Rates - Available to eligible members
  based on employment membership in a segment
  club or other affiliation.
• Three Stages
• Segmentation
• Targeting
• Positioning

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Market Segmentation

• Demographically - according to the age structure
  of the population
• Geographically - by country or region or area
• Behaviouristically - according to the nature of
  the purchase, the use the product is put to, the
  loyalty to the brand and so on
• Benefit - according to the use and satisfaction
  gained by the consumer
• Socio-economically - according to social class
  and income levels

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Selecting Target Markets

• 1. Does the property meet the needs of this
  segment?
• 2. How does the competition meet the needs of
  this segment?
• 3. Does this segment meet the propertys needs?
• 4. How much business are you currently getting
  from this segment?
• 5. How much time and money will it take to
  attract this segment?

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Hotel Target Markets

• Transient Business Travelers
• Convenience Urban Airport
• Privacy Suburban Resort
• Convention Meeting Attendees
• Corporate Association SMERF
• Leisure Vacationers
• Families / Teen Groups
• Newly Weds / Young Couples
• Elderly
• Active vs. Relaxing
• Other (Personal, Special Event, etc.)

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Positioning

• The name recognition of your hotel
• in the minds of the public.
• IMAGE
• Your perception of your hotel must
• match your guests perception.

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Positioning Factors

• Physical Attributes
• What are the physical characteristics of your
  hotel?
•  
• Service
• How efficient is your registration process?
• How long is the wait at your restaurant?
• Personnel
• Are your customer contact people courteous and
  friendly?
• Can they communicate well and respond to guest
  needs?
• Location
• What are the pros and cons of your location?
• Image
• How does the public perceive your property?
• Does your property live up to its perceived
  image?

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Internet Hotel BookingsWhat Market Are They?

• Nearly 37 million of Americas more than 162
  million active Internet users have purchased
  travel online. Online travel bookings were 23
  billion in 2001, and are expected to reach 63
  billion by 2005.
• Internet bookings in the first three quarters of
  2002 accounted for over 23 of rooms sold in New
  York, and over 15 in Los Angeles, Chicago, and
  San Francisco. Some properties are reporting
  Internet bookings ranging from 30 to 50.
• Overall (Internet non-Internet) there are
  approximately 120 million Leisure hotel
  reservations a year, 115 million Business hotel
  reservations a year and just under 100 million
  Convention and Meeting hotel reservations.

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Hotel Market Share

• Market Share is the percentage of the total
  room-night demand your hotel is capturing from
  your market set. It is calculated by dividing the
  room-night demand for your hotel by the total
  room-night demand for your market set.
• Market Set is the total number of rooms you are
  in direct competition with, within your areas
  market and/or segment. 
• Your competitive market set should include hotels
  of similar product type, location type, and
  service level.

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Hotel Market Share

• A hotel's Fair Share represents the average
  market share and is calculated by dividing the
  room count for your hotel by the room count for
  the entire market set.
• Market Penetration shows how well your hotel is
  doing in comparison with the average for the
  market set. It is calculated by dividing the
  market share by the fair share.

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Hotel Market Share Example

• 200-room full service hotel in a market set
  containing 1,000 rooms. Your hotels occupancy
  percentage is 80 and your market sets is 75.
• Fair Share
• 200/1000 20
• Market Share
• 200 x .80 / 1,000 x .75 21.3
• Market Penetration
• 21.3 / 20 1.06

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Hotel Market Share Homework
Calculate Fair Share, Market Share, and Market
Penetration for all three hotels
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Hotel Market Share Homework Answers