Boost conversions and revenue with hotel guest segmentation

Imagine a mountain resort that needs to boost business during its lower occupancy shoulder season. The marketing team decides to create two targeted email campaigns by segmenting potential guests based on market categories and characteristics. They send one personalized promotion to transient couples, enticing them with an exclusive weekend getaway package. The marketing team also sends another promotion, providing adventure-seeking travelers with information on exciting outdoor activities. The result? By using this form of hotel guest segmentation the resort sees increased campaign conversions, a surge in bookings, and a host of positive reviews.

Revinate research shows that segmentation can improve your overall email campaign performance by up to an astonishing 425%.

What you will see here

• What is hotel market segmentation?
• Hotel guest segmentation categories
• Hotel guest segmentation characteristics
• Hotel market segmentation vs. email guest segmentation

What is hotel market segmentation?

Hotel market segmentation is a valuable strategy for hoteliers aiming to increase email marketing conversions and revenue. By categorizing your hotel’s broader market into distinct groups based on factors such as demographics and geography – as well as by characteristics like whether they are transient or business travelers – you can tailor your marketing efforts to make them more effective.

Hotel market segmentation lets you personalize campaigns in ways that resonate with customers who share characteristics like the same booking patterns or lifestyle choices. Whether you’re targeting family vacationers or business travelers, personalized outbound marketing empowers you to build a deeper connection with your guests and potential guests, which is why 64% of companies consider it a top priority.

Hotel guest segmentation categories

It’s important to define and understand the specific market categories that your property serves or could potentially serve, as they provide the foundation for optimizing your marketing strategies.

Transient

Transient travelers are predominantly your impulsive, on-the-move guests. These customers seek short, often urgent hotel stays, and include guests such as spontaneous weekend explorers and business people who travel during the week. Customizing your marketing efforts to transient preferences helps ensure your hotel consistently remains their top choice.

To attract a corporate transient traveler for example, you can send out campaigns that emphasize your streamlined digital check-in process and easy access to workspace essentials, such as desks, printers, and privacy.

CNRs (Corporate Negotiated Rates)

Business travel – historically a highly lucrative segment for hotels – is on the rise again. Corporate negotiated rate (CNR) customers are business travelers who work for larger corporations that have negotiated an exclusive rate with a hotel, typically covering certain room classes, or including special extras such as high-speed WiFi or parking.

By focusing your offerings on the professional needs of CNR travelers, and promoting exclusive corporate perks, you can cultivate lasting relationships that help consistently drive revenue.

LNRs (Locally Negotiated Rates)

Similar to CNRs, locally negotiated rate (LNR) travelers are travelers who work for – or are associated with – local companies that have negotiated a special rate with the hotel sales or revenue manager. Local businesses may need hotel meeting rooms for things like annual conferences or union negotiations and accommodations for out-of-town visitors. Hotels can grow their LNR market by hosting networking events, and sending custom campaigns to local industry associations.

Group

In addition to business travel, group travel is also growing. There were 12 million more group hotel room nights booked worldwide in the first half of 2023 compared to the same time the previous year – an 18% increase.

Group travelers typically receive a discounted rate on a block of rooms, and the travel is arranged either by an outside organization or an individual contact person. Some common types of group travel include sports teams, conventions, and wedding parties. You can increase your group business by crafting campaigns that showcase customizable group packages and seamless event planning services, among other exclusive perks.

Wholesale

Wholesale travel agencies and tour operators will assemble packages and sell them to clients through retail travel agencies. A typical package tour may include flights, accommodations, sightseeing, and entertainment activities.

The wholesale hotel category involves selling rooms in bulk to these travel providers at a discounted rate. Partnering with these behind-the-scenes collaborators can help boost occupancy rates during slow periods, making them valuable partners. You can elevate your wholesale business by promoting personalized packages that unlock revenue potential for both parties in a mutually beneficial relationship.

SMERF

SMERF is an acronym used to describe travelers who fall into another group-based hotel market segment including, Social, Military, Educational, Religious, and Fraternal travel groups. Some common types of SMERF groups include class reunions, spiritual organizations, college fraternities, and educational conference attendees. Attract SMERF business by targeting local organizations, partnering with event planners, and showcasing event-specific offerings in your email campaigns.

Hotel guest segmentation characteristics

There are multiple characteristics shaping hotel market segments. From geographic distinctions to the nuances of traveler behavior, understanding these different facets will equip you to tailor your email campaigns for greater success.

Geographical

Geographical segmentation involves categorizing guests based on their origin, which comprises local, regional, national, or international. When you customize your marketing campaigns to the unique preferences and cultural nuances of a particular geographic segment, your personalized approach will be more likely to resonate with each audience, boosting conversions and increasing profitability for your hotel.

For instance, during a mid-week slump, you could set up a campaign that segments your database by location, and promote an exclusive mid-week spa day to your drive-to market.

Demographic

Segmenting your guests by demographic components requires grouping them based on key factors such as age, income, occupation, and family size. Tailored emails that align with the needs and interests of each demographic segment ensure that each potential guest receives a personalized message that truly speaks to them, helping to enhance guest satisfaction and increase loyalty.

Psychographic

Psychographic segmentation delves into your customers’ lifestyles and values. Whether you’re catering to wellness enthusiasts, budget travelers, or those seeking eco-friendly practices, by understanding the psychological aspects influencing your customers’ choices, you can focus your campaigns and take a refined approach that relates to their particular preferences.

As an illustration, you can send out a campaign to eco-friendly travelers promoting your hotel restaurant’s partnership with local farmers and devotion to organic ingredients, or showcasing your water conservation and waste reduction practices.

Behavioral

Whereas psychographics examine the lifestyle and psychological aspects that shape guest decision-making, segmenting your customers based on behavioral distinctions refers to the actions and choices a potential guest makes in the course of their interactions with your hotel. It involves analyzing booking patterns (such as frequent or last-minute bookings), amenity usage, response to promotional offers, and loyalty.

Consider personalizing special promotions for guests who frequently book last-minute stays to capitalize on their impulsive travel preferences.

Hotel market segmentation vs. email guest segmentation

To recap, hotel market segmentation entails strategically classifying your property’s larger audience into individual groups based on categories and characteristics. By segmenting your audience this way, you can more easily identify where your business is coming from and spot potential new avenues for business growth. This approach helps guide your overall marketing strategy, enabling you to focus your promotions on specific market segments.

In contrast, email guest segmentation zooms in on the preferences, shopping patterns, and feedback of each guest within your database. It allows you to take a granular approach when it comes to understanding each guest’s unique needs and desires.

While hotel market segmentation lays the foundation for targeted campaigns, email guest segmentation empowers you to refine communication for more personalized interactions. By utilizing both types of hotel guest segmentation, you can craft highly customized email campaigns for distinct sections of your customer base.

For example, market segmentation may identify a group of transient travelers, while email guest segmentation within that group can reveal preferences for room upgrades or a desire for specific amenities.

The synergy between these two approaches of segmentation is powerful for your hotel email marketing campaigns, because personalized emails – whether based on broader market insights or individual guest behaviors – create more meaningful connections. This in turn contributes to increased guest engagement and loyalty, more conversions, and ultimately, higher revenue. In fact, faster-growing companies drive 40% more revenue from personalization than their slower-growing counterparts.

If you’d like to dive deeper into hotel guest segmentation strategies, and learn actionable insights for crafting more personalized campaigns, read Revinate’s “Ultimate guide to email marketing.”