3007THS: Hotel Segmentation and Revenue Management Strategies

This report delves into the intricacies of hotel segmentation and revenue management, exploring how hotels categorize their customers to maximize revenue. It examines various segments, including group, transient, and contract, and discusses the unique characteristics of each. The report also analyzes the importance of understanding customer behavior and the impact of external factors, such as economic conditions and technological advancements, on hotel strategies. Furthermore, it covers the concept of displacement, where the acceptance of one segment's business may prevent the acceptance of another, and how this impacts revenue. The report provides insights into the importance of a revenue manager's role in analysing segments, optimizing pricing, and achieving the hotel's revenue management strategy, as well as the importance of monitoring the ever-changing trends in the hospitality industry.

3007THS
Week Three
Room Pricing Fundamenta
Segmentation

Learning Objectives
By the end of this week you should be able
• Define major segments used by hotels
• Explain and apply the concepts of fencing
discounts
• Rank segments by their price sensitivity
• Determine profitability of various key segme
• Analyse a hotel’s mix of business
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Introduction
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Hotels offer a variety of rates to a variety of different groups or segments to ensure that a hotel has every chance toout on
any given night.Establishing segmentation strategy allows revenue managers to define and capitalise on the optimalmix of
travellers coming to the hotel. Revenue managers must understand theirhotel’s mix of business as wellas thecompetition’s
mix ofbusiness.They mustalso understand the role and profitability ofeach segmentto accurately predictand achieve
thehotel’s revenue strategy. This week will also investigate the ever-changing trends in hotel segmentation.

Hotel Segmentation
GROUP
• Corporate Meeting
• Association
• Tour
• SMERF
Specific dates and no often
repeating.
Often Meeting/Events attached.
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Hotel Segmentation
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CONTRACT
• Airline Crew
• Corporate accounts
• Airline distressed passengers
Fixed rooms- Fixed Price
Reciprocal agreement

Hotel Segmentation
TRANSIENT
• Retail
• Government
• Wholesale
• Qualified
• Package
• Discounted
Best Available Rate (BAR)
Buy off the shelf
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Hotel Segmentation (3007THS)
TRANSIENT
• Retail
• Wholesale
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GROUP
• Corporate Meeting
• Tour/Leisure Group
• Social Group
CONTRACT
• Airline Crew
• Corporate accounts

Displacement
The potential revenue lost by accepting a pie
segment business over another.
• Group Segment
• Meeting & event costs
• Attrition
• Contract Segment
• Day of week pattern
• Production
• Last room availability (LRA)
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Environmental Scanning
External factors=significant impact
• Economic
• Inflation
• Social
• Education
• Technology
• Work from home
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Conclusion
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Understanding hotelcustomers and their buying behaviour should be broken down into segments and sub-segments. A
changing environment can impact segments so it is important for Revenue Managers to continually monitor and ana
segments. Identified trends can be communicated with the Sales and Marketing teams to target the optimalmix of business
and achieve the revenue management strategy.

Reference List
Szende, P. (2019). Hospitality revenue management: concepts and practices. Apple
Academic Press.
Tranter, K. A., Stuart-Hill, T. & Parker, J. (2009). An introduction to revenue
management for the hospitality industry : principles and practices for the
real world. Pearson Prentice Hall.

Questions?
See you in the workshop!
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