Webinar - Rethinking Hotel Segmentation
Transcript of Webinar - Rethinking Hotel Segmentation
Rethinking Segmentation: A Constant Evolution
WEDNESDAY, April 29th - 9:00AM (PDT) Duetto Educational Series
About Duetto
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About: Nathaniel “Nat” Estis Green
Senior Global Solutions EngineerDuetto family member since Dec. 2012
Agenda
▍ Segmentation 101
▍ Four Key Considerations
▍ Duetto Best-Practices Case
Study
▍ Key Takeaways
▍ Questions?
4
Revenue Management Introduction
“The application of disciplined analytics that predict consumer behavior at the micro-market level and optimize product availability and price to maximize revenue growth.
The primary aim of Revenue Management is selling the right product to the right customer at the right time for the right price and with the right pack.
The essence of this discipline is in understanding customers' perception of product value and accurately aligning product prices, placement and availability with each customer segment.”
Cross, R. (1997) Revenue Management: Hard-Core Tactics for Market Domination. New York, NY: Broadway Books.
Inventory /
Capacity Demand
Price
$
Segmentation 101Introduction to Segmentation.
7
These are our available hotels
Hotel ABC & Hotel 123
8
300 room property; has limited
segmentation to Retail, OTA,
Group, Wholesale, Corporate
Hotel ABC
9
300 room property; has limited
more detailed segmentation to
Transient, OTA Merchant,
Opaque, Group, Wholesale,
Corporate LRA, Corporate nLRAHotel 123
10
Jim Joe
Meet our customers
&
11
Looking for best deal
possible
Willing to sacrifice
selectionJim
12
looking for a good deal
but also wants to select
a specific property Joe
13
300 room property; has limited
segmentation to Retail, OTA,
Group, Wholesale, Corporate
Charges $215 across all
OTA channelsHotel ABC
14
300 room property; has limited more
detailed segmentation to Transient,
OTA Merchant, Opaque, Group,
Wholesale, Corporate LRA,
Corporate nLRA
OTA Merchant - $225
OTA Opaque - $195Hotel 123
15
Hotel ABC Joe
16
Jim Joe&Hotel 123
Evolution of Segmentation
17
1970s 1980s 1990s 2000s 2010s 2015
Separation of ownership, brand, and management
Leisure & Group
Product segmentation; financial engineering
Leisure, Group, Contract/Corporate
First online booking; enter Expedia
New need for OTA segmentation
Online distribution explodes complexity
Complexity of segmentation continues with more channels
Crowded value chain
Meta search; enter tech giants & new gatekeepers
Historically Travelers Booked Directly with Stay Brands
18
Consumer Stay Brands
Courtesy
Booking Brands Now Dominate Consumer Point of Entry
19
Consumer Stay Brands
v
Booking Brands Courtesy
Commissions Rise at 2x the Rate of
Revenue Growth39%+
2009 2010 2011 2012
%Increase
Commission
Increase
20
20%
Total Acquisition Costs
Room Revenue
Sales & Marketing Expense
Total Revenue
Retail commissions onlySource: HAMA Study 2013-2014
Courtesy
Customer Acquisition Comparative Costs as % of Revenue
21
Revenue
Cost %
3-6% 4-6%
15-25%
What is Segmentation?
The Right Segmentation
for YOU
Segmentation: to divide the marketplace into parts, or segments, which are definable, accessible, actionable, and profitable and have a growth potential.Economic Times
OR
Types of Segmentation
23
Market SegmentationYielding Segmentation
PricingFinancial
Reporting
What about
Promotions?
Types of Segmentation
24
Market SegmentationYielding Segmentation
PricingFinancial
Reporting
TransientRetail • AAA • Friends & Family
CorporateLRA • nLRA
OTAOTA Merchant • OTA Opaque
Consortia
GroupCorporate • City-wide • SMERF
Wholesale
Wholesale(Vacation or city-wide)
Strategic Segmentation
25
Getting StartedThe four key considerations.
Four Key Considerations
27
Segmentation
Distribution Cost of Acquisition
PriceCustomer/Market
Behavior
Four Key Considerations
28
Segmentation
Distribution Cost of Acquisition
PriceCustomer/Market
Behavior
Four Key Considerations
29
Segmentation
Distribution Cost of Acquisition
PriceCustomer/Market
Behavior
Four Key Considerations
30
Segmentation
Distribution Cost of Acquisition
PriceCustomer/Market
Behavior
Four Key Considerations
31
Segmentation
Distribution Cost of Acquisition
PriceCustomer/Market
Behavior
Four Key Considerations
32
Segmentation
Distribution Cost of Acquisition
PriceCustomer/Market
Behavior
Money Where Your Mouth IsDuetto Re-Segmentation Best Practices
Re-Segmentation Key Questions
34
1 2 3
Can you tell the
mix of business (types of customers)
you have?
Can you tell booking
behavior of each
segment of customer?
ADR?
Booking lead-time?
Are your revenue or
sales and marketing
team’s pricing and/ or
promotional
strategies selling out
the hotel day-of?
Circle of Segmentation Optimization
35
Analyze current performance
Strategize
performance goals
Evaluate distribution
strategy
Determine
expected changes and set expectations to
appropriate departments
Execute new
segmentation Segmentation
Optimization
Cycle
Best PracticesKey take-aways for moving forward.
Key Questions to Evaluate
37
Can you tell the mix (types of customers) you have?
Key Questions to Evaluate
38
Can you tell the mix (types of customers) you have?
NO
Refer to “Circle
of Segmentation
Optimization”
Key Questions to Evaluate
39
Can you tell the mix (types of customers) you have?
YES NO
Refer to “Circle
of Segmentation
Optimization”
Can you tell booking behavior of each customer segment? ADR? Booking lead time?
Key Questions to Evaluate
40
Can you tell the mix (types of customers) you have?
YES NO
Refer to “Circle
of Segmentation
Optimization”
Can you tell booking behavior of each customer segment? ADR? Booking lead time?
NO
Key Questions to Evaluate
41
Can you tell the mix (types of customers) you have?
YES NO
Refer to “Circle
of Segmentation
Optimization”
Can you tell booking behavior of each customer segment? ADR? Booking lead time?
YES NO
Are your revenue or sales and marketing teams pricing and/or promotional strategies selling out the hotel day-off?
Key Questions to Evaluate
42
Can you tell the mix (types of customers) you have?
YES NO
Refer to “Circle
of Segmentation
Optimization”
Can you tell booking behavior of each customer segment? ADR? Booking lead time?
YES NO
Are your revenue or sales and marketing teams pricing and/or promotional strategies selling out the hotel day-off?
NO
Key Questions to Evaluate
43
Can you tell the mix (types of customers) you have?
YES NO
Refer to “Circle
of Segmentation
Optimization”
Can you tell booking behavior of each customer segment? ADR? Booking lead time?
YES NO
Are your revenue or sales and marketing teams pricing and/or promotional strategies selling out the hotel day-off?
YES NO
Evaluate re-segmentation in 6-12 months
Key Takeaways
44
Economy Luxury Resorts
City-Center Airport Convention Casino
Questions?
WEDNESDAY, April 29th - 9:00AM (PDT) Duetto Educational Series