Even As Lines Between Business and Leisure Travel Blur, Hoteliers Say Segmentation Is Key

Excerpt from CoStar

Hospitality experts say customers at every price point want some of the same amenities during their stay, and owners must balance that.

A shift in consumer behaviors may lead some hoteliers to believe there are blurred lines within customer segmentation and that categories no longer serve a clear purpose. A group of hospitality experts, however, say that’s not the case.

The traditional breakdown is business and leisure, which is further broken down into transient, corporate negotiated, group, wholesale and other.

At a roundtable hosted by Hotel News Now in partnership with Pinkowski & Company, U.S. hotel industry executives shared their perspectives.

Hoteliers should still be able to identify the original impetus of what brought the guest to a property even if it feels blurred at times, said Kristie Dickinson, managing director and executive vice president of hotel asset management and owner advisory services company CHMWarnick.

“Whether or not that’s the business [traveler] that was able to tack on some additional days for fun or a group attendee that happened to be in a great location that decided to bring family along, I think you can trace back why they were there first. We were able to see some extended length of stay on some of those bleisure trips over COVID,” she said. “Some of that is hanging on. But the consensus so far is that segmentation is not going away. I believe wholeheartedly in that; and from an ownership and asset-management standpoint, we are looking at segmentation not only to identify trends but we are also looking at it because that’s really your key to optimizing profitability at a hotel.”

Not every guest spends the same either. Group travelers and those with corporate cards might have higher ancillary spend than a family staying for leisure.

During the pandemic years, many hotels took any business to gain occupancy, but Dickinson said her team can now more effectively yield “with an eye toward optimization” and channel management.

“There are huge implications on profitability by not effectively strategizing around your segmentation and your mix,” she added.

Michelle Geiger, area general manager at the Hyatt Centric Memphis and Hyatt Caption Memphis, sees a mix of leisure, business and group guests between the two hotel brands.

To be able to measure success at the properties, there have to be categories that the guests fall under, she said.

Blurred segments might come into play more when comparing a town such as Memphis versus a big destination market, Geiger said.

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