Segments are formed by putting your customers into groups with similar characteristics formed by their being behavior. These groups are clustered based on their booking avenue, their source or their price sensitivity. You will find some hotels have over 10 segments and others less. Each hotel will create their segments based on their understanding of business. Some of the segments I constantly come across in our markets are:
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When working on your budgets, you need to look at how each of the segments is performing and evaluate which one has a potential to perform better, which one is dropping its performance over the years and which one is constant.
There are 3 things you need to identify during the budgeting process:
1. What is the contribution of each of these segments to the total budget?
You will identify the rate that most of your business comes in with. This will help you you’re your pricing strategy. Knowing the average rate in each segment will also help in working out your budgeted ADR
It will also help you when building your marketing plan by informing what marketing efforts you need to place on each segment. For instance, you are a city hotel. Groups with conferences contribute 35% of the total budgeted revenue whereas Leisure contributes 9%. You will also find Resorts who perform better in conferencing and conventions, than leisure! You, therefore, need to study your business mix carefully. Your marketing budget and activities need to be skewed more towards the segment with more potential, even as you try to grow the least contributor.
2. How does each segment perform month on month?
Different segments perform better in different months. There are some months strong with Leisure, others with groups others with government activities e.t.c. When budgeting, you need to have this in mind, that way, you balance out your figures accurately. It still helps when doing your sales and marketing plan.
3. What is the booking window for each segment?
As you build these numbers, 1. Identify the booking window for the segments 2. plan marketing activities that will trigger the yield as per plan.
As you do your budgets, have the following data:
- Revenue per room occupied (RevPAR) last year, YTD and the forecast for the year
- Groups or events last year, YTD and the projection for the year
- Demand level indicator last year and this year (High, Medium, Low, Distressed)
- Demand level indicator this year
- Demand calendar for the year
- Exceptional demand indicators
You need someone to walk with you through the budget process? TALK TO US +254 780 777310 or
Email: anne.murungi@thehospitalityconsult.com
