The basis of revenue management is the 5 Rs which are selling the right room on the right channel to the right customer at the right time at the right price. This can easily be applied to upselling and ancillary revenue sales as well. By using the power of segmentation and marketing, Oaky pairs traditional revenue management practices with cutting-edge technology and automation to maximize the revenue potential for hotels and stakeholders and ensure guests have a memorable, personalized stay.
What is segmentation?
Revenue managers and sales teams divide their hotel’s customer base into several segments. These usually focus on three key aspects: product, pricing, and distribution. Groups which respond differently to changes in these areas and price points make up a segment.
For example, business travelers willing to pay a higher price for a last-minute booking with the flexibility of being able to change their reservation make up one segment while leisure travelers choosing non-cancellable rates at a cheaper price many weeks or even months in advance make up another.
Since the different segments look for different things e.g. flexibility, additional services or a particular distribution channel, each hotel and resort must determine segments which reflect their target audience’s needs. Depending on the type of hotel, a variety of segments is necessary.
Why is segmentation important?
Using segmentation properly allows you to target and market to a variety of potential buyers with varying needs, behaviors and budgets. Doing this well will provide you data needed to understand the success of your current revenue strategies and adjust them to maximize your topline in the future.
Also, once you’ve determined several segments, you’ll be able to track their behavior and better understand their demand pattern. You will have the answers to important questions like: what is the lead time by segment – two days, weeks or months? How do the customers respond to offers? Do they like two-night packages including breakfast and airport pickup? Or are room-only rates more popular? If they like offers, which ones are most attractive to them – discounts or ancillary services?
In short, segmentation is important to understand who is booking your hotel, why and how. By knowing that, you can better tailor your offers to your guests and boost revenue potential by sending the most attractive offer to the right customer at the right time.
How can you put segmentation into practice?
Depending on your hotel, different types of segments make sense and are necessary.
Examples of commonly used segments are:
- Group and individual travelers
- Business and leisure (don’t forget the growing number of bleisure travelers today!)
- Contracted and non-contracted rates
- Booking channels: OTAs, direct, travel agents and wholesalers
If you see varying behavior within one segment, deeper segmentation can be interesting. Here are some examples:
- By country: this allows you to identify higher paying markets or those who book with longer lead times
- By OTA: this way you can identify higher performing OTAs and find ways to further boost their performance
- By interest or packages booked: if you offer destination packages and extra services upon booking like spa, excursions or F&B, you can track how people respond to changes in your offers
How Oaky helps with segmentation
While creating all these segments and communicating with them might seem like a lot of effort, Oaky can take most of that work off your hands. Setting up your segments is done in a matter of minutes, and the Oaky handles the rest, like making sure the segments you choose are offered attractive deals in automatically sent e-mails.
By knowing why a guest is staying with you and what their plans are, you can pitch relevant additional services. That might include an upgrade to a larger room for a family traveling with a child or an airport transfer for a business guest.
Here Oaky also uses the element of time to the hotel’s advantage. Thanks to data collected by Oaky, upsell e-mails can be sent at the ideal times to every group to ensure maximum open-rates, click through and conversion rates.
Details gathered by Oaky can also be used to add a personal touch to service. For example, if the guest is in town for an event, you can provide details on how to get there when the guest arrives. While this might not generate revenue directly, it improves the guest’s experience and makes their stay more enjoyable and memorable.
In an age where personalization has become an essential element of service, Oaky offers hotels the chance to automate individualized upselling. By using data collected from hotels around the world to ensure upsells are sent to guests at the optimal time, the top line is boosted and guests experience better service, making this new approach to upselling a no-brainer for any hotel.
Curious to find out more? Get your free, personalized demo today!