Webinar - Rethinking Hotel Segmentation

Rethinking Segmentation: A Constant Evolution

WEDNESDAY, April 29th - 9:00AM (PDT) Duetto Educational Series

About Duetto

Rapid innovation, new

product features

released weekly

Disruptive

Thought

Leadership

Committed to the success

of our customers

Customer Service

FocusedBest-in-Class

Team

Innovative

Philosophies

Marquee

InvestorsIndustry-Leading

Founders

World-Class Technology

Development

Best-in-Class

R&D

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