The market segment—whether luxury, low-cost or somewhere in between—largely determines what guests expect from their stay at their hotel of choice.
Although guests across all segments value
price, reputation, room quality and location when choosing a hotel, these considerations merely cover accommodation costs and little else, offering no guarantee of generating sustainable, repeat business.
To achieve sustainable long-term growth, every hotel must develop a deep understanding of the
type of guests it wants to attract, and then deliver an experience tailored to that specific group. By becoming more attuned to the preferences of current and prospective guests within their segment, hotels can target them more precisely and build meaningful, lasting relationships.
The hotel market can be broadly divided into six segments:
Luxury, Upscale, Upper Midscale, Midscale, Economy and Budget, helping reveal what guests truly want from hotels, what they look for when making an initial booking, and what attracts them and encourages repeat stays.
Every hotel should aim to earn guest engagement. Guests who are engaged and connected to a brand generate a financial premium, regardless of market segment. Fully engaged guests are less price-sensitive because their emotional connection with the brand tempers their concerns about price.
Overall, around one in five hotel guests is fully engaged, although this percentage may vary by segment.
Guests at higher-priced hotels tend to be more engaged than those at lower-priced properties. One-third of luxury guests are fully engaged with their hotels, the highest percentage of any segment.
Attracting new guests
The journey towards creating a "guest for life" begins with a guest’s first stay. Beyond the factors guests expect from all hotels—quality, convenience, price and reputation—hotels must carefully examine their target segment for clues on how to attract new guests.
When luxury and upscale guests choose a hotel for the first time, creating the right atmosphere is essential to winning them over. These guests value the appearance of the property and rely on their own judgement and observations when selecting a hotel for the first time.
Guests in the remaining segments, on the other hand, are heavily influenced by third parties when deciding to book a hotel for the first time. Upscale guests rely on recommendations from friends, while upper-midscale guests prefer the views of family members and friends. Midscale guests depend on the information available on the hotel website when deciding to book a room. The exception is budget guests, who rely on a hotel brand’s reputation when booking a stay for the first time.
Encouraging repeat stays
Price, location and quality remain the main considerations for guests across all segments when making repeat bookings. However, a hotel brand’s reputation becomes less crucial at this stage, as guests focus less on the hotel’s image and more on their personal relationship with the brand.
To encourage guests to return, hotel staff must provide reliable service, resolve their issues and respond enthusiastically to their needs from their very first visit. When staff help guests resolve problems, those guests may become even more engaged than guests who did not experience an issue during their stay.
For luxury-segment guests, price is not a significant factor in repeat bookings. The hotel’s appearance remains a crucial consideration, but staff empathy and problem-solving skills become more important. Confidence in the level of service is important for midscale guests, while for guests in higher segments, the key driver is the level of service received from hotel staff.
Guests in budget segments also value employees’ empathy and service levels, but price remains the main driver when booking a hotel again.
Creating guests for life.
Certain factors, such as price and location, are understandably important in getting first-time guests through the door. If employees can create an emotional connection with guests during their first stay, they will be more likely to return the next time they need a hotel, even if another brand offers a better price or a more convenient location.
The first visit is a crucial opportunity for hotel staff to create a personalised, distinctive experience that encourages guests to return. Winning repeat guests comes down to understanding what matters to hotel guests and their market segment, offering products and services that matter to guests, and ensuring team members understand and can meet guest preferences.
Hotel staff who can handle problems with ease, provide reliable service and respond to guest needs represent an enormous competitive advantage—perhaps the greatest of all.
In some cases, it may be worth considering reducing services that guests do not value and reinvesting in developing the talent and capabilities of the team to strengthen their problem-solving skills.
