Evolution in Segmentation2

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From the course by ESSEC Business School

The Fundamentals of Revenue Management: The Cornerstone of Revenue Strategy

355 ratings

ESSEC Business School

The Fundamentals of Revenue Management: The Cornerstone of Revenue Strategy

355 ratings

Course 2 of 4 in the Specialization Hotel Management: Distribution, Revenue and Demand Management

With a fixed capacity, a highly disposable product and high fixed costs, hotels are a natural candidate for the application of revenue management. Originally developed by the airlines in the 1970s, these analytics-based techniques help predict consumer behavior at the hotel’s market level so that the hotel can sell each room each night at the optimum price. With modern-day rising acquisition costs and distribution complexities, revenue management techniques have increasingly been adopted by both small and large hotel companies, making a comprehensive understanding of segmentation, forecasting and pricing an essential requirement for today’s hospitality professionals. The purpose of this course is to provide a core understanding of the fundamentals of revenue management, which ties into the larger picture of revenue strategy. The course is structured to provide an insightful look into Revenue Management. Created in conjunction with Duetto, this course is hosted by a group of revenue management leaders in both theory and with hands-on experience at properties around the world. Upon completion of the course students should be empowered with industry best practices, which can be applied across the vast diversification the hotel industry to empower those to optimize profits. Duetto delivers powerful revenue strategy solutions to the world’s leading hotels and casinos, combining unparalleled expertise with world-class cloud-based technology. Acknowledgement: Bela Nagy, Agnes Roquefort , Jonathon Liu, Frederic Toitot, Pierrick La Masne, Markus Keller - ACCOR Simone Truscello - ACE HOTELS. Richard Valtr - MEWS SYSTEM. Jean-Luc Chrétien - FAST BOOKING. Jeannette Ho - FAIRMONT RAFFLES HOTELS & RESORTS. Chinmai Sharma - TAJ HOTEL & RESORTS. Cindy Estis Green - KALIBRI LABS. Jason Thielbar - RED LION. Christopher Cooper - ROCCO FORTE. Rom Hendler - SANDS. Rafi Rejerano - AB Hotels. Riko Van Santen - KEMPINKI HOTELS & RESORTS. Vinod Sukhija - BANYAN TREE HOTELS & RESORTS. Olivier Flement - WALT DISNEY COMPANY. Cidalia Pinto Coehlo - LOUVRE HOTELS. Trevor Stuart-Hill - REVENUE MATTERS. Vincent Cusma, Marco Benvenuti, Eric Stoessel, Gayle Ehrean, Nevin Reed - DUETTO. Claire Bertrand, Vincent Chatain, Jessica Moses, Benjamin Six (ESSEC Business School), Emilie Dupré (IMAGE-IN), Gregory Halidy (TRIPLAY)

From the lesson

Introduction to Segmentation

In this second module we will discuss segmentation 101, four things to consider while determining segmentation, as well as our best practices in regards to working with properties who need to go through a re-segmentation exercise, and presenting you with some key takeaways.

Overview of Segmentation2:49

What is Segmentation?6:33

Evolution in Segmentation17:10

Evolution in Segmentation26:35

Meet the Instructors

Peter O'Connor
Professor of information systems, Director of the MBA in Hospitality Management
Information systems
Augustin Cacot
Director of Customer Success, EMEA
DUETTO
Nathaniel Green
Senior Global Solutions Engineer
DUETTO

[MUSIC]

It's important to note that customers coming through various different channels.

OTAs and booking engines make up only a portion of the acquisition cost.

As customers pass through the distribution landscape,

as mentioned in the MOOC on hotel distribution.

The hospitality distribution landscape

has become increasingly complex over the last 15 years.

There are now many different pieces, both consumer and hotel-facing,

all plugged in together.

It starts with a point of entry for

the customer, who enters through search engine, social media, etc.

Then, the consumer moves to the OTA hotel sites, and other specialty consumer sites.

The booking then processes through a CRS, or central reservation system.

The hospitality distribution landscape can be broken apart into 12 systems and

vendor types that most properties might use on a day to day basis.

Data collection companies are generally the online advertising companies, and

they include companies such as Google, Facebook, Yahoo and Kayak.

The hotel website is a platform a perspective customer can search for

content and book directly through the hotel's booking engine.

Examples of hotel websites would be Hilton.com or Accorhotels.com.

Online Travel agencies, or OTAs, typically act as a middleman and

marketer for a large number of hotels.

OTA examples are Expedia, Priceline, and Booking.com.

Consumer websites are those that are distribution partners with a hotel or

hotel company reselling or

redirecting customers from their business to the hotel.

Examples are TripAdvisor for business, united.com, or uptake.

Retail incorporate channels are corporate or travel agents.

Example of these channels would be American Express business and

American Express tap travel agent.

Next, you have your channel management,

which acts as an interface between the hotel and its various channels.

Example of channel managers include EZYield, RateTiger, or SiteMinder.

Global distribution systems are systems that enable automated transactions between

third parties and

booking agents in order to provide travel related services to end consumers.

Examples of GDSs include Galileo, Amadeus, and Sabre.

Pproperty management systems, or PMSs, are the systems you see the front desk agents

using when you check in at the hotel.

It stores intersectional data of the customers at a hotel and

is used operationally to manage the hotel.

A central reservation system is a single or

centralized distribution system designed to connect to both the GDS and

Internet distribution from a single platform.

Example of PMSs and CRSs include micros, cenexes, trust and PAR by Springer-Miller.

Third party platforms such as meeting management companies

help connect group in meeting space guest to a hotel.

Example of these platforms include seven, come friends direct and star side.

All of these different connectivities vary depending on the type of property you

are and the type of consumers in which you primarily focus.

You could see that each of these different brown circles represents

the different consumer types and

how they make way into your different properties distribution landscape.

To minimize cost being paid to intermediaries, it is up to revenue

management to target the right customers for the right price on the right channel.

What does this complexity in the distribution landscape mean for

segmentation?

One, complications and two, power.

Complications, of course,

arise as a natural effect as it means that it's harder to manage all the channels and

costs associated with acquiring customers for different distribution channels.

More of it has been a shift in consumer behavior over the past 20 years.

Don't lose faith.

There is empowerment that comes with more accurately understanding

your target customers.

In the words of Deepak Chopra, the highest levels of performance

come to people who are creative, intuitive and reflective.

People would see a problem as an opportunity.

While the fragmentation within the intermediary space,

or middleman between consumer and hotel has impacted property performance,

hotels have more access today whenever to customers globally.

As a matter of fact, between 2007 and 2012, there was a 97%

increase in global Internet usage from 1 billion to over 2 billion people.

And that rate is only going to increase as it becomes

even easier to connect worldwide.

Since over two billion people have access to the Internet, there are now more ways

to connect the global community to your hotels than ever before.

It is vital to ensure hotel operation teams understand the type of customers

interested in their type of hotel, and to promote efficiently, and

then price to make the most profit.

Online users have shifted significantly over the past 20 years.

Other than noticeable brick nations, Brazil, Russia, India, and

China, smaller countries in Asia, Europe, and the Middle East

have all taken market share from what was once US dominated in the early 90s.

From a consumer behavior and segmentation perspective, acknowledging

the global marketplace is going to be key factor for future segmentation

from a revenue management and sales and marketing segmentation perspective.

We are leaving the traditional date of macro level segmentation

from just a channel and booking window driven perspective and

now need to think more dynamic.

Nationality, type of device, mobile versus computer,

versus tablet used to make the booking.

Generation if data is possible to get.

In our consumer profile information,

hotels can now take into consideration when figuring out segmentation.

Before jumping too far ahead into the dynamics of segmentation,

let's discuss the main types of segmentation.

Which I discuss in the next video.

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