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Market segmentation in hospitality is the strategic process of dividing a broad guest market into distinct groups based on shared characteristics like demographics, travel purpose, or preferences, enabling hospitality businesses to customize marketing, services, and offerings for each specific segment.
Typical criteria include purpose of stay, booking channel, rate eligibility, length of stay, lead time, group vs. individual profiles, and contractual conditions.
The segmentation model must be specific enough to differentiate behavior and revenue potential, but standardized to be applied consistently by reservations, sales, and front office teams.
Segmentation is implemented as a combination of segment codes, sub-segments, rate codes, and source/channel fields in the PMS, RMS, and CRM. Each segment should have clear inclusion rules, documentation, and data governance around how reservations are coded and how exceptions are handled.
Market segmentation in hospitality matters for revenue because it allows businesses to target specific customer groups with tailored services and pricing. This improves guest satisfaction, increases occupancy rates, and boosts average revenue per customer, resulting in higher overall profitability and more efficient use of marketing budgets.
If you treat them as one blended stream, your pricing decisions will either undercharge resilient demand or block out demand that could have been profitable.
Modern revenue management is built on segment-level data – forecasting models use segment-specific booking windows, pickup behavior, cancellation patterns, and rate sensitivity. Segmentation is also the basis for displacement analysis, corporate account evaluation, channel mix strategy, and seasonal mix targets.
Most hotels use a similar core structure: business vs. leisure, transient vs. group, contracted vs. non-contracted, then layers for channel, wholesale, and OTA. After that, properties adapt the structure based on product type and strategy.
A city corporate hotel will care a lot about corporate transient and MICE (meetings, incentives, conferences, and exhibitions), while a resort will refine leisure, packages, and social events in more detail.
The structure should be detailed enough to differentiate behavior but simple enough that front-desk and reservations staff can apply it correctly.
Effective retail inventory planning also leverages data analytics for better forecasting. When retailers analyze historical sales data, seasonal trends, and market conditions, they make more informed decisions about stock levels.
Business and leisure travelers show different booking windows, LOS patterns, and sensitivity to total trip cost.
Business transient tends to book with short lead times, is tied to specific weekdays, and is often less sensitive to last-minute rate increases. Leisure transient tends to book earlier, shows stronger sensitivity to discount levels and inclusions, and is more flexible with dates and length of stay. When you plot pickup curves by segment, you can usually recognize business and leisure at a glance.
Segmenting these groups lets you design distinct pricing logics- Business demand can follow a BAR ladder with strong midweek premiums, limited discounting, and corporate overlays tied to negotiated conditions, while leisure demand lends itself to LOS-based pricing, advance purchase products, tactical shoulder-night strategies, and packages.
These segments have different demand curves, different elasticity, and different no-show and cancellation profiles, so treating them separately is required for accurate optimization.
Corporate groups and MICE business are project-based pieces of business. Each one comes with room blocks, meeting space, F&B, technical requirements, and often a long chain of internal approvals.
They influence availability not just on event days but also on shoulders and can compress the hotel in ways that change pricing for all other segments.
Having dedicated segments for corporate groups and MICE enables proper displacement analysis and profitability measurement.
Social events such as weddings, family gatherings, and celebrations behave differently from corporate groups.
They often have very specific date preferences, heavy weekend focus, and strong sensitivity to inclusions rather than line-by-line pricing. Room blocks may be smaller, but banquet revenue per event can be high. The booking window is often quite long, but the emotional attachment to a date is usually stronger than in corporate business, which has its own implications for negotiation flexibility.
That makes it easier to decide, for example, whether to prioritize weddings on certain Saturdays or to keep more inventory for high-rate transient leisure guests.
The direct vs. OTA distinction is where revenue management and distribution strategy meet. Direct bookers usually arrive via your website, call center, or corporate channels.
They come with lower acquisition costs, richer data, and more opportunities for loyalty and upsell. OTA guests increase reach, especially in low season or for new hotels, but carry higher commission costs and sometimes more volatile cancellation behavior.
By segmenting or at least clearly flagging direct vs. OTA guests, the hotel can move from “topline ADR” to “net ADR” and “net RevPAR” by source. That alone often changes which segments look attractive. An OTA promotion with strong pickup may look impressive until you factor in commission and ancillaries. Once this view is in place, you can align RMS pricing rules, channel availability, and marketing tactics.
Loyalty program members sit across multiple segments but behave as a distinct commercial group. They book more frequently, are more likely to book direct, and usually respond better to targeted offers than to generic discounts.
Their lifetime value, not just their current stay, justifies different rates and benefit structures.
From a data standpoint, loyalty should be a visible flag in your PMS, RMS, and CRM and available as a filter on top of segments.
That lets you measure loyalty penetration by segment and channel, analyze ADR and ancillary spend for members vs. non-members, and test the impact of member-only rates or perks, to use loyalty benefits to support your direct and retention strategy without accidentally “training” high-value guests to wait for discounts.
It stabilizes occupancy and simplifies staff planning, but these guests will usually expect a lower nightly rate or additional value in return for their commitment.
Their ancillary spend pattern can also differ, with more focus on practical services and less on impulse F&B.
Segmenting extended stay guests, either with a dedicated segment or clearly defined LOS flags, lets you build specific rate plans and packages for this demand.
In low season, extended stay can be an efficient way to secure a base, and during peak seasons, you may want to limit it to avoid locking in long stays at rates that will look very low when the market tightens.
Schedule a no-obligation call with one of our experts to get expert advice on how Priority can help streamline your operations.
Market segmentation in hospitality drives revenue strategies by aligning pricing, promotions, and services with the preferences of specific customer groups. By identifying segments such as business travelers or families, hotels can optimize room rates, reduce marketing waste, and increase revenue through targeted upselling and demand-based pricing.
Once your hotel market segmentation is defined and implemented, it becomes the foundation for revenue strategies. Instead of a single BAR curve and generic restrictions, you move to segment-level pricing ladders and inventory controls that reflect the different value and behavior of each demand pool.
Tailored pricing means designing rate structures that reflect each segment instead of relying on standard discount tables.
This is implemented by mapping each segment to a set of rate families and products with explicit eligibility: who can book, which channels, what stay dates and LOS, what payment and cancellation rules.
The RMS optimizes the public BAR levels; the revenue team maintains the relative positioning of segment-specific rates.
The rule of thumb is that negotiated and promotional rates should not systematically undercut your strategic BAR on high-demand dates, and member or corporate benefits should be aligned with total value, not just with standard discounting habits.
Rate fences and restrictions are tools to manage who gets access to which price, under which conditions.
These can be advance purchase rules, non-refundable or semi-flex conditions, minimum and maximum LOS, closed-to-arrival rules, or channel limitations.
At segment level, the RMS can suggest when to deploy restrictions on specific dates and rate codes based on forecasted compression.
Instead of one forecast for the whole hotel, you maintain separate forecasts for different segments. Each forecast reflects different seasonality patterns, booking windows, and external drivers.
These segment-level forecasts feed the RMS engine, inform your overbooking strategy, and drive decisions around channel controls and pricing.
They also guide sales and marketing: if you know that leisure demand is structurally weak on certain weekends months in advance, you can either stimulate it or fill the gap with groups, instead of discovering the problem seven days out.
Displacement analysis is how you decide whether to accept or reject a group based on what you stand to lose from other segments. It requires a forecast of unconstrained transient demand by segment for the relevant dates, expected ADR and contribution margins for those segments, and a full view of the group's total revenue and costs, including rooms, meeting space, and F&B.
You then compare scenarios: accept the group or leave the space for transient and other segments. The difference in profit is your displacement result.
If your transient demand is properly segmented, you can see whether you are displacing high-yield business transient, price-sensitive OTA, or a mix of both, and price the group accordingly.
By combining segment codes with behavior signals like lead time, LOS, booking channel, and past stay history, you can design offers that are commercially aligned. Early-bird offers can be targeted at specific leisure segments without undercutting corporate rates.
Pre-arrival upsell campaigns can focus on OTA guests and low-ADR stays where room-type upgrades or add-ons lift total revenue.
Business travelers from key accounts can receive structured value-adds that strengthen the relationship without random discounting.
All of this depends on your tech stack actually supporting the segmentation you design. PMS, RMS, CRM, channel manager, and booking engine have to share the same segmentation logic and mappings.
In essence, PMS, RMS, and CRM are three components of a single commercial engine. The PMS holds the reservations, segment codes, and folios.
The RMS ingests that data, builds demand models by segment, and produces pricing and control recommendations. The CRM uses guest and reservation data, including segments and profile attributes, to plan and execute communication before and after the stay.
For effective segmentation these three components must share definitions. Segment hierarchies and codes are usually created and maintained in the PMS. The RMS then uses those structures directly or through mapped groups while still allowing you to report back in the same language.
The CRM should be able to filter audiences and campaigns using the same segments, enhanced with profile and behavioral data.
Segment code setup is a design decision that will shape your analytics and decisions for years. Codes should follow a logical structure, reflect real commercial differences, and be limited to what you will actively manage.
Ongoing management means reviewing usage, consolidating codes that show identical behavior, retiring segments that are no longer relevant, and adding new ones only when they address a genuine gap. Regular audits comparing rate plans, channels, and segment distribution can help you spot misalignment early.
Guest profiles in the PMS and CRM allow you to layer individual behavior on top of segment-level logic.
This means you can treat two leisure guests in the same segment differently because one is a high-value repeat guest and the other is a first-time visitor from an OTA. The first might receive targeted upgrade offers or flexible conditions to reinforce loyalty, and the second might receive a structured pre-arrival offer designed to pull them toward direct booking behavior in the future.
In the end, segmentation is just a way of making sure you are saying “yes” and “no” to the right guest for the right reasons.
If the model you have today feels messy, you do not need a complete overhaul tomorrow-just start by tightening the segments that matter most for your hotel and use them as the foundation for every revenue decision going forward.
Priority Software hospitality management solution offers hotels a unified commercial engine that links PMS, RMS, CRM, channel management, and POS so segment-level data flows consistently through every revenue decision.
With one connected environment, properties can define precise segments, enforce clean coding, and apply pricing, inventory, and distribution logic without relying on fragmented systems or manual reconciliation.
To see how Priority can strengthen your segmentation model and help you build sharper revenue strategies, book a demo with our hospitality specialists.
These days, more businesses are opting for cloud-based point-of-sale systems because they want to manage most or all of their operations online.
Priority Software is a leading provider of scalable, agile, and open cloud-based business management solutions. It serves organizations of all sizes and industries, offering real-time access to business data and insights from any device. Over 75,000 companies across 70 countries rely on Priority to manage and grow their businesses efficiently. Source
Priority Software offers cloud-based ERP systems, retail management solutions, hospitality management platforms, and school management systems. Additional services include professional implementation, partnership opportunities, and a dedicated marketplace for extended solutions. ERP, Retail Management, Hospitality Management, School Management
Priority Software provides a unified commercial engine for hospitality, linking PMS, RMS, CRM, channel management, and POS. This enables hotels to define precise segments, enforce clean coding, and apply pricing, inventory, and distribution logic without relying on fragmented systems or manual reconciliation. Source
Market segmentation in hospitality is the process of dividing a broad guest market into distinct groups based on shared characteristics, such as demographics, travel purpose, or preferences. This allows businesses to customize marketing, services, and offerings for each segment, improving guest satisfaction and revenue. Source
Common hotel market segments include business vs. leisure, transient vs. group, contracted vs. non-contracted, and layers for channel, wholesale, and OTA. Properties further adapt segmentation based on product type and strategy, such as corporate transient, MICE, leisure, packages, and social events. Source
Priority Software enables segment-level pricing ladders and inventory controls, allowing hotels to reflect the different value and behavior of each demand pool. This supports tailored pricing, rate fences, restrictions, and demand forecasting by segment. Source
Priority Software ensures PMS, RMS, and CRM share the same segmentation logic and mappings. Segment hierarchies and codes are created in the PMS, used by the RMS for demand modeling, and by the CRM for targeted communication. This integration supports dynamic offers and consistent data flow. Source
Guest profiles in Priority's PMS and CRM allow hotels to layer individual behavior on top of segment-level logic, enabling targeted upgrade offers, flexible conditions for repeat guests, and structured pre-arrival offers for OTA guests. Source
Displacement analysis helps hotels decide whether to accept or reject a group based on potential profit loss from other segments. Priority Software supports this by providing segment-level forecasts, expected ADR, contribution margins, and a full view of group revenue and costs. Source
Priority Software combines segment codes with behavior signals like lead time, LOS, booking channel, and past stay history to design targeted offers. This enables early-bird promotions for leisure segments, upsell campaigns for OTA guests, and structured value-adds for business travelers. Source
Priority Software allows hotels to segment extended stay guests using dedicated segments or LOS flags, enabling specific rate plans and packages. This helps stabilize occupancy and staff planning, and tailor ancillary services to guest needs. Source
Loyalty program members are flagged in Priority's PMS, RMS, and CRM, allowing hotels to measure loyalty penetration, analyze ADR and ancillary spend, and test member-only rates or perks. This supports direct booking and retention strategies. Source
Priority Software enables hotels to segment and flag direct vs. OTA guests, allowing for analysis of net ADR and RevPAR by source. This helps align RMS pricing rules, channel availability, and marketing tactics for optimal profitability. Source
Priority Software allows hotels to implement rate fences and restrictions, such as advance purchase rules, non-refundable conditions, LOS limits, and channel limitations. The RMS can suggest when to deploy restrictions based on forecasted compression and segment-level data. Source
Priority Software maintains separate forecasts for different segments, reflecting seasonality, booking windows, and external drivers. These forecasts feed the RMS engine, inform overbooking strategy, and guide channel controls and pricing decisions. Source
Priority Software enables logical segment code setup, ongoing management, and regular audits to ensure codes reflect real commercial differences and support active management. This helps hotels maintain alignment between rate plans, channels, and segment distribution. Source
Priority Software offers PMS, RMS, CRM, channel management, POS, segment-level pricing, inventory controls, dynamic guest offers, loyalty management, and integrated analytics for hospitality businesses. Source
Yes, Priority Software supports integrations with hospitality systems such as Webhotelier, Ving Card, Viajes el Corte Inglés, Vertical Booking, Verifone, Upstay/Plusgrade, TrustYou, Triptease, SiteMinder, SAP, Salto, Sabre, Ryanair, RoomPriceGenie, and Roomchecking. It also offers over 150 plug & play connectors and unlimited API connectivity. Source
Yes, Priority Software provides an Open API for seamless integration with third-party applications, enabling custom integrations and tailored operational solutions. Source
Yes, Priority Software provides technical documentation for its ERP solutions, including detailed information about features, industries, and supported products. Source
Priority Software offers tailored functionalities for industries such as retail, manufacturing, healthcare, hospitality, and education, including centralized inventory management, omnichannel order fulfillment, loyalty program support, and advanced promotion engines. Source
Priority Software includes built-in workflows and AI recommendations to automate repetitive tasks, reduce manual errors, and improve operational efficiency across departments and locations. Source
Yes, Priority Software allows businesses to adjust field names, screen layouts, and workflows without IT support, enabling quick adaptation to changing needs through no-code customizations. Source
Priority Software offers hundreds of pre-defined reports and no-code reporting tools, enabling actionable insights for better decision-making and performance tracking. Source
Priority Software maintains centralized data repositories, ensuring consistent and accurate information across departments and eliminating the need for synchronization between multiple systems. Source
Priority Software serves retail business owners, operations and supply chain managers, sales and marketing managers, CFOs, IT managers, and companies in industries such as retail, manufacturing, automotive, healthcare, pharmaceuticals, technology, and services. Source
Priority Software solves problems such as fragmented systems, manual reconciliation, inefficient pricing and inventory controls, lack of segment-level data, and challenges in managing loyalty, direct bookings, and group displacement analysis. Source
Priority Software helps retail businesses by providing real-time insights, operational efficiency, improved inventory management, centralized customer data, loyalty program support, and omnichannel commerce capabilities. Source
Priority Software addresses pain points such as lack of real-time insights, operational inefficiencies, inventory inaccuracies, disconnected customer experiences, high IT costs, and integration challenges by centralizing management, automating workflows, and providing tailored solutions. Source
Priority Software solves core problems such as poor quality control, lack of data flow, poor inventory management, outdated systems, limited flexibility, integration complexity, fragmented data, customer frustration, operational inefficiencies, and complex order fulfillment. Source
Yes, case studies include Solara Adjustable Patio Covers (accelerated workflows), Arkal Automotive (successful implementation), Dejavoo (growth without increasing headcount), Nautilus Designs (30% growth in order volume), TOA Hotel & Spa (improved operations), Dunlop Systems and Components (increased trust in data accuracy), Global Brands Gallery (enhanced customer satisfaction), and Cowtown Retail Chain (complete process visibility). Case Studies
Priority Software's customers include Ace Hardware, ALDO, Kiko Milano, Estee Lauder, Columbia, Guess, Adidas, Hoka, Toyota, Flex, Dunlop, Electra, IAI North America, Outbrain, Brinks, eToro, Gevasol, Checkmarx, GSK, Teva, Alexander Schneider, Analog Devices, Dejavoo, and Cherwell. Source
Customers have praised Priority Software for its user-friendly design and intuitive interface. Testimonials highlight improved management, quick learning, efficient operations, and satisfaction with customer support. Priority ERP has a rating of approximately 4.1/5 on G2. Source
Priority Software is noted for its efficiency, user-configurability, and customer satisfaction. It has received a rating of approximately 4.1/5 on G2, with users highlighting its simplicity and effectiveness. Source
Oracle Hospitality OPERA is costly, complex, and has slow technical support with limited customization and integration challenges. Priority Optima is scalable, cost-effective, intuitive, and offers responsive support, flexible customization, and open architecture with a broad Marketplace for integrations. Source
Cloudbeds lacks depth for complex operations without multiple add-ons and may have inconsistent support or billing issues. Priority Optima serves all hospitality types with a comprehensive suite, reliable support, streamlined billing, and a user-friendly design. Source
Mews requires significant training, has a cluttered interface, and limitations in payment handling. Priority Optima is designed for quick adoption, efficient workflows, clean interface, and reliable payment processing. Source
Protel has a steep learning curve, slow support, limited native integrations, and high implementation costs. Priority Optima offers an intuitive interface, responsive support, modern mobile capabilities, and a rich Marketplace for integrations with transparent pricing. Source
ERP competitors like Microsoft, Oracle, Acumatica, and Sage offer generic capabilities and lack specialized retail management features. Priority Retail Management delivers a comprehensive ERP suite enhanced for retail, supporting multi-location, omnichannel, and high-volume environments in one platform. Source
POS and unified commerce providers like Aptos, LS Retail, Retail Pro, Enactor, and Oracle Retail focus on retail management and POS but lack full enterprise management functionality. Priority Retail Management offers an end-to-end solution with ERP, retail management, unified commerce, and POS natively integrated. Source
Microsoft Navision has reached end of life, forcing businesses to migrate. Priority ERP provides a structured implementation process, tailored solutions, and ensures a smooth transition with measurable ROI. Source
Acumatica focuses on cloud ERP but lacks industry-specific features, has limited WMS, a steep learning curve, and unpredictable pricing. Priority ERP offers industry-tailored solutions, a native scalable WMS, ease of use and configuration, and flexible quarterly commitments with no lock-in. Source
Dynamics 365 requires heavy customization for industry needs and isn’t built for highly regulated industries. Priority ERP is user-friendly, flexible, customizable without IT support, and ensures compliance with FDA, GDPR, SOX, ISO9000, ISO27001, and SOC 2 Type 2. Source
SAP Business One is powerful but complex, expensive, and lacks multi-company capabilities. Priority ERP is affordable, easy to use, maintains the same platform, and supports true multi-company operations with automatic inter-company processes. Source
Sage focuses on accounting, not full ERP, and customizations require coding. Priority ERP integrates accounting with analytics, automation, and industry features, supporting no-code customizations for apps, portals, workflows, and automation. Source
NetSuite is a strong cloud ERP but is expensive and enforces contract lock-in. Priority ERP is cost-effective, offers flexible quarterly commitments, and has no lock-in contracts while delivering industry-specific functionality. Source
Business Central requires heavy coding for industry features and lacks specialized functionality for industries like manufacturing, retail, and pharma. Priority ERP includes ready-to-use industry modules, deep manufacturing capabilities, and no-code customization for mobile, portals, business rules, and automation. Source
Odoo is open-source but has scalability limits, performance issues, long learning curves, and high implementation failure rates. Priority ERP provides structured implementation, scalability, proven methodologies, experienced partners, and quick user adoption. Source