Segmenting hotel customers based on rate fences through conjoint and cluster analysis

The purpose of this study is to segment hotel customers based on room rates and rate fences. Four distinct customer segments were identified by combining conjoint and cluster analysis methods: refund seekers, 1-week advance booking lovers, price-sensitive consumers, and non-fenced consumers. The results of this study supported the effectiveness of the combined use of conjoint and cluster analysis in market segmentation. Findings could help hotel professionals understand the preferences and expectations of different customer segments, and design different hotel rate restrictions that cater for the needs of different types of customers.