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11th Edition Market Segmentation
The primary source of revenue for a lodging property generally arises from the rental of rooms and suites to guests. Rooms Revenue is divided into four parts: Transient Rooms Revenue, Group Rooms Revenue, Contract Rooms Revenue, and Other Rooms Revenue.
Transient Rooms Revenue
Transient Rooms Revenue commonly includes revenue derived from rental of rooms and suites by individuals or groups occupying fewer than 10 rooms per night. It also includes rooms leased to guests who have established permanent residence, with or without a contract. Transient stays typically include the following categories:
- Retail: A market positioned, seasonally priced room rate for transient business. It is a non-discounted, non-qualified rate that is always available when the hotel has rooms to sell.
- Discount: A rate open to the general public (non-qualified) under which the guest pays less than the Retail rate. Examples include advance purchase, loyalty redemptions or offers, packages, promotions, and online travel agency (OTA) opaque.
- Negotiated: A rate negotiated with special (typically corporate) accounts. Identification with a particular company or organization is required to obtain this rate.
- Qualified: A rate that requires the customer to be associated with a particular organization or to have a specific affiliation in order to book Identification is required upon check-in. Examples include senior citizen, AAA, government, and employee rate.
- Wholesale: A discounted room rate packaged with outside travel and/or car rental prior to being sold to the guest. The rate is not visible to the guest.
Group Rooms Revenue
Group Rooms Revenue includes revenue derived from renting blocks of rooms or suites to a group. A group is typically defined as 10 or more rooms per night sold pursuant to a contract. Group Rooms Revenue is recorded net of discounts to wholesalers for selling large blocks of rooms. Rebates or subsidies granted directly to a group should be recorded as contra revenue. To facilitate effective sales and marketing efforts, Group Rooms Revenue is generally segregated by market segment. Market segments typically include the following categories:
- Corporate: A negotiated rate for a block of rooms associated with a company related to industries such as, but not limited to, manufacturing, retail, healthcare, insurance, financial, law firms, professional sports organizations, entertainment companies, and transportation corporations.
- Association/Convention: A negotiated rate for a block of rooms associated with a trade, professional, or philanthropic association.
- Government: A negotiated rate for a block of rooms associated with qualifying government agencies including, but not limited to, active military, national security, and health and human services.
- Tour/Wholesalers: A negotiated rate for a block of rooms associated with tour operators/wholesalers who package together travel components and sell them as escorted tour group, escorted tour series, or inbound ad hoc group.
- SMERF (Social, Military, Educational, Religious, Fraternal): A negotiated rate for a block of rooms associated with organizations that fall into the categories of social (a celebratory or personal event), military (veterans, support, and social groups), education (private or public organizations founded and united for the specific purpose to educate), religious (faith-specific organizations), and fraternal (honor societies, fraternities, sororities, unions, and unique forms of organizations that limit membership to specific fields of study, expertise, or employment).
Contract Rooms Revenue
Contract Rooms Revenue includes revenue derived from a contract with another entity for a consistent block of rooms for an extended period over 30 days. Contract Rooms Revenue is recorded net of discounts. Examples include domiciled airline crews, ongoing corporate training seminars, and incentive-based benefit programs.
Other Rooms Revenue
This includes no-shows, day use, early departure fees, late check-out fees, rollaway beds, cribs, surcharges, and service charges.