Certified Hospitality Manager (CHM) 2025 – 400 Free Practice Questions to Pass the Exam

Market segmentation in the hospitality industry refers to the process of dividing the broader market into distinct groups of consumers who share similar characteristics, needs, or behaviors. This method allows businesses to tailor their marketing strategies, services, and products to meet the specific demands of each segment, thereby enhancing customer satisfaction and driving sales.

By identifying and understanding different segments—such as leisure travelers, business travelers, families, or luxury seekers—hospitality businesses can create targeted marketing campaigns that resonate with each group's preferences. For instance, a hotel may offer family-friendly amenities to attract families, while targeting corporate travelers with business facilities and convenience features. This strategic approach helps operators effectively allocate resources and develop offerings that align with the unique expectations and desires of various customer groups.

The other options represent more generalized or ineffective strategies. Dividing the market based on pricing strategies overlooks the importance of customer characteristics that go beyond cost considerations. Combining all customers into a single target market fails to recognize the diversity of consumer needs and preferences, leading to a one-size-fits-all approach that may alienate certain groups. Offering the same services to all customers neglects personalization, which can detract from the overall guest experience and may result in missed opportunities to engage distinct market segments.