MEMPHIS, Tennessee — A shift in consumer behaviors may lead some hoteliers to believe there are blurred lines within customer segmentation and that categories no longer serve a clear purpose. A group of hospitality experts, however, say that's not the case.

The traditional breakdown is business and leisure, which is further broken down into transient, corporate negotiated, group, wholesale and other.

At a roundtable hosted by Hotel News Now in partnership with Pinkowski & Company, U.S. hotel industry executives shared their perspectives.

Hoteliers should still be able to identify the original impetus of what brought the guest to a property even if it feels blurred at times, said Kristie Dickinson, managing director and executive vice president of hotel asset management and owner advisory services company CHMWarnick.

"Whether or not that's the business [traveler] that was able to tack on some additional days for fun or a group attendee that happened to be in a great location that decided to bring family along, I think you can trace back why they were there first. We were able to see some extended length of stay on some of those bleisure trips over COVID," she said. "Some of that is hanging on. But the consensus so far is that segmentation is not going away. I believe wholeheartedly in that; and from an ownership and asset-management standpoint, we are looking at segmentation not only to identify trends but we are also looking at it because that's really your key to optimizing profitability at a hotel."

Not every guest spends the same either. Group travelers and those with corporate cards might have higher ancillary spend than a family staying for leisure.

During the pandemic years, many hotels took any business to gain occupancy, but Dickinson said her team can now more effectively yield "with an eye toward optimization" and channel management.

"There are huge implications on profitability by not effectively strategizing around your segmentation and your mix," she added.

Michelle Geiger, area general manager at the Hyatt Centric Memphis and Hyatt Caption Memphis, sees a mix of leisure, business and group guests between the two hotel brands.

To be able to measure success at the properties, there have to be categories that the guests fall under, she said.

Blurred segments might come into play more when comparing a town such as Memphis versus a big destination market, Geiger said.

"Right now, it doesn't feel too far off at this moment. But running two separate hotels, you're looking at different guests very often," she said. "I don't know [that] it's blurring as much in our market currently."

Paul Novak, executive director of lodging at real estate private equity firm Whitman Peterson, which invests in outdoor lodging brand AutoCamp, said he doesn't foresee segmentation ever going away.

"It might be blurred a little bit between business transient and pleasure transient only because of the fact that people are working [remotely] at hotels and taking advantage of the leisure. The question then becomes, 'is that a business traveler or a leisure traveler?'" he said. "But there's clear definition of group business, of the pure business transient and of pleasure transient."

Novak added that each customer in a segment has different requirements for the same hotels.

"A business transient guest is not necessarily looking for or expecting the same thing that the group traveler is," he said. "I don't see how it ever goes away."

Micajah Sturdivant, CEO of MMI Hospitality Group, said segmentation helps to guide sales team strategies.

"MMI used to have 15 segments [in the portfolio] ... and there has been consolidation. We were over the top. Yes, there is the business vs. leisure but beyond that, there is a certain level of understanding and accountability that is important. You've still got to have some buckets; there's still too many room nights being sold in a year to lump it into one [segment]."

Novak said the biggest problem facing the industry is that the younger generations are less willing to return to offices to work. This is resulting in a gap in business transient and group demand.

"I don't know where you make it up, other than hopefully at some point we get more international travel," he said. "The reality is, when business people don't come to the office, there's no reason for somebody to come to that office and meet with them."

Lee Hunter, chief operating officer at Hunter Hotel Advisors, said UPS, IBM and Coca-Cola in Atlanta are now requiring employees to return to office five days a week or to be in their clients' offices.

"When you get UPS, Coke and IBM saying you've got to come back, who's going to win that game? It's a game of chicken," he said.

In terms of designing hotels to meet the needs of today's travelers, Novak doesn't feel things are changing because of a shift in demand segments but due to travelers becoming more casual.

For example, luxury hotels have become more approachable, said Roger Hill, chairman and CEO of The Gettys Group.

Chuck Pinkowski, founder of Pinkowski & Company, said the choices and preferences of travelers has changed in the 50 years he has been in the hospitality industry.

However, travelers staying at all price points generally want the same things, Hill said.

"As we say, people like to be alone but not lonely. They want to work in environments where you can have some privacy and potentially be on a call and be in a chair that gives you sound insulation but [enables you to be] watching all the action during a multi-hour Teams call," he said. "You'll see that at the luxury hotel or at a premium select-service hotel."

It's not always easy for a full-service hotel to execute this due to more fixed costs, Hill said.

"People want those environments. [Full-service hotels] tried over the years to make public spaces a little more dynamic but it's still not what people are looking for today," he added. "You want to be able to have a great food experience, a great working experience, great cocktails, be able to immerse yourself in technology and have outlets as frequently around as possible but not have it an afterthought where there's duct tape holding down those power outlets. It's expensive."

From a premium select-service perspective, there are a lot of dynamics that offer a great value for customers that are super profitable for owners, he added.

Mike Sullivan, architect and principal of LRK architects, said his company has hotel clients at all price points and each chain scale with the same wish lists.

A living room-style lobby and a rooftop bar are spaces that hotel guests at all price points want, he said.

"It's just how much can you turn the volume up on one versus the other. It's the exact same wish list," he said.

Read more news on Hotel News Now.