Value-conscious travelers have become a major segment in the hospitality sector.
Budget travelers, who are always looking for the best value on their travel dollars, represent a growing and resilient segment of the travel market in any economic climate. These smart consumers come in all income levels and demographics, and make deliberate decisions about how to spend their hard-earned money.
This guest segment represents a huge opportunity for hoteliers to manage revenue. Understanding how you can attract, retain, and serve budget travelers will transform your pricing strategies and create loyalty that is independent of economic cycles. Independent hotels who successfully target this market are able to maintain constant occupancy all year round, increasing overall profitability.
What are the characteristics of a budget traveler
We need to dispel this common misconception: the budget traveler of today doesn’t necessarily travel on a tight budget because they are forced to. Many budget travelers choose to divide their travel costs to maximize their guest experience.
Budget travelers are found in all age groups. It includes backpackers and solo travelers, but it also includes middle-income professionals and families. Even affluent people who prefer to manage their travel expenses can be included. Budget travel is no longer just a necessity for hotel guests. It has become a lifestyle choice.
The approach of these travelers is what makes them stand out: They are research-driven and technology-savvy. And they are remarkably good at finding the best deal. These travelers use technology such as travel apps and hotel websites to compare different options. They often book flights on the basis of price, rather than convenience. In order to make a decision, they often conduct extensive comparisons across different booking platforms.
The most important thing is that they are a significant and growing segment of the market. Gen Z travelers will choose lower-rated accommodations (3 stars or less) to stretch budgets. Value for money is the top factor that 47% of travelers use to select destinations. according to research from TravelPerk. Those on fixed incomes, such as baby boomers, are adopting strategies similar to this one in order for their retirement savings to be used more often for vacations.
Travelers with limited budgets should consider the following (in addition to pricing)
Hoteliers are aware that while competitive rates for hotels are important, they also know that budget travelers will not be attracted by the lowest prices. Understanding other factors that affect their travel decisions can help you position yourself effectively, without resorting margin-shrinking discount that hurts both profitability and reputation.
Peak travel season and demand
Budget travelers are known for their flexibility when it comes to travel plans. Budget travelers are not bound by rigid schedules or school holidays. They actively look for opportunities to travel off-peak. To avoid excessive spending, budget-conscious travelers are often willing and eager to travel in shoulder seasons.
This is a great opportunity for revenue management teams to maintain a healthy occupancy year-round and smooth demand curves. Travelers who are looking for value often respond well to properties that create targeted shoulder-season marketing campaigns that highlight authentic experiences without crowds. These marketing campaigns can transform slow months into profitable ones with steady occupancy rates for independent hotels.
The proximity of attractions and public transportation
Budget travelers make decisions based on location, but they have different priorities than luxury guests. While luxury travelers may prioritize scenic views or prestigious areas, budget travelers focus on practical accessibility in order to minimize their travel costs.
In the hospitality industry, properties near transportation hubs are particularly attractive. Even the best-planned travel budget can be quickly depleted by transportation expenses. For hotels in less desirable locations, shuttle services, bike rentals or partnerships with Uber and other rideshare companies can help overcome this disadvantage.
Amenities that lower overall trip expenses
The most budget-conscious travelers consider the total cost of their trip when evaluating accommodation. Amenities That reduces other travel costs becomes a significant decision factor and can justify an increase in the room rate.
In-room microwaves, coffee makers, kettles and refrigerators allow guests to prepare and drink their own food and beverages. It can save up to $30-50 per day on food, which is great for extended business trips or families. Budget travelers love the ability to prepare breakfasts from leftover street food or store them.
Self-service facilities allow for lighter packing and help guests avoid baggage charges on flights. They can also extend their trips. For budget road trippers, free parking means no daily fees of $20-30.
What do budget travelers look for when booking accommodation?
Budget travelers today have more options for accommodation than ever. Understanding how budget travelers make decisions helps hoteliers compete in a diverse market.
Budget-conscious travellers carefully consider all lodging options, including hotels alternative lodging solutions. In addition to the nightly price, they also look at factors such as amenities included, location convenience and guest experience. Hotel technology that streamlines the booking process – clearly displaying availability and rates – can make a significant difference in capturing these tech-savvy travelers.
According to Lighthouse dataIn 2024, the number of alternative accommodation listings was up by 42% compared to just two years before. This increases competition among budget travelers, which challenges revenue management strategies of traditional hospitality providers.
Independent hotels compete successfully in the market by highlighting their unique advantages, including quality, professionalism, security and reliability. Budget-friendly hotels that emphasize their 24-hour service and professionalism in housekeeping, as well as their high cleanliness standards, often attract travelers who have been disappointed by other accommodations.
Booking habits and preferences provide important information about this segment. Online travel agencies (OTAs), which dominate the market, remain dominant. 43% of travelers using these platforms for booking hotelsResearch shows that direct booking is gaining in popularity. We’re noticing a growing interest in booking directly. Recent trends show that travelers are using OTAs to research, but they are increasingly booking directly through hotels for better rates and exclusive perks.
Attracting budget travelers to your Hotel
To convert a looker into a booker, you must take a strategic approach that focuses on value for money instead of just low prices. Here are some of the best tactics to capture this lucrative segment and improve profitability based on our partners’ success stories:
Discounts and other offers
When implemented thoughtfully, strategic pricing and discounts remain effective. Focus on creating offers which deliver perceived value, without compromising your rate integrity or dilution of your hotel marketing mix.
Discounts for advance purchase are in line with the planning habits of budget travelers. Bookings made at least 30 days in advance are eligible for a 15-20% discount. This rewards guests’ commitment to booking early. These early bookings are valuable. booking pace Data helps forecast demand more accurately and aids in revenue management decisions and staffing.
Budget travelers are encouraged to extend their trips by offering incentives for bookings that include 3+ nights. It increases your revenue and reduces their nightly average cost. This works particularly well during shoulder season when budget travelers can add additional nights if you offer a compelling value proposition.
Book flexible dates
Flexibility is becoming increasingly important for budget travelers. 67% of budget travelers say they are more interested in flexible travel policies than certain amenities or locations.
Flexible cancellation policies allow for revenue protection while also accommodating guest preferences. Some budget travelers will always prefer non-refundable rates, but others are willing to pay a little more to be able to change their travel plans at any time without incurring penalties. In today’s unpredictable travel environment, travel insurance may not cover every contingency.
Offer options such as early check-ins and late checkouts for budget travelers whose flight schedules are awkward. Budget travelers book flights with less convenient schedules in order to save on costs. They may arrive early in the morning or depart late at night.
Free breakfast and other offers
Complementary amenities are a great way to save money for travelers on a budget. Breakfast is consistently rated as the best hotel service. In addition to cost savings, breakfast is convenient and saves time. Budget travelers will be able to start the day without any additional expense or planning. Budget travelers will appreciate the fact that this service is in line with current standards. travel and hospitality trends.
Some of the other high-value travel offers that are particularly appealing to budget travelers include
-
Enjoy free high-speed internet throughout the property
-
Shuttles to and from the airport/train stations are complimentary
-
Toiletries essentials that reduce packing size
-
Enjoy coffee and tea in your room
-
Fitness centers and swimming pools
-
Refilling water bottles or access to filtered water
-
Early arrivals and late departures can benefit from luggage storage
These relatively cheap additions can create a good first impression, and often lead to positive reviews. Reviews can be a key factor in future bookings for budget-conscious travelers who are looking to upgrade their travel experience at no additional cost. The amenities listed above will enhance the guest’s experience at independent hotels and help them stand out from their competitors.
Adam Swart
Adam is the Vice President of Content Operations for Lighthouse. He leads content strategy and production at Lighthouse. Adam is on Facebook, Twitter and LinkedIn. LinkedIn.
Lighthouse
Lighthouse (formerly OTA Insight) is the leading commercial platform for the travel & hospitality industry. We convert complexity into confidence through actionable insights, business analytics, and price tools that maximize revenue. We continuously innovate to offer the best platform that allows hospitality professionals to measure performance better, price more effectively and understand the markets in new ways.
Lighthouse is a solution trusted by 65,000 hotels across 185 countries. It’s the only one that provides hotel and short term rental data in real time on a single platform. We aim to provide the best experience possible with unparalleled customer service. We view our clients as partners, and their success is also our success.
This article was originally published on Lighthouse.
