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o fully examine what drives Average Daily Rate on weekends. These groups are often looking for dis-
(ADR) for various hotel types we must first explore counted hotel room rates in exchange for filling up a large
the various segments of hotel demand and what block of rooms at a hotel or at a few hotels proximate to a
factors are at play in each segment. This will help convention center or conference space.
Tto answer the question of how smaller, independent However, some smaller, higher-end groups are simply
hotels are able to achieve ADRs significantly above their looking for the best space for their meeting or event without
competitive set. Hotel demand is typically broken into requiring discounted room rates. Often, the executive staff
three categories: Corporate Individual, Group, and Leisure. of a convention or meeting will stay at a higher-rated hotel,
Looking at these three demand segments and what drives as well as speakers and exhibitors, as a perk or for privacy.
them, one can then dive into the differences between large,
major branded hotels and small, experiential independent Leisure
hotels and the segment of demand each is targeting. Demand for hotels in the leisure segment is primarily
weekend travelers. Additionally, some leisure demand can
occur on weekdays in markets where there is a leisure
DEMAND SEGMENTS destination that travelers seek out for an extended vacation,

such as a beach resort or amusement park. The leisure
Corporate Individual segment is divided between price-sensitive families looking
Demand in the corporate individual segment general- for the best deal on a hotel to reduce their spending while
ly consists of weekday business travelers. This demand traveling and those that are seeking out adventure and have
can include some discounted hotel rates for companies a larger disposable income. The latter will typically priori-
that provide a large number of hotel room nights in a tize travel as part of their lifestyle and dedicate a significant
particular market area or to a specific hotel. However, portion of their income to traveling and finding unique
this segment is also made up of business travelers that experiences and destinations along the way.
are reimbursed by their company or by a client that
is willing to pay higher rates, especially for a quality
hotel that is conveniently located near their business
travel purpose and/or that offers the amenities needed to “Houston hotels with the highest
make their work easier. Additionally, corporate travel by Average Daily Rates (ADR) are
executives is often high priced. They seek the top luxury
hotel or an experiential and exclusive hotel for both the La Colombe d’Or Hotel,
privacy and prestige. The Post Oak Hotel, The Lancaster,
and Hotel ZaZa. All of these are
Group
Group travelers are those attending conventions, independent hotels and although
conferences, and other business meetings as well as social some are larger than one hundred
groups and those traveling for events, weddings, sports, rooms, they are still able to capitalize
etc. Business groups and conventions tend to occur during
the week, with social events such as weddings primarily on their unique product offering.”

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