The hospitality industry is facing unprecedented challenges: customer loyalty is fading, acquisition is more costly than ever, and customer data is subject to strict regulation. Meanwhile, Airbnb has surged in popularity, transforming the landscape. Fortunately, the industry isn’t out of options: niche markets present an untapped opportunity. In fact, they may define the future of hospitality.
A niche market is a smaller segment with needs that differ from those of the larger market. The payoff of a niche strategy includes reduced competition and resource conservation. But, perhaps most importantly, it allows hotels to narrow their focus, glean expertise, and serve one group exceptionally well. No one knew this better than Herb Kelleher, founder of Southwest Airlines. Southwest embraced its identity as the economy airline, serving peanuts instead of meals and eschewing first class service. Southwest targeted a niche market who wanted no frills, efficient, affordable travel, in a time when the luxury experience dominated. They are now the world’s largest low-cost carrier.
These lessons can be translated to the hospitality industry—in fact, some players have already shifted their focus to niche markets. The following are three strategies the hotel industry should pursue to hook the right niche for their business.
Adopt an Identity
Lifestyle brands like Nike offer more than a product or service: they tell a story that aligns with their customers’ identity. The hospitality industry can capitalize on this trend as well. Hotels can craft an identity that resonates with a specific community, such as foodies, art-lovers, or musicians (and those who wish they were). These hotels have taken identity marketing to its zenith.
This hotel hooks customers by offering the chance to “Sleep at a Museum.” They curate modern art exhibitions and at each of their hotels and offer clientele the chance to “consume global culture and connect with local communities.” For art lovers, 21C is the perfect escape.
This Beverly Hills hotel is designed to attract filmmakers and film aficionados. Its lobby showcases a chandelier made of film lights and couches decked out with count-down pillows. It’s a haven for movie lovers—even offering movie-themed cocktails at its restaurant, the Double Take.
W Hotels partnered music director DJ White Shadow to design their “Sound Suites,” which are professional recording studios for musicians on the road. The W brand is sending a message that it knows music and caters to those who love it.
Tap into Fandoms
Targeting niche fandoms entails more than adopting a gimmick. For some travelers, a transformative and immersive hotel experience is the adventure of a lifetime. Some hotels have made a names designing magical experiences for their guests—chief among them, Disneyland Resorts. This strategy works best for hotels that are near an event, museum, or theme park.
Georgian House Hotel “Wizard Chambers”
This hotel, located near the Warner Brothers UK studio, offers a complete Harry Potter experience. Its rooms are designed to look like Harry Potter dormitories, equipped with wooden owls and four-poster beds. They even offer complimentary DVD rentals for those who wish to relive the magic. In the morning, they serve a “Wizard Breakfast” themed from the films.
Nickelodeon Resort “Pineapple” Suite
The Nickelodeon Resort invites guests to “rekindle their sense of play” with their Spongebob-themed Pineapple suite. This special room is designed to mirror the house of Spongebob Squarepants—complete with a life-size statue of Gary, the snail. This hotel offers a memorable experience for the entire family.
Star Wars Resort at Disney’s Hollywood Studios
This addition, which is now under development, will provide an immersive Star Wars experience for fans. Visiting families will board a starship, with every cabin offering a view of space. Guests will even be invited to dress in Star Wars–inspired attire for the duration of their stay.
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Highlight Differentiators
A niche market strategy doesn’t have to involve contemporary art or animatronic characters. Often, simple features, policies, or services can make a world of difference to the right niche. A hotel may consider the clientele they already attract, then highlight or expand the features that appeal to them. For example, if a hotel sees a lot of solo female travelers, they may offer free airport transportation at night. These hospitality innovators use what makes them different.
Airbnb recently purchased Accomable, an accessible travel startup. Through this partnership, they now offer detailed filters to help elderly and disabled travelers select the right space. Features such as ground floor bedrooms, shower rails, and elevators can make a major difference for guests.
Kimpton Hotels are boutique, luxury, and dog-friendly; making it a top choice for pet-lovers. The hotel brand even promoted this in a partnership with Nationwide Pet Insurance: they are offered a free stay as a part of Nationwide’s “Road Trip with Rover” sweepstakes.
The Ashbury targets solo travelers by designing activities and spaces that foster community. They have recreation areas replete with board games and ping pong tables. The hotel encourages mingling at meals and offers communal activities that help bring solo travelers together, such as yoga classes and film nights.
Own What Makes You Different
Niche markets are the future of hospitality. Niches like Star Wars, culture-junkies, and pet-lovers are all massive untapped opportunities. When hotels shift their focus and become experts at serving these select groups, they distinguish themselves in a crowded market. Hotels may tap into these niches by adopting an identity that attracts a certain clientele or by creating an immersive fan experience. Even a strategy as simple as hyping pet-friendly policies can become a differentiator and create a loyal customer base.
