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Unlock This CourseBefore a tourism business launches a new product, changes its prices, or runs a big advertising campaign, it needs to know who its customers are and what they actually want. That's where market research comes in. It's the process of gathering, recording and analysing information about customers, competitors and the wider market.
Without research, a business is basically guessing and in a competitive industry like travel and tourism, guessing can be very expensive.
Key Definitions:
This is research a business carries out itself. Examples include:
✅ Up-to-date and specific to the business's needs.
❌ Can be expensive and time-consuming.
This uses data that already exists. Examples include:
✅ Quick and cheap to access.
❌ May be outdated or not specific enough.
VisitBritain, the UK's national tourism agency, publishes detailed annual reports on inbound tourism how many visitors came, where they came from, how much they spent and what they did. A small hotel in the Lake District could use this secondary research for free to understand trends in overseas visitors, saving thousands of pounds on conducting their own research.
Collecting data is only the first step. A business then needs to analyse it look for patterns, trends and useful insights. This is called market analysis.
Tourism businesses use market analysis to answer key questions about their customers and the wider environment. The goal is to turn raw data into useful decisions.
Age, income, nationality, travel habits. For example, a spa hotel might find 70% of its guests are women aged 30–55 useful for targeting future promotions.
Identifying peak and off-peak seasons. A theme park in the UK might see 60% of annual visitors arrive in July and August so they may offer discounts in October to boost quieter months.
Average spend per visitor helps businesses set prices and plan revenue. VisitBritain data shows US visitors spend significantly more per trip than visitors from many other countries.
One of the most common tools used to analyse a tourism business or destination is a SWOT analysis. It looks at internal and external factors to help make strategic decisions.
Center Parcs regularly conducts customer surveys and analyses booking data. Their research revealed a growing demand from families wanting short breaks (2–4 nights) rather than traditional week-long holidays. They also identified that customers valued all-weather activities highly. As a result, Center Parcs invested in expanding their indoor facilities and introduced flexible short-break packages. This is a clear example of market research directly shaping business decisions. Their analysis also showed that families with children under 12 were their core segment which influenced everything from pricing to the activities they promoted.
Not all tourists are the same. A backpacker travelling around Southeast Asia has very different needs from a retired couple on a luxury cruise. Market segmentation is the process of dividing the total market into smaller groups of people who share similar characteristics or needs.
By segmenting the market, tourism businesses can target their products, prices and promotions more precisely which saves money and increases the chance of success.
Key Definition:
There are four main bases for segmentation used in travel and tourism. Each one gives businesses a different lens through which to understand their customers.
Dividing the market by personal characteristics:
💡 Example: Saga Holidays specifically targets the over-50s market with tailored cruise and holiday packages.
Dividing the market by where customers come from:
💡 Example: A resort in Bali might create separate marketing campaigns for Australian visitors (short-haul, frequent) and European visitors (long-haul, once-a-year trips) because their needs and booking habits are very different.
Dividing the market by lifestyle, values and personality:
💡 Example: Intrepid Travel targets environmentally conscious, adventure-minded travellers who want authentic local experiences not mass tourism.
Dividing the market by how customers behave:
💡 Example: Airlines use behavioural data to offer loyalty programmes (like British Airways Executive Club) to reward frequent flyers and encourage repeat business.
Club Med originally targeted young, carefree singles in the 1950s–70s with its all-inclusive beach resorts. But as their original customers aged and had families, Club Med used market research to identify a shift. They repositioned themselves to target affluent families and upmarket couples, investing in premium facilities, kids' clubs and fine dining. This is a brilliant example of how segmentation analysis led to a complete brand repositioning and it saved the company from decline. Today, Club Med operates in over 40 countries and is considered a premium brand.
Once a business has segmented the market, it must decide which segment(s) to target and how to position itself in the minds of those customers.
One product for everyone. Rare in modern tourism. Example: a basic budget airline offering the same no-frills service to all passengers.
Different products for different segments. Example: a hotel chain offering budget rooms, standard rooms and luxury suites each marketed differently.
Focusing on one specific segment. Example: G Adventures targeting solo travellers aged 20–35 who want small-group adventure tours.
Positioning is about how a business wants its customers to perceive it compared to competitors. It's the image a brand creates in the customer's mind. A positioning map (also called a perceptual map) is a useful tool it plots brands on two axes (e.g. price vs. quality) to show where they sit relative to each other.
For example, on a price vs. quality map for UK holiday companies:
Positioning helps a business identify gaps in the market spaces where no competitor currently operates, which could be a new business opportunity.
Examiners love asking you to recommend a type of research or segmentation strategy and justify your answer. Here's what they want to see:
Example question: "Explain one method of primary research a new visitor attraction could use."
Strong answer: "The attraction could use a questionnaire given to visitors as they leave. This would collect first-hand data about visitor satisfaction and what improvements they'd like to see. However, it can be time-consuming to analyse and some visitors may rush their answers, reducing reliability."