Purpose - This paper aims to recommend a two-step approach to destination segmentation that incorporates the views both of multiple stakeholders and of tourists. Design/methodology/approach - Step one applies a case study approach incorporating semi-structured interviews with 13 destination stakeholders. Step two involves segmenting tourists to the destination based on a questionnaire survey developed from the semi-structured interviews. The study compares and contrasts the result with the current DMO approach. Findings - The two-step approach produces three segments for the destination under study using four segmentation bases and ten variables. The DMO approach also utilizes all four segmentation bases but produces six segments with five different variables. The DMO approach captures fewer tourists visiting the destination. Research limitations/implications - This study considers one regional Australian destination. Future research is recommended in a range of alternative destinations to further understand the two-step segmentation approach. It is recommended that the two-step approach should be extended to destination branding and positioning. Originality value - Segmentation guides positioning and branding strategies and the proposed two-step approach may assist destination stakeholders to reach more of the types of tourists who are likely to visit the destination.