Hotel Revenue Management: 8 Ways to Boost Your Business (2023)

Hotel revenue management is an incredibly complex machine. It's perpetually in motion, requiring routine maintenance and replacement parts on occasion. While operating the machine may seem overwhelming, especially to those new to the hotel revenue management space, understanding why and how each piece works can go a long way.

In this post, we take a deep dive into hotel revenue management: What it is, how it works, and the vital role it plays in a hotel’s overall success. Then, we discuss resources, best practices, ideas, and strategies that revenue management professionals from all over the world can use to reinvent their revenue management strategy and increase hotel profits.

Explore hotel revenue management ideas, strategies, resources, and tools

What is hotel revenue management?

The term hotel revenue management refers to a variety of principles and practices that help hotel professionals predict what customers are going to do in the future. While specific goals may vary from one property to the next, some primary objectives of hotel revenue management are to optimize prices to match travel demand, outperform the comp set, increase profits, and improve hotel performance year-over-year.

By using performance data and other hotel analytics, revenue managers make rate decisions, determine distribution strategies, and work to increase the amount of revenue the property generates — all without hindering guest satisfaction.

How can Cvent help with hotel revenue management?

Hotel revenue professionals rely on a variety of tools, resources, reports, and software systems for comprehensive management. Whether you're a new revenue manager looking to grow your skillset or an experienced hotel professional looking for new ways to get an edge on the competition, you can benefit from Cvent’s extensive collection of hotel revenue management solutions.

Cvent provides a variety of solutions and innovative systems that can help:

  • Drivemore direct bookings
  • Capture higher rates
  • Optimize pricing strategies
  • Improve year-over-year profits
  • Outperform competitors
  • Analyze hotel performance
  • Track demand for improved forecasting
  • Win more RFPs
  • Reach more planners
  • Improve your market mix
  • And so much more

Above property: Here's how we can help

At property: Here's how we can help

(Video) How to do Revenue Management for Hotels? Improve ADR and Occupancy

What happens if hotel revenue is not managed properly?

Failing to effectively manage hotel revenue can negatively affect every aspect of hotel performance. Revenue managers and directors who do not diligently track, analyze, and utilize revenue reporting could:

  • Push business to competing hotels
  • Harm thehotel’s reputation
  • Hurt guest loyalty
  • Lead to missed rate opportunities

Additionally, sales and revenue directors may earn a portion of their salary from meeting revenue goals, and missing those goals could have a significant impact on their annual earnings.

Strategies for better hotel revenue management

Implement revenue management strategies that are in line with your hotel’s revenue goals and budget. See which strategies work best in your market and adjust as needed.

1. Start with an honest inventory.

Creating a successful revenue management strategy should start by taking a hard look at the way the hotel’s revenue is being managed right now. Before making any major changes, ask the following questions to help assess your hotel’s current position:

  • What is your current revenue management strategy?
  • What are your revenue management goals or objectives?
  • Is your revenue management style proactive or reactive?
  • What is your group pricing strategy?
  • Are you knowledgeable about area events and attractions?
  • Do you know what your demand generators are?
  • Do you keep a close eye on competitor pricing?
  • Do you know what your market mix is? Is it balanced?
  • Are your leads and proposals turning into actual business?
  • Can you identify the cause of demand changes or rate anomalies at your hotel?

Once you have a firm and fair understanding of your revenue strengths and weaknesses, you can identify opportunities for improvement and create an informed hotel revenue management strategy.

Free webinar: Revenue growth 101

2. Become an expert in your market.

A profitable revenue management strategy factors in seasonal changes and demand fluctuations. Identify the major demand generators in your area, review planner sourcing behavior, and analyze travel patterns in your market. Determine your hotel’s peak, off-peak, and shoulder seasons to help maximize rates and fill future need dates.

Create a calendar of special events, restrict blackout dates, and sign up for Google Alerts. Stay up-to-speed on area events, community projects, and what the businesses in your area are doing.

(Video) Revenue Management - the science of ultimate hotel success

Strive to know more about your market than revenue managers at competing hotels. The more information you have, the more comprehensive your hotel revenue management strategy can be.

3. Use future forecasting data to establish your budget.

While unexpected hiccups can throw a wrench in the most thorough hotel budgets, proper budgeting and forecasting can help prevent revenue managers from depleting their financial reserves too early or too often. When preparing a budget, hoteliers and revenue managers should review historical data, hotel rate reporting, and competitive set performance tracking to identify revenue opportunities that will have an impact on budgeting decisions.

When establishing a budget, gather data that tracks how your hotel performed over different seasons, during special events, holidays, and other notable dates. Gaining a comprehensive understanding of a hotel’s performance history will help revenue managers identify past market trends, as well as better predict future trends.

Regularly review hotel data tracking and revenue reporting to identify:

  • Sudden demand changes
  • Unexpected shifts in occupancy
  • Unusually high/low ADR
  • RevPAR fluctuations
  • Booking patterns
  • Missed RFP opportunities

Analyze the strategies used in the past and evaluate how well the hotel performed as a result of those strategies. Identify which strategies worked best, which could be improved, and which should be eliminated; use detailed analysis to inform your next budget.

4. Use variable pricing strategies to optimize hotel revenue.

When it comes to hotel revenue and pricing management, there is no one-rate-fits-all solution. Successful hotel revenue managers consistently optimize room rates to match what's happening in their market. They use dynamic pricing strategies that are based on past performance, current demand, future forecasting, and changes in the comp set. With this information, revenue managers are able to optimize room rates and drive more revenue.

Hotel rate and pricing strategies can be influenced by:

  • Travel demand
  • Special events
  • Room availability
  • Market conditions
  • Booking windows
  • Competitor pricing
  • Market segment mix
  • Target market trends
  • Service level
  • Available amenities

To sell guest rooms at an optimal rate, revenue managers keep a close eye on what's happening in their market. They anticipate future demand changes, track room night pickup, and adjust rates accordingly.

(Video) 6 Upselling Sales Techniques to Improve Hotel Revenue Management | Hotels Open Now

Hotels that offer superior services and amenities may be able to charge higher rates during high-demand periods than area hotels with less to offer. If your property offers services comparable to nearby competing hotels, however, selling higher rates than the competition can lead to displaced occupancy, sending travelers to the comp set.

5. Keep a close eye on the competition.

All revenue managers need to know what their hotel offers compared to the competition. What room types are available at each hotel? Which properties are full-service and which are select-select service? Which hotels have event space? What rates are competing hotels in the area offering? Which properties are pet friendly?

Is your hotel receiving its fair share business in the market? If not, dig deeper into competitive set data. Review reporting and performance index changes to identify the reason.

6. Increase repeat bookings using guest segmentation.

Many hotel professionals characterize distinct groups of travelers by their reason for travel in a process called “guest segmentation.” Travelers may be segmented by a variety of travel types:

  • Leisure travel
  • Business transient travel
  • Corporate negotiated travel
  • Group travel
  • Weddings
  • Event attendees
  • SMERF: Social, military, education, religious, and fraternal travel

Analyze the travel habits displayed by different segments to better understand your customers. Review stay patterns, room type preferences, and purchase habits to get an idea of what sets your transient travelers apart from your leisure guests, or your weekday mix from your weekend mix.

By developing a deep understanding of different market segments and the types of guests who visit your hotel, hotels can construct exclusive offers and promotions that appeal to specific traveler types for example,48% of customers who identify as loyal expect personalized experiences from businesses they interact with. Entice loyal customers to return to your property by creating targeted promotions and running more personalized marketing campaigns.

Confirm which segments are bringing in the most business and which are underperforming. Pinpoint market segments that need targetingand develop a plan of action.

7. Manage your RFPs efficiently.

(Video) Top 10 Tips for Outstanding Hotel Revenue Management | Hotel Marketing

A vital part of hotel revenue management, especially in high-demand areas, is effectively managing RFPs.Stop wasting valuable time writing lengthy proposals for leads that end up being a bad fit for your business. Evaluate and rank the leads that your hotel receives to quickly identify the best pieces of potential business. Prioritize the RFPs that fit your hotel’s availability, size, and revenue goals; rank RFPs ill-suited for your hotel the lowest.

Instead of spending hours reviewing lead after lead, optimize your RFP management system’s response settings to work for you. Update your settings to automatically turn down groups or events that your hotel can't accommodate. Small adjustments that maximize efficiency will allow you to spend more time focused on converting prime leads and winning more business.

Even with so many travel planners booking business online, major decision makers can still be difficult to access. Market to hard-to-reach planners by telling your hotel’s unique story. Add personalized touches to your proposals that will help planners make a memorable connection to the hotel.

8. Widen your audience reach.

Guests can't book a room at your hotel if they don't know that it exists. Widen your reach and improve your hotel’s search rankings by:

  • Responding to guest reviews
  • Advertising on social media
  • Creating a Google Business profile
  • Using geo-location services
  • Ensuring accuracy across OTAs
  • Managing hotel branding
  • Creating valuable content
  • Publishing a hotel directory listing

Online hotel directories make your hotel visible to travel and event planners from all over the world. Listing in a directory can help hotels generate more group, transient, corporate, and event business by dramatically expanding their audience reach.

Is your hotel also a wedding venue? Reach wedding planners and engaged couples by listing your hotel in a wedding venue directory.

MORE: 14 tips to maximize your hotel's SEO

Bookmark this guide to find the hotel revenue management tools you need when you need them!

You now have tools and resources to help build a profitable revenue strategy. Next, work to improve hotel occupancy with these proven strategies.


How revenue management is used in hotel industry? ›

Revenue management involves the use of analytics and performance data to help those in the hotel industry predict their customers' behavior. The data is then utilized to make appropriate decisions in regards to pricing and distribution strategies.

What are the 3 main concepts used in revenue management? ›

The discipline of revenue management combines data mining and operations research with strategy, understanding of customer behavior, and partnering with the sales force.

What does the revenue manager do to maximize revenues at a major hotel? ›

Since one of the main tasks of a revenue manager is to make sure that all the rooms are occupied, he or she sets the entire marketing, pricing, and distribution strategy to maximize occupancy.

What are revenue management strategies? ›

Revenue management refers to the strategic distribution and pricing tactics you use to sell your property's perishable inventory to the right guests at the right time, to boost revenue growth. Other products such as your amenities and food and beverage offerings will also come into the picture.

How do you promote hotel sales? ›

11 foolproof ways to increase hotel sales and revenue with upselling
  1. Stop giving away free upgrades. ...
  2. Offer paid room upgrades pre-arrival. ...
  3. Streamline your upselling efforts with a smart hotel technology. ...
  4. Offer personalised deals and packages. ...
  5. Benefit from guest segmentation. ...
  6. Capitalise on food and beverage deals.
23 Feb 2022

What are examples of revenue management? ›

The most common example of how Revenue Management is executed is in the businesses of Hotel Management and the Airline Industry. The primary source of revenue for hotels is found in their room rates. The revenue generated from the bookings is a simple multiplication of price and volume booked.

What are the major sources of revenue for the hotel? ›

Typically, revenue in the hospitality industry is generated through hotel room rentals, meeting space occupancy, and the sale of food or beverages. All of these produce profitable revenue for a hotel or other hospitality industry business such as a food and beverage operation, a theme park, or a cruise line.

Why do hotel companies need to follow nine 9 revenue management strategies? ›

Although revenue management is applicable to other industries, it has significance in the hospitality industry because hotels deal with a perishable inventory, fixed costs and varied levels of demand. Revenue management is considered important because it takes the guesswork out of key pricing decisions.

What are the elements of revenue management? ›

Key Elements for Performing Revenue Management Effectively
  • Useable data.
  • Constant demand.
  • Flexible costs.
  • Segmented customer markets.
  • Fixed capacity.
  • Perishable inventory.

What are the broad goals of revenue management? ›

Revenue Management is a key tool for setting hotel room rates. The goal is to select the right product for the right customer and sell it at the right time for the right price.

How revenue management can benefit your business? ›

The benefits of revenue management include a better ability to predict customer wants and needs, a more effective pricing strategy, an expansion of available markets and a stronger relationship between the company divisions.

How can revenue management be improved? ›

10 expert tips to improve your revenue strategy
  1. Be aware of your market. ...
  2. Work with your team and gain their respect. ...
  3. Consistent communication is key. ...
  4. Invest in technology. ...
  5. Track business. ...
  6. Never stop learning. ...
  7. Bridge the RM and Sales gap. ...
  8. Big data allows you to be proactive instead of reactive.

What are the challenges faced in revenue management? ›

Issues can range from having different technology systems that don't communicate well with one another, to not securing the budget to invest adequately in the technology your hotel needs. Without technology, most RMs are staring down the barrel of hours of spreadsheets each day to keep up with their online channels.

How do hotel management companies make money? ›

Hotel management companies make money in a few ways: an incentive fee, a base fee, and/or a percentage of gross revenue. Depending on the type of hotel, the services the management company provides, and the owner's goals, the management company fee structure can vary greatly from property to property.

How do I attract people to my hotel? ›

How to Attract Local Guests to Your Hotel?
  1. Do not take off seasons for granted. ...
  2. Promote the concept of stay and play. ...
  3. Let your marketing tone resonate with the locals. ...
  4. Focus on organizing events. ...
  5. Work on building local tie-ups. ...
  6. Highlight your facilities. ...
  7. Use local influencers as an advertising strategy.
22 Sept 2022

How do hotels increase customers? ›

Hotel guest satisfaction tips and best practices
  1. Personalize, personalize, personalize.
  2. Post-booking communication.
  3. Offer freebies and complimentary services.
  4. Implement in-room technology.
  5. Be proactive in your service.
  6. Reward repeat guests.
  7. Offer multiple communication channels.
  8. Create an inclusive experience for all.

How do hotels increase low season revenue? ›

Five hotel marketing tips to improve off-season bookings
  1. Determine your low occupancy days and weeks and modify hotel marketing strategies. ...
  2. Use metasearch and search engine optimisation. ...
  3. Create packages for local events and attractions. ...
  4. Retain customers with loyalty programmes. ...
  5. Promote your hotel through OTAs.

How do I get more hotel sales? ›

While there are many ways to increase your hotel revenue depending on your property's needs, here are 15+ tactics to get you started.
  1. Build a road map. ...
  2. Segment your target market. ...
  3. Sell the experience over the transaction. ...
  4. Maximize online reach with a Channel Manager. ...
  5. Build your direct channel with a Booking Engine.
20 Jul 2022

How do hotels increase bookings? ›

18 Ways to Boost Hotel Bookings and Get More Revenue
  1. Solidify Your Hotel Guest Personas. ...
  2. Use a Strong Value Proposition to Resonate With Guests. ...
  3. Speed up Your Hotel Website. ...
  4. Make Your Hotel Gallery Page Sparkle. ...
  5. Keep Your Site as Simple As Possible. ...
  6. Don't Spoil Visitors With Too Much Choice.

How can I improve my business Lodge? ›

Boost group business with easy personalization software
  1. Follow your event leads. ...
  2. Use social media to spread the word organically. ...
  3. Make your hotel photo-op worthy. ...
  4. Gather success stories and promote them. ...
  5. Partner with local businesses. ...
  6. Keep a pulse on changing hospitality trends. ...
  7. Incentivize longer stays.

What are the low demand tactics? ›

During low-demand time, it is important to accept discounts to encourage room nights. Encourage upgrades is another great tactics– Move guests to a better accommodation or class of service to enhance their experience and encourage them to come back to the property again and again.

What affects hotel occupancy? ›

The occupancy rate of your hotel is based on the number of rooms you have filled. You can look at this figure by day, week, month, or even longer. The rate will be different depending on the length of time you consider.

How can I run a successful hotel? ›

Success in the Hotel Industry: 8 Things That Keep You on Top
  1. The hotel industry thrives on location. ...
  2. Keep an eye on those reviews. ...
  3. Generate great leads. ...
  4. Give customers an innovative experience. ...
  5. Keep your guests safe. ...
  6. Communicate, communicate, communicate. ...
  7. Give managers flexibility. ...
  8. Be observant.

What is the best promotional tool in hospitality industry? ›

# 1 - Loyalty Programmes

Loyalty programmes are always invaluable from a promotional standpoint, but they take on entirely new heights in an industry like hospitality, where there's a real risk that guests will stay with you once and never return.

What is most important to hotel guests? ›

Cleanliness matters

The most important expectation has and always will be cleanliness. Lack of cleanliness is among the top complaints about hotel stays. Good cleanliness often goes unnoticed, but poor hotel hygiene will always be something guests remember about their hotel stay.

How can I improve my bookings? ›

Increase Your Bookings: 13 Can't-Miss Marketing Tips
  1. Create content that meets the needs of your audience. ...
  2. Make the most of social media. ...
  3. Optimize your site for search engines. ...
  4. Invest in search engine advertising. ...
  5. Reach out to site visitors. ...
  6. Encourage reviews. ...
  7. Build an email list. ...
  8. Take advantage of user-generated content.
27 Apr 2021

How can I increase my direct booking? ›

Offering exclusive value-added packages on your website could go a long way to convincing potential customers to book directly through your booking engine. Exclusive packages, special promotions and preferential rates are very attractive to website visitors. Such unique features could very well trigger direct bookings.

What are the marketing strategies necessary in the hospitality industry? ›

Marketing strategies you should consider in the hospitality industry include special events and community partnerships, online and digital promotions, content marketing, and loyalty programs.

How do you make hotel guests happy? ›

Hotel guest satisfaction tips and best practices
  1. Personalize, personalize, personalize.
  2. Post-booking communication.
  3. Offer freebies and complimentary services.
  4. Implement in-room technology.
  5. Be proactive in your service.
  6. Reward repeat guests.
  7. Offer multiple communication channels.
  8. Create an inclusive experience for all.

How do you impress guests? ›

Ways to Impress Your Guests
  1. Make Your Porch Presentable. The porch, or your entryway if you live in an apartment building, is the first thing guests see. ...
  2. Keep Everything Clean and Neat. ...
  3. Have a Hangout Area. ...
  4. Prepare the Food Ahead of Time. ...
  5. Make a Signature Drink. ...
  6. Set a Beautiful Table. ...
  7. Serve Snacks. ...
  8. Put up Decorations.
11 Sept 2017


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