5 Key Components to an Effective Revenue and Profit Strategy

Author: Rainmaker

Looking to increase revenue in 2019? Get in line. The desire to generate more revenue is nothing new to hoteliers, but the journey toward higher revenues and greater profitability requires hotels to take a more holistic approach; one that implements technology that leverages data from disparate sources to develop actionable intelligence to help stimulate and optimize demand. Let’s take a closer look at five important areas of focus for your revenue journey.

revenue lift
Channel Segmentation

Your distribution channels – online, off-line, direct, and indirect – should be segmented and analyzed by guest type and acquisition cost. This lets you to determine where your most valuable mix of bookings and revenue is coming from. With OTAs charging hefty commissions, sometimes as high as 30 percent, you want a distribution strategy that drives as much direct business as possible. It’s important to regularly review your channel mix to ensure that it’s profitable and aligned with your property goals.

Optimal Business Mix

Although it may appear that your most valuable guest is the one who stays in your top suite, and drops a lot of money on F&B and spa treatments, this may not be the case. Understanding your guests on a segment level, based on nationality, ancillary spend, type of traveler (business vs leisure), and the regularity with which they visit, allows you to develop a more accurate view of who your most valuable guests are.  An accurate picture of your most profitable customers lets you focus on the areas of your business you most want to cultivate. You can also more effectively yield rates for rooms and tailor your promotional efforts to generate higher conversions.


An accurate demand forecast is the first step to developing a winning revenue strategy. The forecast generated by your RMS should provide a picture of total, unconstrained demand for future dates in order to recommend the best price. To produce the most accurate forecast, you must account for things such as historical patterns, marketing promotions, seasonality, and events. It’s imperative that the forecast is updated daily (even intraday) to adjust for these changes as well as updates in bookings and competitor activity.The forecast can then be shared with marketing to identify periods of high demand and use promotional offerings in a more tactical way, helping you achieve your performance goals in terms of revenue and profit. 

Room-type pricing

__1607-CS-HG-LAubergeDeSedonaRoomsA common mistake many hoteliers make is losing out on revenue opportunities by overselling their base room category. A state-of-the-art revenue management system allows you to establish an optimal rate for your base room type that incorporates competitor rates, price sensitivity,  and room upgrade opportunities. The ability to adjust room type modifiers based on booking velocity and occupancy indices produces optimal rates to have an accurate pricing strategy and, in the end, win more revenue. 

Group Business 

In many cases, group business is a significant percentage of a hotel's total revenue, sometimes the majority. Your RMS should allow you to accurately forecast both group and transient business simultaneously, while optimizing pricing for  both. Advanced technology enables you to drive up-sells by creating attractive packages that include profit-lifting add-ons . In addition, identifying group demand early-on will help you set appropriate transient pricing. Having an accurate forecast of both group and transient business will allow you to choose the most profitable business on both sides.

These five critical topics really just begin to scratch the surface as revenue Managers are consistently faced with making sense of a seemingly endless amount of data. Understanding and quickly accessing the most useful data in an accurate and actionable format is the Holy Grail. The right data with the right technology stack can empower your teams to make smarter, faster, stronger revenue decisions. Consistently focusing on these five areas will help you create an optimal revenue strategy for your hotel while always keeping total revenue and profitability top of mind.  

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