15+ effective ways to increase hotel revenue and profit (2023)

Every hotelier and host faces the question ofhow to increase revenue and profit without raising prices or overspending. When immersed in day-to-day operations, it can be hard to see the big picture, and getting the right answers can be complex. While there are many ways to increase your hotel revenuedepending on your property’s needs, here are 15+ tactics to get you started.

1. Build a road map

Before you can start your revenue strategy, you need to know where your business currently stands: from your bottom line and revenue streams to marketing efforts and online review scores. Knowing the fixed cost of an available room is essential to calculate how to set the right rates plans, dates for promotions and group offers, and whether to invest time and effort on specific OTA channels. With this information, you can create an accurate and personalized road map that will help guide your sales strategy in the right direction.

Your road map doesn’t have to be formal, but it should accurately reflect your business’s current status in terms of finances, reservations, revenue, and costs so that you can plan appropriate goals for the future. Additionally, your road map or hotelbusiness plan will need to be reviewed and revised every year to achieve optimal results.

2. Segment your target market

A key component of hotel marketing is creating guest personas so you can tailor your marketing efforts accordingly. You need to understand who your guests are, why they’re choosing to book with you, and their main reason for travel so you can understand how to direct your marketing efforts. The answers to these questions will help youdevelop guest segments and provide powerful data to streamline your marketing strategy and sales activity.

To illustrate, you might notice that your accommodation mainly attracts business travelers between the ages of 35 and 45 and that these guests choose to stay at your property because of your proximity to a convention center that hosts many corporate events. Knowing this, you can run unique marketing campaigns and paid ads that promote your property’s optimal location and directly target business travelers.

You may notice that you have different guest demographics depending on the season. If this is the case, you can add another guest persona and create an appropriate marketing campaign to target that specific group. Segmenting your guest market and building targeted campaigns is strategic and will provide new ideas for increasing your hotelrevenue.

3. Sell the experience over the transaction

In the saturated travel marketplace, it’s essential for hotel properties to showcase what makes them unique. As a hotelier, you need to put your property’s best and most differentiating aspects at the forefront of your website and social media accounts so potential guests can start their experience before they even arrive for their stay. You may think this is hard to do if you have a small, basic accommodation, but the real differentiation is between offering a transaction (basic room and board) and an experience (an unforgettable stay). This can often be done with above-and-beyond service instead of relying on a fancy design.

Providing a unique guest experience can become a part of your hotel’s value proposition. Staff should address your customers’ unmet needs and problems and make an effort to make them feel like they are in for something special. You’ll also need real-world evidence or customer reviews to help promote the unique offer that you provide. If you can find something to set your accommodation apart, you’ll, in turn, attract more hotelguests and increase revenue.

4. Maximize online reach with a Channel Manager

How to increase online bookings? Ahotel channel manager main functionality is to distribute your room inventory across several different Online Travel Agencies (OTAs) at once and sync bookings to your property management system (PMS) in real-time to optimize occupancy while avoiding overbookings. This means that you can sell the same room on different OTAs, like Booking.com, Expedia, TripAdvisor, etc., and as soon as a room is booked, availability will be removed from the other channels. A channel manager can connect your rooms to a broader audience, giving you more visibility, reaching more travelers, and ultimately increasing hotel revenue and occupancy.

Though using a channel manager is a great way to sell your room availability, you will have to pay a commission fee to the OTAs.

15+ effective ways to increase hotel revenue and profit (1)

5. Build your direct channel with a booking engine

You can use a booking engine to counterbalance the reservations you get through OTAs and boost direct bookings that are commission-free and processed via your hotel website. A booking engine will allow visitors to book their reservations directly on your website or on social channels like your Facebook page. Optimize your hotel website pages for SEO to drive as much direct traffic to your website as possible.

With an integrated booking engine, potential guests have a seamless way to book their reservations or add-ons (room upgrades, late checkout, breakfast, and more). Always take advantage of cross-selling opportunities on your website.

Always follow up a direct booking with a confirmation email to assure guests that your hotel is legitimate, and send communications closer to check-in as a welcome with detailed instructions.

6. Partner with local businesses

Building strong relationships with other businesses in the local community is another great way your hotel can generate more revenue.

To get started, research local businesses and who may benefit from a co-marketing arrangement. Many businesses and organizations can refer your accommodation, such as small travel agencies, tour operators, conference centers, schools, and more. See if you can make a deal where they recommend your property in exchange for a commission fee.

Next, enhance your hotel’s package offerings. For example, you can advertise partnerships with local tour companies and offer add-ons. Co-creating clever packages in collaboration with local providers can lead to new upselling sources.

7. Try dynamic pricing

Regardless of your hotel type, you should regularly revisit your pricing plans and occupancy forecasting. As demand changes constantly, you should be able to adapt to the changing market conditions and react accordingly. Here’s where dynamic pricing can help.

Dynamic pricing in the hotel industry is the practice of using a flexible pricing strategy for a hotel room or service based on market demand, usually used to increase the price as demand increases. The basic concept behind Dynamic Pricing in a revenue management strategy is simple: a hotel room or a hostel bed will be priced based on supply and demand. Room rates should generally be increased when demand exceeds supply (to capitalize on ADR) and lowered when demand is weak (to increase occupancy).

Keeping up with upcoming events will help your estimates and enable you to reach your revenue potential, especially in the off-season. It also doesn’t hurt to keep tabs on competitor pricing – this can help you better predict demand and give you a competitive edge when deciding how to adjust your price.

8. Get mobile-friendly

Making your website responsive and adaptive for mobile is no longer an option, it’s a necessity.63% of travelers say using smartphones to plan or book their trip is extremely important, while 58% use them to book accommodation. Simply put, if you want to get more bookings and increase hotel revenue, having a mobile-ready site is a necessity.

The widespread nature of mobile technology is also changing consumers’ expectations. It’s not enough to have a shrunken version of your website as your mobile page. Your mobile site needs to have a unique design. Millennials and Gen Zers expect a speedy, sleek, and personalized mobile experience. If you don’t optimize your site for mobile, you’re missing out on a huge opportunity to grow your hotel’s occupancy rate.

9. Up your digital marketing game

Make sure you cover all the fundamental digital marketing channels. Firstly ensure that your information is accurate and up-to-date wherever potential guests find you. From yoursocial media networksand your website to your Google My Business listing and OTA profiles, modern travelers will research your business online to check reviews or find specific information. Look up your property name on any search engine to see it through their eyes.

Secondly, you can use digital marketing tools to your advantage. You could create engaging social media campaigns, try a new social channel such as TikTok, or automate email campaigns aimed at returning guests or corporate partners.

To get the most out of your different social channels, ensure you are tracking specific metrics such as engagement, impressions, and reach to identify what strategies work well. Continually test and iterate on these to run successful digital marketing campaigns.

10. Use high-quality visuals

Few things will captivate potential guests more than high-quality images. Images of your property have the potential to visually tell a story and entice travelers to make a booking. Research has shown that67% of consumersconsider clear, detailed images to carry more weight than a long description (54%) and customer ratings and reviews (53%). Not to mention that many OTA sites will reject low-quality images, making it difficult to get your listing approved.

Your photos should help potential guests imagine themselves at your property. This emotional appeal will engage people more with your listing and help increase your revenue. In fact, in a study done by Visual Web Optimizer, larger images were shown toboost hotel bookings by 9.46%. So when it comes to images, it’s good to remember that the higher the quality, the higher your direct sales will be.

11. Attract group business

Depending on your property, you could attract large groups who prefer to book at larger hotels or smaller groups looking for a more personalized experience. Here’s how you can target these three types of groups:

Intimate weddings – many people have smaller wedding gatherings with fewer than 30 guests. Use photos from past events to showcase your property’s potential.

Family reunions– develop reunion-specific packages that may include custom menus and group room-rate discounts.

Corporate groups– connect your property to aglobal distribution system (GDS)that will get your inventory in front of business travelers and their booking partners.

12. Use hotelrevenue management analytics

Having dependable revenue management technology can really give hoteliers a competitive advantage. These systems are beneficial for independent properties, where profit improvements can significantly impact total revenue. Here’s how revenue management software can improve your profit margin:

Competitive advantage– automatically monitor your competitor’s rates, occupancy, and distribution channels.

Demand forecasts– getreal-time access to consumer demand, and you’ll be able to make updates to your pricing or room types.

Avoiding errors –revenue managementsystemsalso steer you away from errors, such as overpricing or underpricing your rooms.

Automatic price updates– set rules and triggers that the system will execute automatically.

13. Implement stay restrictions

Rather than hiking rates or selling out quickly on busy nights, consider adding in stay restrictions such as closed-to arrival or a minimum length of stay to boost occupancy on shoulder nights.

Stay restrictions can be beneficial if events are going on in your city, such as concerts, conferences, or festivals, and over periods such as holiday weekends or spring break.

14. Optimize your inventory

Identify your different room types and categorize them to increase your revenue per available room (RevPar). Charge premiums for not only suites and popular rooms but also for value-added features like larger rooms, a better view, preferred bed configurations, and attributes like balconies, fireplaces, wet bars, and pool access.

In addition to room inventory, properties must be aware of their secondary inventory or any other items you are providing guests. This ranges from toiletries, to gift shops, and restaurants on-site. Carefully monitor this inventory to ensure that you aren‘t being wasteful and ordering more than necessary.

15. Capture ancillary revenue

In the hospitality industry, there are many additional ways to increase guest spending through upsells and sales of room amenities, room service, incidentals, and special services. Consider adding in other services such as:

  • Airport transportation
  • Mini-bar stocked with drinks and snacks for purchase
  • In-house laundry
  • Paid breakfast
  • Co-working spaces
  • Guided tours

Final thoughts

When it comes to ways to increase your hotel revenue, you have many different tools and avenues to put together a customized plan, which you can build yourself or with the help of a professional revenue manager. With the tools and tactics listed above, you can get a head start on increasing your profit today.


What can you do to boost the revenue and profit of the hotel? ›

How to increase hotel revenue in 2023 [15 Clever ways]
  • Offer room upgrades pre-arrival. ...
  • Provide early check-in and late check-out options. ...
  • Get savvy with upselling and cross-selling. ...
  • Use automation to streamline your efforts. ...
  • Apply dynamic pricing to your room rates and room upgrades. ...
  • Make your food and beverage deals pop.
May 31, 2023

What is the major source of profit and income for the hotel? ›

Room revenue is typically the most significant source of revenue for hotels, accounting for about 70% of their total revenue. Room rates depend on various factors, such as the room type, location, amenities, and demand.

How can hotel industry increase 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.
Dec 10, 2022

What are the largest sources of hotel revenue? ›

When it comes to bringing in revenue, hotels typically rely on four primary sources: rooms, meetings and events, food and beverage, and ancillary services. In hospitality, typically, the performance of each pillar will determine a property's financial success.

What makes a hotel profitable? ›

Owning a hotel can be profitable if you have the right combination of location, price point, quality of the physical asset, marketing strategy, dedicated employees, and supportive investors and management partners. However, a hotel isn't profitable by default, so you can expect a lot of hard work to generate profit.

What is the most profitable part of a hotel? ›

5 Profitable Hotel Amenities
  • Hotel Directories. Hotel directories are easily one of the top most valuable hotel amenities a hotel can provide for guests. ...
  • Guest Room Accessories. ...
  • Conference Room Products. ...
  • Banquet Supplies. ...
  • Pool Menus.

What are the three profit levels in a hotel? ›

RevPAR (Revenue per available room) TrevPAR (RevPAR + ancillaries) GOPPAR (Gross operating profit per available room)

What are the main sources of profit? ›

The sources of economic profit are:
  • Market control- It refers to the market power which a firm has. ...
  • Risk- It is the profit generated out of the risk of production activities. ...
  • Innovation- Profits which firms get due to innovating or introducing a new product in the market.

How do you attract customers to hotels? ›

10 Effective Ways To Attract Hotel Customers
  1. Impress Visitors before their arrival.
  2. Train your staff to deliver world-class service.
  3. Maintain Excellent Room Services.
  4. Offer better rates with recreational facilities.
  5. Establish an online presence.
  6. Take advantage of peak booking seasons.
Mar 17, 2023

What are 5 selling techniques to sell hotel service? ›

11 Hotel Room Selling Techniques To Boost Revenue
  • Use Digital Upselling Software. ‍ ...
  • Showcase Rooms Across Channels. ‍ ...
  • Package Deals. ‍ ...
  • Digital Marketing. ...
  • Leverage Group Business and Room Blocks. ...
  • Build Strategic Partnerships. ...
  • Improve Your Online Reviews. ...
  • Implement a Loyalty Program.
Feb 25, 2023

What is the best way in promoting hotel business? ›

What are the 5 best marketing methods and strategies used in the hotel industry/business?
  • 1- Search engine optimization. ...
  • 2- Content. ...
  • 3- Effective Hotel marketing campaigns. ...
  • 4- Local online marketing. ...
  • 5- Form brand alliances. ...
  • Allow for a quick check-in and check-out. ...
  • Use apps.
Feb 22, 2023

What is the secret of a successful hotel? ›

You need a good location, excellent reviews and a steady stream of guests for your hotel to succeed, and you can get those things by keeping in touch with your target audience, creating excellent maintenance and service plans, and marketing across many channels.

What are the tactics to increase profit? ›

There are four key areas that can help drive profitability. These are reducing costs, increasing turnover, increasing productivity, and increasing efficiency. You can also expand into new market sectors, or develop new products or services.

What is top line revenue in hotels? ›

The top line refers to a company's gross revenue or sales figure, which is reported as the first, or the top-line on a company's profit & loss statement. It reflects the hotel's total revenue from its operations before any expenses, taxes, or other deductions are considered.

What is the largest expense in most hotels? ›

At most hotels, rooms expenses will be one of the largest cost buckets, since this category includes not only payroll and personnel expenses for rooms team members, but also reservation system fees, travel agent and third-party commissions, and any other expenses associated with rooms and reservations.

What is the highest expense for a hotel? ›

The Biggest Expense in a Hotel
  • Labor costs (Payroll-related expenses, Hourly labor) – 40%
  • Comparison with other major expenses.
  • Strategies for optimizing labor costs.
  • Utilities (Utilities like gas, electricity, and water) – 11%
  • Marketing, Advertising, and Distribution (Marketing and distribution) 6%
May 30, 2023

How to grow in hotel industry? ›

Look into getting hotel or tourism managerial experience and demand to be shown all the different areas of the business. Enthusiasm is often the one key attributes in the sector. If you can demonstrate enough interest in doing a particular role, you're likely to be given the freedom to develop yourself in that area.

How do you determine profitability of a hotel? ›

You can establish the ROI of your hotel by dividing your hotel operating income (or operating income from hotel business) by the capital invested in the hotel by the owners, then multiply the result by 100 to express return on investment of the hotel in percentage form.

Can small hotels be profitable? ›

In terms of profitability, small hotels can also vary greatly. According to a report by the Hotel and Lodging Association, the average profit margin for small hotels in the United States was 7.7% in 2019. However, this can also vary depending on factors such as operating expenses, marketing costs, and competition.

What do hotels waste the most? ›

4. Food waste. Food waste makes up over 50 percent of waste in the hospitality industry and in the U.S., more than $218 billion is spent on growing, processing, moving and discarding food that is never eaten. Many hotels have found innovative ways to deal with food waste.

Where do hotel managers make the most money? ›

Highest paying cities for Hotel Managers near United States
  • Nashville, TN. $89,415 per year. 47 salaries reported.
  • New Orleans, LA. $87,903 per year. 21 salaries reported.
  • Miami, FL. $66,420 per year. 34 salaries reported.
  • Las Vegas, NV. $64,079 per year. 30 salaries reported.
  • Scottsdale, AZ. $59,528 per year. ...
  • Show more nearby cities.

What are the 3 main elements of a hotel investment decision? ›

Newell and Seabrook (2006) define the main factors influencing hotel investment decision making as financial (weight of 37.0%) and location (29.9%) factors followed by economic (14.5%), diversification (12.0%) and relationship (6.6%) factors. Finance factors are most important to equity investors and financiers. ...

What is the profit per room of a hotel? ›

Revenue per available room (RevPAR) is a performance measure used in the hospitality industry. RevPAR is calculated by multiplying a hotel's average daily room rate by its occupancy rate. RevPAR is also calculated by dividing total room revenue by the total number of rooms available in the period being measured.

What is a good profit margin when managing a hotel? ›

Whilst EBITDA can reach 30% for the most successful hotels, net profit margin can go up to 10-15% instead. That's because depreciation and interest expenses are typically very high for hotels.

What are the 4 types of profit? ›

What are the different types of profit?
  • Gross profit. Gross profit is the amount of money remaining after subtracting the cost of goods sold (COGS) from the total income from sales. ...
  • Operating profit. Operating profit includes both variable and fixed costs. ...
  • Pre-tax profit. ...
  • Net profit. ...
  • Net profit margin. ...
  • Reduce costs.
Dec 22, 2022

What are the three keys to business profits? ›

He breaks down any business into these three key components: people, product and process.

What is 1 example of profit? ›

Profit is a term that often describes the financial gain a business receives when revenue surpasses costs and expenses. For example, a child at a lemonade stand spends one quarter to create one cup of lemonade. She then sells the drink for $2. Her profit on the cup of lemonade amounts to $1.75.

What makes customer happy in a hotel? ›

Offer beer, wine, and snacks and the availability of the concierge and other hotel staff to plan excursions or set up itineraries in the city during their stay. After a long day of sightseeing or an all-day conference, being able to sit down and relax with a free glass of wine leads to very happy hotel guests.

How do you promote a 5 star hotel? ›

Here are 14 must-know methods to influence the customer journey and get ahead of your competitors.
  1. Differentiate Yourself From Competing Luxury Hotels. ...
  2. Be Innovative & Add Value. ...
  3. Value Emotion & User-Generated Content. ...
  4. Post Your Resort Advertisements on Social Media Platforms. ...
  5. Use Influencer Marketing.

How do hotels ensure excellent customer service? ›

8 Practices to provide the best hotel customer service to your guests
  1. Understand who your customers are. ...
  2. Make customer service easy. ...
  3. Put a heavy focus on hotel customer service training. ...
  4. Ask the right questions. ...
  5. Make sure anyone can help guests. ...
  6. Use omnichannel communication. ...
  7. Buddy up with local offerings.

What are the 4 selling strategies? ›

There are essentially four selling strategies: script-based selling, needs-satisfaction selling, consultative selling, and strategic partnering.

What are 3 selling techniques? ›

The Top 3 Selling Techniques--Which Is Best For Your Business?
  • Product Selling. Product selling is exactly what it sounds like: selling the advantages or features of a specific product or service. ...
  • Solution Selling. Solution selling goes beyond simply selling products or services. ...
  • Insight Selling.
Mar 1, 2017

What are the 4 basic selling techniques? ›

The four types of selling
  • Transactional selling.
  • Solution selling.
  • Consultative selling.
  • Provocative selling.

How can I impress my hotel guests? ›

15 Ways to Make Hotel Guests Feel Special
  1. Offer the little extras. ...
  2. Offer some amenities free of charge. ...
  3. Always be fully-staffed. ...
  4. Show you care by listening and responding to your guests. ...
  5. Make all guests feel that your hotel is concerned about their special needs. ...
  6. Train your staff. ...
  7. Offer complimentary items.
Mar 11, 2019

How can hotels improve their services? ›

Training and rewarding staff can help create a positive work environment and motivate employees to provide excellent service to customers. This can include things such as hospitality training, customer service training, or even incentive programs that reward staff for providing great customer service.

What is 4p marketing strategy in hotel? ›

The marketing mix for hotels

Marketing Mix devides its instruments into four groups: Product Policy, Pricing Policy, Communication Policy and Distribution Policy. In marketing jargon we refer to them as the “Four Ps”.

What makes a hotel feel luxurious? ›

In-room fireplaces with optional concierge services so you don't even have to light it yourself! Lavish bathrooms with upscale features such as heated floors and soaking tubs. High-end, lush linens and towels. Deluxe pillows and mattresses so your sleeping hours are as blissful as your waking ones.

What is the #1 function of any hotel? ›

Hospitality Function

As such, the actual function of a hotel lies not only in providing a place for people to stay but creating an enjoyable experience for guests and seeing to all their wants and needs.

What is the most important thing that you sell in hospitality? ›

Service is the key in the Hospitality Industry

All important services should be easily accessible and ideally offered before guests make a request. Making your customers feel special and even spoiled is an art that only dedicated, trained staff can achieve.

What 4 things can one do to increase their overall net profit? ›

How to Increase Net Profit
  • Net profit calculation. You can use a simple formula to calculate net profit. ...
  • Reduce utilities. It might seem difficult to reduce utilities, but there are ways to do it. ...
  • Reduce insurance premiums. ...
  • Reduce labor costs. ...
  • Reduce operation costs. ...
  • Increase sales revenue.
Nov 1, 2022

How do you attract customers? ›

10 Ways to Get New Customers
  1. Ask for referrals. ...
  2. Network. ...
  3. Offer discounts and incentives for new customers only. ...
  4. Re-contact old customers. ...
  5. Improve your website. ...
  6. Partner with complementary businesses. ...
  7. Promote your expertise. ...
  8. Use online reviews to your advantage.
Apr 6, 2017

What are the 5 tactics in business? ›

Summary : There are only five business strategies: cost, quality, distribution, technology, and intellectual property (IP). All business strategies break down into these five, or some combination of them. As a general principle, focusing your organization on one is the easiest to execute.

How can a hotel business maximize profit? ›

Here, we list 9 Revenue Management Strategies that you can use to increase your revenue.
  1. Provide Incentives For Direct Bookings. ...
  2. Modernize F&B Offerings — Go Local And Sustainable. ...
  3. Form Profitable Partnerships With Unique Local Businesses. ...
  4. Invest In The Right Property Management Software. ...
  5. Segment Your Customer Base.

How will you increase revenue in the service department? ›

6 Steps to Increase Service Department Profits
  1. Establish Processes. First, you must have written processes that you strictly follow. ...
  2. Follow Good Billing Practices. ...
  3. Flat Rate More Work. ...
  4. Bill Time & Materials Correctly. ...
  5. Help Your Techs Be More Productive. ...
  6. Set Up Bonus Programs to Drive Productivity.

How do hotels generate revenue? ›

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.

How do you increase average revenue per customer? ›

How to Improve ARPU
  1. Develop a Strong Customer Retention Strategy. Reducing customer churn is a major part of optimizing ARPU. ...
  2. Utilize Add-Ons & Upgrades. ...
  3. Consider Long-Term Product Strategy. ...
  4. Find the Right Customers.

What are revenue management strategies? ›

6 revenue management strategies:

Segment your customer base. Choose the best pricing strategy. Focus on customer retention. Focus on mobile optimization. Leverage revenue management tools.

What do hotel guests value most? ›

What are the three most important expectations of guests in a hotel? The three most important expectations of guests in a hotel are convenience, autonomy, and personalization.

What are the 4 methods to increase revenue? ›

What Are The '4 Methods to Increase Revenue'? If you want your business to bring in more money, there are only 4 Methods to Increase Revenue: increasing the number of customers, increasing average transaction size, increasing the frequency of transactions per customer, and raising your prices.

How can I increase my revenue fast? ›

6 ways to increase your revenue
  1. Grow your customer base. More customers usually means more revenue. ...
  2. Focus on retention. Once you have a healthy customer base, you need to work hard at keeping them. ...
  3. Customer service and support. ...
  4. Data-driven engagement. ...
  5. Refine your pricing strategy. ...
  6. Find new revenue streams.
Nov 24, 2022

How do you increase sales growth? ›

13 strategies for increasing sales
  1. Understand your customers. A business's most important asset is its customers. ...
  2. Use the sales funnel model. ...
  3. Interact with customers online. ...
  4. Give a variety of payment options. ...
  5. Create a referral program. ...
  6. Offer discounts. ...
  7. Bundle products. ...
  8. Audit pricing structures.
Feb 27, 2023


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