Revenue management is key to maximizing profits in today's competitive hotel industry. Hotel News Now says good revenue management can boost a hotel's revenue by 10-20%. The increase depends on the hotel's size, location, and market position. By balancing room rates with occupancy levels, upselling additional services, and tapping into digital tools, hotels can increase revenue and enhance the guest experience. Here’s a look at 15 strategies that hotels can use to maximise revenue year-round.
Table of contents
1. Optimise pricing with dynamic rate adjustments
2. Upsell and cross-sell amenities and services
3. Personalised guest experiences
4. Design seasonal packages
5. Use minimum length-of-stay restrictions
6. Forecast demand using RMS
7. Targeted digital marketing campaigns
8. Enhance food and beverage revenue through digital menus
9. Occupancy-based pricing
10. Automated booking and cancellation management
11. Loyalty programs for repeat guests
12. Invest in mobile-first experiences
13. Offer special rates for extended stays
14. Revenue optimisation for non-room services
15. Pre-arrival and in-stay messaging for promotions
Table of contents
1. Optimise pricing with dynamic rate adjustments
2. Upsell and cross-sell amenities and services
3. Personalised guest experiences
4. Design seasonal packages
5. Use minimum length-of-stay restrictions
6. Forecast demand using RMS
7. Targeted digital marketing campaigns
8. Enhance food and beverage revenue through digital menus
9. Occupancy-based pricing
10. Automated booking and cancellation management
11. Loyalty programs for repeat guests
12. Invest in mobile-first experiences
13. Offer special rates for extended stays
14. Revenue optimisation for non-room services
15. Pre-arrival and in-stay messaging for promotions
1. Optimise pricing with dynamic rate adjustments
Dynamic pricing adjusts room rates based on demand, competition, and occupancy. It allows hotels to maximize revenue across different booking periods. For example, during peak seasons or city-wide events, hotels can raise rates, while during low-demand times, rates can be adjusted down to attract budget-conscious travellers.
Key techniques for optimising dynamic pricing include:
Automated pricing tools. Revenue management systems (RMS) can adjust rates in real-time based on competitor rates and market demand.
Rate fencing. Offer different rates for guests willing to book in advance, stay longer, or accept less flexible cancellation policies. Dynamic pricing has been shown to increase revenue by 10-30% (source: Hotel Tech Report).
Key techniques for optimising dynamic pricing include:
Automated pricing tools. Revenue management systems (RMS) can adjust rates in real-time based on competitor rates and market demand.
Rate fencing. Offer different rates for guests willing to book in advance, stay longer, or accept less flexible cancellation policies. Dynamic pricing has been shown to increase revenue by 10-30% (source: Hotel Tech Report).
2. Upsell and cross-sell amenities and services
Upselling is offering a higher-value room or service, like upgrading a guest from a standard to a suite. Cross-selling is promoting additional services, like in-room dining, spa packages, or airport transfers. Digital pre-arrival communications can present personalised offers to guests based on their booking history, preferences, or loyalty status.
Ways to increase upselling and cross-selling include:
Pre-arrival communications. Send tailored emails offering room upgrades or amenity packages.
Digital in-room menus. Use digital menus to recommend room service and spa options based on guest preferences. According to McKinsey, hotels using digital upselling strategies see a 25% increase in ancillary revenue.
Ways to increase upselling and cross-selling include:
Pre-arrival communications. Send tailored emails offering room upgrades or amenity packages.
Digital in-room menus. Use digital menus to recommend room service and spa options based on guest preferences. According to McKinsey, hotels using digital upselling strategies see a 25% increase in ancillary revenue.
3. Personalised guest experiences
Personalisation is a critical differentiator, particularly as younger travellers increasingly expect customised services. By using guest data to offer tailored experiences, hotels can enhance guest loyalty and drive higher spending.
Strategies for effective personalisation include:
Room customisation. For guests who’ve visited before, offer in-room amenities that match their preferences (e.g., extra pillows, snacks, or specific toiletries).
Loyalty rewards. Provide loyalty programme members with exclusive offers that reflect their preferences or previous bookings. Hotels that prioritise personalisation see a 30% increase in loyalty from repeat guests.
Strategies for effective personalisation include:
Room customisation. For guests who’ve visited before, offer in-room amenities that match their preferences (e.g., extra pillows, snacks, or specific toiletries).
Loyalty rewards. Provide loyalty programme members with exclusive offers that reflect their preferences or previous bookings. Hotels that prioritise personalisation see a 30% increase in loyalty from repeat guests.
4. Design seasonal packages
Seasonal or holiday packages help hotels fill rooms in slow times. They attract guests seeking unique experiences. For example, offering a winter wellness retreat that includes spa treatments and guided yoga sessions can appeal to wellness-focused travellers.
Best practices include:
Local partnerships. Work with nearby attractions or businesses to create packages that provide added value to guests (e.g., bundled tickets to local events).
Themed holiday offers. Offer discounted packages around Valentine’s Day, New Year’s Eve, or long weekends to draw in local travellers. Seasonal packages also create cross-promotional opportunities with local businesses, helping boost occupancy and RevPAR.
Best practices include:
Local partnerships. Work with nearby attractions or businesses to create packages that provide added value to guests (e.g., bundled tickets to local events).
Themed holiday offers. Offer discounted packages around Valentine’s Day, New Year’s Eve, or long weekends to draw in local travellers. Seasonal packages also create cross-promotional opportunities with local businesses, helping boost occupancy and RevPAR.
5. Use minimum length-of-stay restrictions
MLOS requirements can help hotels keep high occupancy. They avoid single-night bookings during peak periods to reduce costs. A two-night minimum stay on a holiday weekend reduces turnovers and the strain on housekeeping.
Implementation tips:
Adjust restrictions based on demand. Set higher MLOS during major city events and reduce it during quieter periods.
Monitor competition. If competitors are enforcing MLOS, we can offer flexible options to attract guests seeking one-night stays. When implemented effectively, MLOS strategies can significantly reduce vacancy rates and increase operational efficiency.
Implementation tips:
Adjust restrictions based on demand. Set higher MLOS during major city events and reduce it during quieter periods.
Monitor competition. If competitors are enforcing MLOS, we can offer flexible options to attract guests seeking one-night stays. When implemented effectively, MLOS strategies can significantly reduce vacancy rates and increase operational efficiency.
6. Forecast demand using RMS
Demand forecasting, supported by RMS, allows hotels to predict occupancy based on historical data, upcoming events, and even weather patterns. Accurate forecasting helps hotels plan promotions, adjust staffing levels, and optimise inventory.
Key demand forecasting factors include:
Local event calendars. Track large-scale events, festivals, and conventions that drive up local demand.
Historical analysis. Regularly review past occupancy rates and booking patterns to refine demand forecasts. Hotels that use advanced demand forecasting can reduce operational costs and avoid overbooking, resulting in more efficient use of resources.
Key demand forecasting factors include:
Local event calendars. Track large-scale events, festivals, and conventions that drive up local demand.
Historical analysis. Regularly review past occupancy rates and booking patterns to refine demand forecasts. Hotels that use advanced demand forecasting can reduce operational costs and avoid overbooking, resulting in more efficient use of resources.
7. Targeted digital marketing campaigns
Digital marketing helps target specific guest demographics. It creates campaigns that drive direct bookings. Social media ads, retargeting, and Google Ads let hotels reach potential guests at various stages of their travel planning.
Effective tactics include:
Demographic targeting. Use ads that speak directly to the interests and needs of families, solo travellers, or business guests.
Email retargeting. Email guests who abandoned bookings. Offer limited-time discounts to convert them. Targeted campaigns can increase booking conversion rates and reduce the need for OTAs, which often take significant commissions.
Effective tactics include:
Demographic targeting. Use ads that speak directly to the interests and needs of families, solo travellers, or business guests.
Email retargeting. Email guests who abandoned bookings. Offer limited-time discounts to convert them. Targeted campaigns can increase booking conversion rates and reduce the need for OTAs, which often take significant commissions.
8. Enhance food and beverage revenue through digital menus
Hotels using digital menus and room service platforms report an increase in both order frequency and average order size. According to Hospitality Technology, hotels adopting digital dining options have seen a 15-20% increase in room service orders.
To maximise F&B revenue:
Promote seasonal or limited-edition items. Highlight unique options on the menu to encourage guests to try special offerings.
In-room dining packages. Bundle food and drink for celebrations, like a “couples’ weekend” package including champagne and desserts.
To maximise F&B revenue:
Promote seasonal or limited-edition items. Highlight unique options on the menu to encourage guests to try special offerings.
In-room dining packages. Bundle food and drink for celebrations, like a “couples’ weekend” package including champagne and desserts.
9. Occupancy-based pricing
Occupancy-based pricing, or best available rate (BAR) pricing, lets hotels adjust room rates in real time based on demand. This dynamic approach allows hotels to attract price-sensitive travellers by lowering rates when occupancy is low and, conversely, raise rates during high-demand periods such as holidays or events.
By tracking competitor prices, seasonal demand, and local events, revenue managers can keep rates competitive without hurting profits. This method reduces last-minute discounting. It preserves the hotel's revenue and boosts its market competitiveness.
By tracking competitor prices, seasonal demand, and local events, revenue managers can keep rates competitive without hurting profits. This method reduces last-minute discounting. It preserves the hotel's revenue and boosts its market competitiveness.
10. Automated booking and cancellation management
Automated booking and cancellation systems streamline reservations. They reduce the front desk staff's workload and enable quick reallocation of cancelled rooms. These systems also allow guests to change their reservations, which improves the booking experience and increases conversion rates.
Implementation tactics:
Instant availability updates. Automate cancellation updates so rooms can be resold quickly.
In-app cancellation waitlists. Allow guests to join waitlists for sold-out dates, automatically booking them if space opens up. Automated booking systems reduce labour costs and ensure more flexible, guest-friendly experiences.
Implementation tactics:
Instant availability updates. Automate cancellation updates so rooms can be resold quickly.
In-app cancellation waitlists. Allow guests to join waitlists for sold-out dates, automatically booking them if space opens up. Automated booking systems reduce labour costs and ensure more flexible, guest-friendly experiences.
11. Loyalty programmes for repeat guests
Loyalty programmes encourage repeat bookings. They offer perks like early check-in, room upgrades, and discounts. Hotels can boost RevPAR by rewarding loyal guests. This will encourage repeat stays.
Suggested loyalty programme components:
Exclusive discounts and member-only rates. Offer tiered loyalty levels with increasing perks.
VIP events and exclusive access. Host events for loyalty members or grant priority access to new amenities.
Suggested loyalty programme components:
Exclusive discounts and member-only rates. Offer tiered loyalty levels with increasing perks.
VIP events and exclusive access. Host events for loyalty members or grant priority access to new amenities.
12. Invest in mobile-first experiences
Mobile platforms have become essential for hotels, as a growing number of guests prefer to make bookings, order room service, and request amenities directly through mobile devices. A mobile-friendly interface improves convenience and is proven to increase direct bookings.
Examples of mobile engagement:
In-app upselling. Encourage guests to add extra services like spa treatments or meal upgrades directly from their devices.
Mobile check-in/check-out. Reduce waiting times by allowing guests to check in or out through an app. Mobile tools help increase booking conversions, particularly among younger travellers who value digital convenience.
Examples of mobile engagement:
In-app upselling. Encourage guests to add extra services like spa treatments or meal upgrades directly from their devices.
Mobile check-in/check-out. Reduce waiting times by allowing guests to check in or out through an app. Mobile tools help increase booking conversions, particularly among younger travellers who value digital convenience.
13. Offer special rates for extended stays
Special rates for extended stays appeal to business travellers, remote workers, and families. They need low-cost, longer accommodations. The rates lower the nightly rate for booking several nights at once. It helps increase occupancy during slow times. It also cuts costs by reducing room turnover.
Extended stay offers help hotels achieve more consistent revenue and attract a steady stream of guests even when short-term bookings fluctuate. This strategy is particularly useful for filling rooms mid-week or during the low season, when leisure demand may be lower.
Extended stay offers help hotels achieve more consistent revenue and attract a steady stream of guests even when short-term bookings fluctuate. This strategy is particularly useful for filling rooms mid-week or during the low season, when leisure demand may be lower.
14. Revenue optimisation for non-room services
Non-room revenue from services like meeting rooms, spa treatments, and dining can be optimised with RMS. For instance, pricing spa services differently during weekends or offering discounts on mid-week meeting spaces can drive up bookings.
Practical applications:
Meeting room rentals. Use variable pricing based on time of day, day of the week, or seasonality.
Spa and wellness packages. Adjust rates based on demand and promote packages during off-peak hours.
Practical applications:
Meeting room rentals. Use variable pricing based on time of day, day of the week, or seasonality.
Spa and wellness packages. Adjust rates based on demand and promote packages during off-peak hours.
15. Pre-arrival and in-stay messaging for promotions
Messaging before arrival and during the stay can introduce guests to hotel services and amenities. It gives them a chance to book early or reserve premium experiences. For instance, an automated email sent two days before arrival can highlight available room upgrades, dining reservations, or local tour bookings.
Tactics for messaging:
Early booking incentives. Offer discounts on certain amenities if guests pre-book them before arrival.
Targeted in-stay messages. Remind guests of events, spa slots, or promotions during their stay.
Tactics for messaging:
Early booking incentives. Offer discounts on certain amenities if guests pre-book them before arrival.
Targeted in-stay messages. Remind guests of events, spa slots, or promotions during their stay.
Conclusion
Maximising hotel revenue requires a mix of digital tools, strategic pricing, and personalised guest experiences. By adopting these 15 strategies, hotels can boost RevPAR. They can streamline operations and create memorable experiences. This will drive loyalty and long-term profits.
