Hotel Revenue management 101

Hotel Revenue Management Strategy - Best Practices


Hotel Revenue Management is a professional discipline that requires a good understanding of guest preferences, environment trends, and competitor behaviour. Although revenue management is financial, it relies on the marketing concept of perishable Inventory.

Suppose your hotel has empty rooms today. If you’re not able to sell them by midnight, the room revenue you could have made is lost. To run a successful hotel business, implementing revenue management strategies can protect your sources of income.

Not to managing revenue can lead to consequences such as :

  1. Pushing guest to competing hotels;

  2. Damage the hotel’s reputation;

  3. Ignore selling opportunities;

  4. Forgetting guest loyalty;

  5. Becoming less valuable to stakeholders.


The methodology for developing your Revenue Management Strategy should originate from standard operating procedure – more commonly known as SOP’s (Standards Of Procedure) SOP’s can include things like: Market Segmentation; Dynamic Pricing, Forecasting and Channel Management. There are many standards we can use in building the strategy. Either way, it's most likely going to rely on archived and existing data and information from hotel operations like: rates, occupancy, seasonal booking patterns, and environmental factors etc …

Standard operating procedure can also be considered Hotel Best Practices which is the terminology we'll use for this blog.


Below are 8 pillars representing hotel best practices. Using the 8 together for our strategy helps define a robust foundation of checks and balances.


Not all travellers are the same. Identifying unique attributes help identify similarities between different guests enabling you to segment the market into groups, like: leisure, business, family, family holidays, events, etc. Knowing your guests and understanding their booking habits, makes it easier to plan and execute your strategy.

Typical segments include:

  1. FIT / Transient

  2. Corporate

  3. Group / MICE

  4. Government

Segmenting allows you to differentiate and target guests by positioning your hotel with rates or packages to target specific groups or market segments. It can also help you to stand out from the competition, as well as to create your own competitive advantage.


Not every hotel next door is your competitor. You have to define your competition. (AKA compset). Identify competitor hotels based on the similarities to you using the criteria below:

  1. No.of rooms;

  2. Room types;

  3. Size of rooms;

  4. Room Rates;

  5. Number of Services;

  6. Ratings and reviews.

Identifying hotels closest in market positioning to your own property, can alert you about when they are offering deals. Respond to competitor tactics with a combination of promotional deals or incentives to attract more guests.


Find out where you're making the most sales by mapping out your revenue streams, including direct bookings, OTA, Wholesaler, Corporate and MICE etc. This is useful to help understand which channels are contributing most to your bottom line, and where you can harvest better value bookings.

Having diversified distribution channels help spread the revenue base so you’re not relying on one source of income. Hoteliers can increase their reach and attract a bigger selection of guests by carefully managing these channels to avoid over or underselling rooms through one or more channels.

Analysing which channels contribute the most hotel bookings also help identify whether you're pushing rates too aggressively through one channel instead of maximizing your profit from more stronger channels.


Forecasting is an effective hotel revenue management strategy to set prices based on expected demand. Keeping records of historic performance, such as occupancy, rates and revenue, will help guide your revenue management strategy.

For example - if you see a regular slow down in bookings, beginning every October, you can plan for the expected lower demand and therefore prepare special discounted prices in order to incentivize bookings.

One of the best tools to use in forecasting (for example) is the hotel property management system. The system can generate detailed reports and provide business insights that include revenue earned, best-selling rates, channels, ADR, and more. These reports will help identify trends that will allow you to make precise and important decisions in executing your hotel revenue strategy.


Dynamic pricing is one of the most important ways to get better value from your bookings in order to increase revenue.

You can optimize revenue by using a variable pricing model that adjusts depending on market conditions. Pricing strategies include:

  1. Dynamic pricing changing up or down according to demand;

  2. Lower prices for direct bookings;

  3. Different rates per length of stay;

  4. Packages that include other services along with the room rate;

  5. Different rates according to different market segments.

The rationale for using dynamic pricing is that you continuously adjusts room rates in line with market demand. That way, your hotel can respond to market conditions quickly with rates, pitched according to buying sentiment. The principle behind dynamic pricing is that it allows your hotel to capture the right customer at the right time and so you can maximize your revenue opportunities.


Direct bookings are the most profitable bookings, with no additional commissions to pay. Inspiring guests to booking through your website or social media platform is a skill and should be part of the revenue management strategy.

To maximize direct bookings, you can offer attractive packages, incentive freebies and room upgrades.

For example, personalize the promotion according to the market segment or guest preference such as :

  1. A room with a ocean view;

  2. Late checkout;

  3. Free Breakfast;

  4. Airport transfers.

Upselling your direct bookings is another great way to generate booking revenue and improve the guest experience by selling upgrades you know the guest wants.


When people book a hotel, they look it up on Google, TripAdvisor, Trivago, etc. to get information. This can be an excellent opportunity and therefore, you should add your hotel website to the Google My Business listing so that a customer can go to your website and explore the option of booking directly.

Additionally, with Google's Free Booking Links program, your hotel can get listed easily by signing up with an authorized Google reseller. The program makes it easy for guests to “search their way” using Google meta search, and having your direct hotel rates featured in the search results. Google's Free Booking Links can drive more direct bookings to your hotel without too much effort.

To complement what you’re doing through Google metasearch - be proactive with SEO (search engine optimization) This is one of the most under-rated tools to improve performance. SEO can be done on your Website and Social Media platforms to increase your organic website traffic. The better you rank in search engine organic results page - the more likely guests will find your hotel and book directly.


In today's competitive environment, It is almost impossible to keep up with market trends, let alone manage bookings and room inventory through different B2B and B2C channels. Hoteliers can easily miss important occasions like festivals and events to increase occupancy and rates. Why leave important revenue opportunities decisions like this to chance ?

Hotel productivity applications act as an aid to revenue management and the tools they provide can assist hoteliers remain at the top of their game.

Productivity applications that help and support in Revenue Management include:

  1. Property Management Systems (PMS): Hotels can manage bookings, room availability, and pricing across different channels.

  2. Hotel Channel Manager: These tools enable hotels to manage rates and inventory across different channels saving time and money

  3. Revenue Management Systems (RMS): By using algorithms and data analysis, hotels can optimize their pricing and resources in real time.


Hotel revenue management relies on the concept of perishable inventory. Revenue Managers need to be skilful and should know how to analyse archived and existing data about hotel operations. Implementing a revenue management strategy can be an insurance policy that protects your income stream against loss in a dynamic and challenging marketplace.

The underlying concept of revenue management is to sell the right room to the right customer at the right time, for the right price via the right channel, with the best cost efficiency.

Hoteliers Guru offers a revenue management service for hotels who want to be proactive with growing their revenue. We do this through careful management of hotel inventory and rate distribution through B2B and B2C channels. We are a Google reseller and our booking engine is certified under the Free Booking Links program.

We offer applications and tools to help execute your hotel’s revenue management strategy such as Property Management System and Channel Manager. Hoteliers guru can provide channel manager connectivity with top Revenue Management Systems like Duetto and Ideals dot Com for those hotels already using a Revenue Management Service.

If you’d like more information about our services please contact us by email: [email protected]