15+ effective ways to increase hotel revenue and profit

Every hotelier and host faces the question of how 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 revenue depending 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 hotel business 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 you develop 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 hotel revenue.

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 hotel guests and increase revenue.

4. Maximize online reach with a Channel Manager  

How to increase online bookings? A hotel 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.

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 your social media networks and 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 that 67% of consumers consider 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 to boost 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 a global distribution system (GDS) that will get your inventory in front of business travelers and their booking partners.

12. Use hotel revenue 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 – get real-time access to consumer demand, and you’ll be able to make updates to your pricing or room types.

Avoiding errors – revenue management systems also 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.