Unlocking Hotel Revenue Potential: 3 Proven Strategies for Growth

In today’s hospitality market, maximizing revenue is more than a necessity—it’s a survival strategy. RevPAR (Revenue Per Available Room) growth has become increasingly challenging, with U.S. expectations down 25 to 50 basis points, according to a Baird equity note. The first quarter of 2019 saw RevPAR growth of only 1.2% in the U.S. and 0.7% in Europe, according to HotStats. This reality forces hoteliers to get creative and rethink traditional approaches to revenue generation.

To gain insights on how to tackle these challenges head-on, we turned to industry veterans: Johnathan Capps, VP of Revenue at Charlestowne Hotels; Harshil Patel, VP at Champion Hotels; and Kristie Dickinson, EVP of Business Development & Marketing at CHMWarnick. They shared three powerful strategies that can elevate hotel revenues even in a slow-growth market.

1. Cultivate Talent to Drive Innovation

“Hire the Right People,” says Johnathan Capps. Today’s revenue managers need to be more than data-driven; they must be inventive and cross-disciplined leaders who can adapt to new revenue channels and rethink rate strategies. Technology has advanced, but so have customer acquisition costs. Revenue managers need to collaborate closely with marketing and sales teams, applying analytics to develop new campaigns or explore alternative pricing structures that challenge traditional methods.

Capps emphasizes the importance of understanding how demand is generated and how it contributes to the bottom line. This holistic approach enables hotels to pinpoint which channels are producing the most profitable business and adjust their focus accordingly.

2. Optimize Food & Beverage for Incremental Gains

Food and beverage (F&B) operations often represent an underutilized revenue stream. Capps stresses that hotels must invest in F&B programs strategically, as they not only generate direct revenue but also help elevate the hotel’s market position. Well-run F&B outlets can attract more than just hotel guests—they can become community hotspots.

By ensuring quality in service and menu offerings, hotels can create memorable experiences that enhance guest satisfaction and loyalty. Discounting F&B options can also create a perceived increase in value without eroding room rates, enabling properties to maintain or even raise their Average Daily Rate (ADR) while boosting overall guest spend.

3. Master Sales and Business Mix Management

Sales strategy plays a critical role in revenue growth, especially in competitive markets. Harshil Patel from Champion Hotels underscores the value of having a strong sales director to focus on outside sales. It’s essential that General Managers (GMs) concentrate on guest services while sales professionals generate new business. A strong sales director helps build long-term relationships that lead to repeat stays, increasing occupancy and profitability.

At the same time, understanding your property’s brand and its strengths is key. Patel advises working with brands that offer strong reservation contributions and customer loyalty programs, as these partnerships can significantly increase booking rates without the need for aggressive discounting.

Kristie Dickinson further highlights the importance of adjusting a hotel’s business mix. Simply shifting focus from one market segment to another can open up untapped revenue streams. By reevaluating which segments (e.g., corporate, leisure, group) you target, you may uncover opportunities for higher rates, even without changing prices within a specific segment. Dickinson also suggests transforming sales teams from passive “catchers” to active “hunters” who pursue the business that aligns with the hotel’s financial objectives.

Bonus Tip: Leverage Data and Benchmarking

Finally, hotels must consistently benchmark their performance against competitors to gauge success. As Dickinson explains, making informed decisions based on data is crucial. Monitoring industry trends, using revenue management systems, and tracking competitors’ pricing and occupancy strategies can help hotels stay competitive. This data-driven approach enables more strategic decisions that go beyond guesswork and align with market dynamics.

Conclusion

In a sluggish RevPAR environment, maximizing hotel revenue requires more than basic rate adjustments. By hiring inventive leaders, investing in F&B, optimizing sales strategies, and leveraging data, hoteliers can position their properties for success. With these three strategies in hand, hotel operators, owners, and asset managers can rise to the challenge and unlock new revenue opportunities in even the most difficult markets.