Growing hotel revenue is crucial for staying competitive and relevant. It allows you to keep reinvesting so you can keep your property in top shape and build a stronger brand while adapting to changes in the market.
Growing hotel revenue is crucial for staying competitive and relevant. It allows you to keep reinvesting so you can keep your property in top shape and build a stronger brand while adapting to changes in the market.
But how do you go about it?
When answering the question of how to increase hotel revenue, we need to look beyond just optimizing room occupancy and focus on total possible revenue: the revenue your hotel could make across all of its infrastructure and services.
This makes you less dependent on purely the number of rooms you sell and, consequently, allows you to generate more revenue even during low season.
If you're stuck for ways to increase hotel revenue, analyzing what your competitors are doing can be a good option. But what if they seem just as stuck, or you want to make sure your hotel stands out?
Read on.
How to Increase Hotel Revenue: 19 Strategies
In what follows, you'll find 19 strategies to increase hotel revenue. Some of these will be a better fit for your hotel than others, but try to keep an open mind. Often, it requires only a little bit of creativity to adapt something typical for another segment to your offer.
Sharpen Your Messaging
Are you a boutique hotel best-equipped for couples, a hostel targeting solo travelers, or a luxury resort prepared for those who only want the finest things? Whatever your brand is, make it clear to anyone who comes across you during their research process.
Reaching the right guest and showing them why you're the best choice for their trip is crucial. That means:
- developing a clear brand image across your advertising and marketing efforts - including your presence on OTAs.
- tailoring paid ad and marketing campaigns to different segments of your audience.
- appearing in the magazines and on the online platforms relevant to your potential guests.
Having a strong brand not only helps you to stand out and be memorable, it also gives travelers a sense of what to expect when staying with you. This increases the chances of the right traveler booking a room, having a positive experience, and leaving a positive review.
Encourage Reviews
People are less likely to book a hotel when it has few reviews, so encourage guests to leave you one. You don't even need to offer them anything extra. Simply asking and making the process easy for them already increases the chance of them taking action.
If you have their email address and they've consented to receiving emails from you, send them a review request shortly after their stay. If they've booked through an OTA, you can send a message through the OTA's messaging system and ask them if there's any extra feedback they'd like to leave you with.
Asking them verbally when they check out likely won't be enough. After all, they'd have to look for your hotel online, figure out where to leave the review, and then do so. Make it easy for them by sending them a link to click that leads directly to your desired review pages - whether that's on your own website, Google Maps, or somewhere else still.
And of course, for guests to leave positive reviews, you need to deliver the quality and service they are expecting - or more.
Up Your Customer Service Game
According to a report by Accor, 97% of travelers look up reviews before booking a hotel. While you can't change a review someone leaves, you can respond to it. Not only does that show past guests that you still care, it also shows potential guests that you're invested.
Of course, always be courteous, even if the review is not.
Another way you can show guest care even before someone has booked with you is by being helpful and kind when travelers call or email with specific questions. When someone takes an action like that, you're at the top of their consideration set, and how you reply could make the difference between a booking and an empty room.
Just be careful not to promise anything you can't deliver, and take into account that with email, the speed at which you reply is just as important as what you say.
Boost Direct Bookings
While Online Travel Agencies (OTAs) are an indispensable marketing tool and revenue generator for many hotels, they can swallow up to 20% of your earnings in commission. If you want to increase your hotel revenue, you need to decrease your dependence on OTAs.
Generate more direct bookings by:
- linking to your hotel website from OTAs when possible.
- offering free extras such as breakfast or a late check-out when guests book through you.
- having an active online presence through your website, social media channels, and newsletter.
- getting featured in relevant publications, online and offline.
- investing in SEO and GEO (Generative Engine Optimization).
- re-marketing to travelers who left your website without booking.
- maintaining an easy-to-use booking engine on your own website.
Consider Strategic Collaborations
Your hotel exists within the larger realm of experiences a traveler can have at your destination. Even if you run a resort where guests never leave the property, they've still chosen your destination for a reason.
Consider collaborating with other local businesses to market your hotel property, enrich your guests' stay, and increase hotel revenue at the same time.
If you haven't done so already, get acquainted with the marketing departments of local and national tourism boards. They often organize destination marketing campaigns for which they bring in press and influencers to cover what their destination has to offer - including places to stay.
You can also sell tours, show tickets, or other activities and take a cut. According to this McKinsey report, in 2023, 47% of experience bookings still happened offline with many travelers booking experiences at their hotels.
And did you know that according to an Expedia trends report, 44% of travelers shop for local goods they can't find at home? You could offer the most popular items or a selection of things that fit your brand.
Lastly, don't forget about business travelers. If your hotel is suitable for business travelers, figure out which companies regularly fly in employees and reach out to them to fill up your rooms on weekdays.
Host Your Own Events
Aside from working with outsiders, you can also host your own events. Activities such as cooking workshops, author readings, and art classes draw in the local community and are an extra selling point for those looking for accommodation.
Hosting events also allows you to give purpose to otherwise underutilized spaces and drive additional revenue through catering and on-site dining options.
Market and Pitch Group Bookings
Connect directly with wedding planners, event organizers, and retreat hosts to pitch your property as the perfect partner for their event. You can also list your hotel in online hotel directories so organizers can easily find you.
To win group bookings, offer competitive rates or discounts starting from a certain number of hotel rooms booked. You can also create packages customized to each group. Do this by bundling services or by working together with local operators to create a more complete travel experience.
Promote Your Loyalty Program
While more relevant for certain hotel types than others, loyalty programs can be a great way to stimulate repeat stays. The key is to offer the rewards your guests value most and not just points. That could be discounts on future stays, free early check-in or late check-out, free breakfast, airport transfers, or other exclusive perks.
If you have a lot of repeat stays, consider creating a tiered membership to reward loyal customers who return more often.
And don't forget to promote your loyalty program whenever you can. A revenue generator isn't worth much when guests don't know about it. Mention it on your hotel website and social media, during check-in, when guests check out, and in your newsletter.
Lastly, having clear program rules and making it easy for travelers to redeem awards is crucial for participation.
Offer a Next-Stay Discount or Perk
If implementing a loyalty program doesn't make sense for your hotel, you can still incentivize repeat stays by offering a next-stay discount or other perk. Just make sure the offer doesn't expire too quickly, as not many types of travelers want to or can return to the same destination within the year.
Upsell and Cross-Sell Throughout the Guest Journey
Early check-in, late check-out, a champagne breakfast, a room upgrade, a spa treatment, … there are plenty of services you can sell hotel guests both before their arrival and while they're with you.
Some great places and moments to offer upsells and cross-sells are:
- during the booking process.
- in pre-arrival communication.
- upon check-in.
- through information stickers in elevators and leaflets in the rooms.
And if your rooms come with high-quality towels, bathrobes, or toiletries, why not offer these for sale as well? The right type of hotel could even double as a gallery, exhibiting and selling work from local artists, or partner with design stores to sell the furniture and decorations at guests' disposal.
Sell to Non-Guests
Occupancy rates are important, but getting your hotel rooms booked isn't the only way to generate revenue. Opening your facilities and services to non-guests not only increases revenue but also introduces your brand to new people.
Aside from hosting your own events, you can:
- open conference rooms for coworking at daily rates.
- welcome non-guests to your restaurant and bar.
- sell hourly or daily passes to your spa center or pool.
Create Packages
People love a good deal. Instead of only selling them separate extras like early check-ins, consider creating packages or bundles at a lower price than guests would pay for each of the services separately.
A couple on holiday might want to enjoy both a late check-out and a couples massage, while a businessman might appreciate an early check-in paired with an airport transfer.
Create bundles that make sense and promote them on your website, in pre-arrival emails, and at check-in.
Implement Stay Minimums and Maximums
If one-night stays are driving up your costs or taking up rooms during high-demand periods, consider implementing a temporary stay minimum. Just asking for a two-night stay minimum already increases your revenue-per-guest and can lower your costs significantly, as you won't need to handle as many check-ins, check-outs, and room preparations.
In the same way, you can set a maximum length of stay just a few days before a big event takes place so that you can charge people coming for the event a higher rate.
Incentivize Longer Stays
If your hotel is equipped for it, consider marketing to travelers who are looking for an extended stay. They'll likely focus on other amenities and services than short-term travelers, such as the presence of a gym, laundry service, and a decent fridge in their room.
Extended stays offer double benefit: you have fewer nights to sell, and your cost per guest lowers.
Uplevel The Dining Experience
If you have an on-site restaurant, boost its appeal by designing seasonal menus, working with renowned chefs, only using local ingredients, or going for an interesting theme. This makes it more enticing both for guests and non-guests alike.
Regardless of the range you're in, there is something you can do to make your restaurant stand out.
Experiment With Competitive and Dynamic Pricing
Are you charging less than what your audience is willing to pay? Then it's time to increase your room rates. Additionally, you're able to charge more on certain days of the week or times of the year when demand goes up. If you don't adapt your room rates accordingly, you miss out on an opportunity to significantly boost revenue.
To know when to change your rates, track what your competitors are charging, and what local events are taking place that could affect your occupancy rate. These can include:
- festivals
- school holidays
- a large trade fair
- …
It's worth investing in advanced revenue management software that does the math for you and presents you with ready-to-use data on demand fluctuations throughout the year. These tools also automatically implement dynamic pricing based on your chosen criteria, saving you a lot of time.
Invest in Sustainability
Guests across segments increasingly expect hotels to be mindful of their ecological footprint. If you think this doesn't ring true for your target audience, feel free to skip to the next point, but not before you read that according to Booking.com's Sustainable Travel Report 2024, 45% of travelers find accommodations with a sustainability certification more attractive than those without.
Investing in sustainability can also reduce costs. For example, when you ask guests to consider the environment and reuse their towels. Other times, an upfront investment is needed to reduce costs in the long run. A typical example would be replacing all traditional light bulbs with LED lights.
Lower Costs, Not Quality
If generating extra revenue seems hard, what about cutting costs? Perhaps you have some chunky processes in place that cost your staff a lot of time they could spend elsewhere? Or maybe your dining menu offers 12 options while 90% of your guests just order six of them?
Getting rid of un(der)utilized offers is a great way to simplify and make room for things that could generate revenue.
Have a thorough look at the services you offer as well as your internal processes, and be honest about what you can cut without lowering the quality of the guest experience.
Balance Investments With Expected ROI
More often than not, increasing revenue requires a certain investment. If not financially, then maybe in terms of time or operational changes you need to make. It's therefore important to estimate the expected ROI you'll get from each investment and prioritize things that are likely going to pay off well.
Depending on where you're at, you might also want to prioritize quick wins or do the opposite and invest in changes that will bring in more revenue in the long run.
To gather ideas, train your staff to spot possibilities brought forth by guests, whether that's through formal feedback or a simple mention of "Oh, too bad there is no carpaccio on the menu." This allows you to come up with strategies that you wouldn't be able to generate just from crunching numbers and can prevent you from investing in things that don't align with your brand image.
Track Your Efforts
Use hotel revenue management technology to track what brings in revenue, what the market is like at any given point, to spot patterns in demand, track competitor rates, and more. Doing this not shows you where to invest next and where to decrease your efforts. On top of that, it shows you whether your estimates about the ROI of a new revenue generator were correct.
Start Growing Your Hotel Revenue Today
Now that you have a list of ideas for how to increase hotel revenue, it's up to you. Make an inventory of you're existing revenue streams, which ones are working well, and where you could implement something new to maximize revenue.
Think beyond room occupancy and decide which possible revenue streams to invest in first based on estimated ROI. Track your efforts and adjust accordingly.
And whatever you decide to do, keep the quality of the guest experience central.
