What Is Revenue Maximization and Why Does It Matter in Hospitality

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Full service hotels have an average daily expenditure of $41,000. But what if there was a way to reduce those expenses and increase your earnings instead? With a hotel revenue maximization strategy, there is.

The lack of a proper revenue maximization strategy increases the risk of losing reservations and overbookings and incurring unnecessary costs. Optimizing your revenue strategies combines marketing, demand, and pricing strategies to increase your hotel’s overall revenue for your business’s growth and success.

This guide explores essential facts about revenue optimization and helpful tips to utilize your hotel’s maximum potential for an ultimate guest experience.

What Is Revenue Maximization for the Hotel Industry?

Revenue maximization in the hotel industry involves generating the best strategies to ensure your property works at its maximum potential to increase your revenue and profitability. It considers proper revenue management to streamline pricing operations to boost sales and increase profit margins.

Basically, revenue maximization utilizes the best room prices to sell them to the most suitable guest in a certain period of time. But it’s more than just selling rooms. You must also consider your property’s other aspects, including the following:

  1. Ballrooms and function rooms for events
  2. Food and beverage
  3. Room upgrades
  4. Other amenities and services

All these aspects are critical because they help predict guest demand to increase your hotel’s overall sales.

Moreover, revenue maximization also includes utilizing relevant analytics to leverage suitable strategies to take advantage of all your property’s room types and use them to their full potential. The following are significant factors for analysis:

  • Determining guest behaviors and spending habits
  • Predicting room demand
  • Creating dynamic pricing strategies
  • Studying your competitors’ pricing strategies

These factors can improve your revenue management system, allowing you to make more informed decisions. Generally, revenue maximization means addressing five basic questions:

  1. Who
  2. What
  3. Why
  4. Where
  5. How

Additionally, proper revenue maximization involves a responsible revenue manager who will fulfill competitive duties, giving hotels new business opportunities. They also have additional marketing and commercial roles for the success of your hotel’s profit optimization.

Why Is Revenue Maximization Important in Hospitality?

Revenue management in hospitality is important because it helps hoteliers maximize revenues and yields. They do this using hotel technologies and big data to draw conclusions about how market demand may change and how to respond to those changes accordingly.

Additionally, revenue maximization is essential in the hospitality industry because it unites various departments in your hotel. The different departments offer different insights that support a strong revenue management strategy and ensure your hotel’s success.

The below table outlines a couple of departments that can help support your revenue management strategy.


The Purpose of Its Inclusion


Identify ways to resonate and reach your consumers through personalization

Branding and Reputation

Determining the importance of public perception to improve guest experience


Getting details about guests’ preferences, behaviors, and booking patterns to secure more deals in the future

Finance and Operation

Generate better budget allocations for your hotel revenue management

Food and Beverage

Assess the performance of your guests, servers, and menu to identify how to improve client experience


Identify events that contribute success to your sales and overall profitability

Why Use Total Revenue Management to Maximize Total Revenue for Hotels?

Total revenue management involves path-breaking initiatives to devise more effective pricing strategies to optimize your hotel’s total revenue performance. It’s through this tactic that hotels can survey different avenues to generate more funds, especially during off seasons and low-occupancy periods.

Total revenue management involves increasing your hotel’s profit margins by measuring and tracking various links in different revenue streams. This allows hoteliers to establish better package rates and services that benefit the property’s profitability.

Hotel upselling is also part of a total hotel revenue management plan. It’s more straightforward because it has two main purposes:

  1. Increase your average daily rate
  2. Create strategies to resell your lower room categories

When your total revenue management strategy is well-established and well-rounded, you can guarantee reduced costs, increase profitability, improve portfolio or cluster performance, and create better department alignments.

For instance, proper total revenue management strategies encompass your hotel’s ancillary and food and beverage revenues. This ensures the best pricing decisions are made considering all the aspects of your hotel.

Total revenue management also considers profit margins, resulting in better control of purchasing, staffing, and fixed costs. Plus, because it promotes efficiency across all departments, you can expect a more cohesive workforce to achieve a common goal.

A total revenue management strategy also promotes asset optimization. It ensures all of a hotel’s dead zones are filled through a unified approach. These dead zones can range from rooms to restaurants, banquet spaces, spa rooms, and more.

How to Maximize Revenue for Hotels

Whether it’s the off or peak season, questions about maximizing your hotel’s overall revenue will dominate any hotelier’s mind. You might think that maximizing revenue involves changing your entire operation or replacing your team members with more competitive individuals. But that’s not always the case. Maximizing your property's revenue is not complicated, especially when you know which strategy works. Sometimes, even a few simple tweaks can entirely change your topline. Always remember that the key to efficient revenue maximization is leveraging the right hospitality technologies and the best strategies for your hotel.

We did our research and put together the most efficient and strategic methods to utilize when maximizing your revenue.

Strategic Method

Purpose or Benefit

Offer Early Check-In and Late Checkout

Can cause a substantial increase in your hotel’s revenue because these are premium services

Promote your food and beverage options throughout the stay

Provide convenience to guests who want to check out your food options

Offer room upgrades pre-arrival

An upselling strategy that caters to guests even before their arrival

Partner with local businesses to offer excursions and experiences

Commissions you receive can significantly increase your revenue

Take advantage of other upsell opportunities

Contributes valuable revenue aside from room reservations

Promote upsells with text messages

Can increase adoption even when your guests have already arrived at the hotel

Incentivize your staff to promote upsells

A great opportunity because your staff can directly communicate with your guests for feedback

Increase and improve your reviews

Can improve your online brand image and reputation

Offer promotions to encourage bookings during slow periods

Can maximize your hotel stays during off seasons, increasing your profitability

Market your hotel to appease specific guest demographics

Advertising can address client demands

Optimize your website, social media, and prices

Increases your online presence to reach more potential guests

Invest In The Right Revenue Management Software

Becomes your avenue to accomplishing relevant tasks faster and more efficiently

Offer Early Check-In and Late Checkout

Did you know that early check-in and late check-out are under-optimized in a hotel management’s upselling opportunities? Not leveraging these strategies is a costly mistake. Plus, you’re leaving potential revenue increase on the table.

Early check-in and late checkout services are simple ways to offer your guests premium services and increase your hotel’s revenue. Don’t think twice about charging for these instead of offering these services for free.

The fees you receive from these services can significantly increase your hotel revenue. Guests are often willing to pay a little more for an early check-in or late check-out. Even better, these extra charges contribute to 100% of your hotel’s profit.

Early check-in and late check-out can also help increase your hotel’s occupancy rate because you’re accommodating guests with preferences outside the typical check-in and check-out times. This can also significantly improve the guest experience, loyalty, and online reviews.

Promote Your Food and Beverage Options Throughout the Stay

Because of the rise of on-demand convenience from big companies like Uber, Amazon, and DoorDash, guests are attracted to services they can order and get as quickly as possible.

Part of an optimal revenue maximization strategy is providing your guests with digital access to your food and beverage options throughout their stay. This includes having an online menu or a QR code your guests can scan and view from their phones and a website or application where they can place orders.

When guests can easily view your food and beverage selections and place orders using their mobile phones, it promotes convenience, increasing your hotel’s overall purchase rates.

Offer Room Upgrades Pre-arrival

Another common way to maximize revenue in the hospitality industry is by offering room upgrades to your guests. This involves giving your guest a room from a higher category at a discounted rate.

Offering room upgrades is normally done upon check-in by the front desk, or you can inform your guests about possible room upgrades, even pre-arrival. This can be done through emails, text messages, or phone calls.

The following are the advantages of offering room upgrades pre-arrival:

  • Gives guests an opportunity to think about the possible upgrade and respond to it at their own convenience
  • Allows you to resell your lower category rooms to boost occupancy

This also helps prevent overbooking because there’s no need to offer free upgrades when selling high-category rooms.

Luxe Pricing’s software offerings assist in this scenario. Using HouseCount RMS, room, events, and amenities pricing is optimized throughout your resort or resorts. Pricing can be managed via a 360-degree campus view, making it easy for RMs to make small tweaks. However, the software also offers full automatic pricing using the power of machine learning and the concept of feedback control theory—an approach that allows the system to use the information it gathers to optimize pricing continually.

When HouseCount is combined with LuxeSell URS, agents are able to maximize upsells with little effort on their part, as the software presents the right offer to the right guest at the right time. Of course, the agent can also view dynamically yielded pricing for all room types in the hotel.

Partner with Local Businesses to Offer Excursions and Experiences

There’s a high chance majority of your leisure guests are willing to pay for day tours, excursions, and other unique experiences that will make them enjoy their vacation outside of your property. This is why partnering with local businesses with these services is an outstanding way to increase revenue.

Moreover, it’s a win-win situation for your guest and the hotel. They are likely to get these experiences at a discounted price, and you get a bonus profit which helps with your hotel’s revenue from the commission or referral fee from the local business.

This is called partnership marketing. It’s a strategic approach that promotes collaboration with local businesses, engaging and attracting more guests. Aside from increased revenue, hotels benefit from gaining access to knowledge, expertise, and shared resources. At the same time, hotels can tap into the local business’s client base to build brand awareness.

Take advantage of other upsell opportunities

Don’t forget that you must leverage other upsell opportunities for your hotel. Not offering these upselling strategies loses your chance to achieve valuable revenue. Here are other upsell opportunities you must take advantage of:

  • Parking and valet fees.
  • Pet fees. Make your hotel pet friendly by asking for an extra charge if your guests will bring their pets
  • Shuttle transportation. A kind of convenience guests are willing to pay for, especially from the airport or local attractions
  • Gift or souvenir shop. You can sell merchandise items

You can utilize your hotel’s spacious parking lot for guests to secure safe parking spaces for your guests’ vehicles. And if there are unused slots, you can offer these as rental spaces to restaurants, office buildings, or performing art centers.

However, this also means you must know how to properly audit the capacity of your parking lot during different periods. This prevents affecting your guests’ parking experience at your hotel.

Promote Upsells with Text Messages

A study by Gartner revealed that SMS messages have a 98% open rate and a 45% positive response rate. This gives you a smart way to spend money using text messages for upselling and cross-selling strategies.

The study also tells you guests prefer text messages over receiving professional emails. Texting your customers is a form of communication that can increase your hotel’s adoption and revenue, even when they are on-site.

An effective SMS upselling marketing sparks up an accurate dialogue with your guests. It involves asking them the right questions to know their opinions and feedback regarding their stay at your hotel.

Moreover, communicating with your guests through text messages can also build rapport, creating deeper connections with them. This helps in gaining their loyalty so that they return to your property. It also helps you determine their specific needs and preferences.

Incentivize Your Staff to Promote Upsells

Providing incentives to your team members with effective upselling strategies can also increase your hotel’s revenue over time. Your different hotel staff can interact more frequently with your guests, creating an effective upselling opportunity.

Always remember that a motivated and friendly staff is key to your hotel’s success. You can incentivize them by giving them monetary compensation for any successful upselling. But you can engage your team members in a friendly competition if you are fond of challenges.

Provide a unique prize or reward for the staff that upsells the most at the end of each month. Regardless of your chosen strategy, remember that it can only succeed if your staff decides to buy into it.

Moreover, value your hotel staff and team members because they are essential resources for effectively brainstorming ideas on increasing revenue. This is because they know your guests the best. They know what they need and their demands to improve their overall stay.

Increase and Improve Your Reviews

increase-and-Improve -your-Reviews

It’s common for guests to check online hotel reviews prior to booking. Reviews are guest testimonials, feedback, and opinions that help guests manage their expectations and determine whether the hotel can match their demands.

One way to work on your hotel reviews is to ask your guests upon checking out. Ask them face-to-face about their experience so you can provide follow-up questions and ask for suggestions on how you can improve your hotel.

After the communication, you can tell your guests to leave a review online. Because they enjoyed their stay, they will likely recommend their stay on your chosen review channel.

Alternatively, you can immediately ask your guests for an online review after their stay through email marketing or text messaging. Post-stay messaging is an ideal way to encourage your guests to leave online reviews.

Post-stay messages include words of gratitude sent to your guests to thank them for trusting your hotel. They should be sent to all your guests with a polite endnote to leave a review, especially if they enjoyed their stay.

You can also include in the message to contact your hotel directly for negative feedback. This ensures communication between you and your guests even after their stay.

Another way to increase your reviews is to incentivize your guests. Incentives are an easy way to motivate guests to leave feedback on your preferred distribution channel.

Offer Promotions to Encourage Bookings During Slow Periods

All businesses in various industries will always have peak and off seasons, even hotels. This does not mean you shouldn’t do anything during slow periods to maximize revenue. Instead, you must leverage these times to utilize smart strategies to stay ahead of your competitors and increase your revenue.

For instance, business-centric hotels in urbanized areas can have lower occupancy rates during holidays or weekends versus busy workdays. At the same time, leisure hotels and resorts can experience reduced occupancy rates during normal weekdays than holidays and weekends.

Offering promotions is the most strategic approach to increasing occupancy rates during slow periods. You can promote special bundles that enable guests to reserve higher-category rooms at a much more affordable price. You can also partner with local businesses to create special bundles.

Business-centric hotels can collaborate with restaurants or local attractions to create desirable travel deals.

Market your Hotel to Appease Specific Guest Demographics

The right marketing strategy depends on specific guest demographics. This is why you must know all the information about all types of guests. This is also how you can address their demands and expectations the best.

Your advertising strategies should capture your guests’ attention, depending on the specific demographics you’re trying to appease. The right strategy can make your guests become more inclined to secure a room at your hotel.

The right marketing approach can also aid in establishing well-rounded pricing strategies to suit your guests. This means you are well aware of the current events and trends you can leverage to create targeted promotions that are advantageous for the local community and your hotel.

Marketing your hotel also helps create a more personalized experience for your guests. But this also means getting to know them, including their spending patterns, booking behaviors, and other preferences affecting their stay.

This is also why storing your PMS system data securely is critical. It includes relevant information that can help you determine the following:

  1. Whether they are business or leisure travelers
  2. Whether they are traveling solo or in a group
  3. Their age and location

All these pieces of information will also allow you to understand what add-ons and premium services will cater to them the most.

Optimize your Website, Social Media, and Prices

If you want more guests to become interested in your hotel, you must also optimize your online presence. This includes improving and revamping your website, social media, promotions, and other forms of marketing. It ensures you can cater to your guests, especially those who are genuinely interested in your property.

Optimizing your online presence includes improving online reviews and social media impact and establishing the right prices to attract more guests. But you must also keep in mind that this will not happen overnight. It takes patience, determination, and significant time to master your guest profiles and know exactly what they want.

Moreover, website optimization can boost organic traffic, meaning more people will view your website and check your services.

Additionally, price optimization is beyond simply increasing your room prices. It involves setting various rates during different time frames across various distribution channels. This ensures you attract the right guests at the right time.

Invest In The Right Revenue Management Software


And finally, every strategy will succeed and work out with the right revenue management software. Because it’s a tech solution, it’s an investment you must take seriously to prevent wasting your available resources. The right revenue management software knows proper price optimization while utilizing other approaches to maximize your hotel’s revenue.

For instance, HouseCount RMS by Luxe Pricing is an all-in-one cloud-based tech solution for the success of your hotel’s revenue management. It encompasses all the features you need to promote efficiency, boost your property’s performance, and improve the overall guest experience.

Ultimately, the right revenue management software maximizes revenue by utilizing all your property’s rooms. It focuses on each service and room your hotel offers to maximize their occupancy potential.

How to Improve Hotel Revenue With Luxe Pricing

HouseCount RMS by Luxe Pricing provides real-time and accurate dynamic pricing for hotels, events, and theaters. Its main goal involves boosting sales and efficiency and maximizing revenue for the success of hotels in the hospitality industry.

One of its main features involves automatic, real-time, and accurate pricing. Using the principle of feedback control theory, a common theory in engineering, HouseCount RMS promotes quick adaptation to real-time changes in the industry’s supply and demand. This results in better transparency, flexibility, and pricing recommendations.

HouseCount RMS also features Autopilot and Inventory-Type of Pricing. Inventory segments are provided by this tech solution to ensure proper aggregation of each room type and price level. And thanks to autopilot, you can enjoy round-the-clock pricing coverage.

HouseCount RMS offers convenience, flexibility, and comfort for hoteliers. It saves time spent on repetitive tasks because it’s automated and cloud-based.

At the same time, LuxSell URS presents agents with the best upsell opportunities to present to guests, meaning they can confidently present an upsell without digging through current promotions or deals or double-checking pricing. Instead, the system dynamically presents an offer for each individual guest that acts as the perfect complement or upgrade to their original purchase.


Revenue optimization might just be the key to your hotel’s success. It’s more than just raising prices—revenue optimization ensures you establish optimized prices in each room type to maximize your property’s full potential.

Investing in the best hotel revenue management software is essential for proper revenue optimization. Without an ideal tech solution, you risk losing valuable money that can boost your hotel’s profitability in the market.

HouseCount RMS is a trusted and reputable cloud-based tech solution for your hotel revenue needs.It’s an all-in-one platform that promotes strategic pricing, real-time analytics, and full mobility for your guests’ convenience. Schedule a demo today to learn more about how it works and how it can help support revenue maximization.

From Upsell Opportunities to Accurate Price Management, Luxe Pricing is Here to Maximize Your Revenue