Hotel revenue management is one of the most important elements of a successful business in the hospitality industry. By understanding what’s behind optimal performance, you can maximize your hotel’s economic results and understand better where your pitfalls lie. You can do this by analyzing demand and defining ideal rates that will help optimize your revenue.

There are many effective revenue management strategies and in this article we will look at the top ten. 

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Why is it important to have an effective revenue management strategy?

An effective revenue management strategy is the driving force behind any successful business. In the hospitality industry in particular, by anticipating demand hoteliers can optimize availability and pricing, which helps deliver the best financial results possible. To do so, you must be able to understand consumer demand trends in order to be able to sell a room at the best price at any given time using the right distribution platform. 

Read more about how to find the right price.

Contrary to popular belief, just because a hotel has high occupancy at any given time, it doesn’t necessarily mean that a hotel has high revenue, because there is so much more behind optimizing earnings. By using hotel rate management software, you can be sure to optimize inventory and maximize profits by creating customized product rates and rules to suit your business. Managing revenue should not be a one-size-fits-all approach, but rather you should adopt strategies that best align with your hotel’s value proposition.

10 revenue management strategies

Now that we’ve understood the importance of revenue management, let’s take a look at the top ten revenue management strategies. 

1. Monitor the competition 

Your comp set should be your guiding force to make decisions about pricing and to understand how you hold up against other hotels in the same price range, in the same location and with similar amenities. In revenue management, it is important to keep an eye on the competition to anticipate peaks in demand and make strategic decisions about prices. For example, knowing when your competition is offering deals could be an indicator that demand is low, so you should follow suit and adjust prices. 

2. Forecasting is key 

In the previous point, we talked about anticipating peaks in demand, and this can be done by forecasting. By keeping methodical records of historic performance data, such as occupancy, rates and revenue, you can better prepare for the future. If you notice a consistent lull in bookings from year to year in the first weeks of September, you can anticipate lower demand and thus run a special discounted price in order to incentivize bookings during this period.

Of course, forecasting should be accompanied by a closer monitoring of the competition’s performance, trends across the industry, market dynamics such as a recession, and holidays. Data is key, and being able to analyze that data correctly will do wonders for your revenue management strategy.

3. Know your guests 

You know what they say: segmentation in the hospitality industry is key. By knowing who your guests are and understanding their booking habits, you’ll be able to better guide the planning and execution of your revenue management strategy. Segmenting audiences by travel purpose such as leisure, business, family reunions, family holidays, events etc., will help give you a better idea of when your guests are more likely to book. 

Furthermore, by having clearly segmented audiences, you can then understand who are your most profitable guest profiles and optimize your revenue strategy based on this.

4. Direct bookings are gold

Direct bookings are the most profitable types of bookings, with no additional commissions or costs paid to distributors, which is why having a plan to obtain direct bookings is a key part of any revenue management strategy. In order to maximize direct bookings, you may consider creating a loyalty program or offering discounts or an added bonus for booking directly.

5. Don’t neglect yield management 

Yield management goes hand in hand with revenue management, as it includes the revenue generated through room rates and occupancy. By optimizing your room prices to suit demand, you can effectively increase your revenue. Establishing different prices based on occupancy also allows you to get more per room when demand is higher. 

Learn about the benefits of yield management.

6. Diversify your pricing strategies 

Pricing strategies are one of the most important ways to increase revenue. Some pricing strategies could be: dynamic prices that lower or increase based on demand; offering lower prices for direct bookings; employing different rates per length of stay; packages that include other services along with the room rate; or you can even offer different rates according to the segment. Diversifying your pricing strategies will allow you to optimize revenue by using a variable pricing structure that allows you to adjust according to the market conditions.

7. Work across departments 

Revenue management should be based on a holistic approach; that is to say that your hotel should work across departments to optimize earnings. Ancillary revenue from room extras, spa services, restaurant and bars, and room service can be a great source of additional earnings. Make sure all staff are aligned on what they need to do in order to play their part in improving the hotel’s performance.

8. SEO can make a difference 

SEO, or search engine optimization, is one of the most under-rated tools to improve performance. SEO is optimization that can be done on your own direct channels such as your website and social media to increase organic performance in search rankings; and the better you rank, the more likely guests are to find you and book directly. Link building is an important component of SEO and by listing your hotel on different distribution channels, you can increase your visibility. Increased visibility is like a domino effect that can thereby lead to more bookings.

9. Think long-term 

It’s easy to get caught up in the day-to-day operations of a hotel, but one of the most important things you can do as a hotelier is to make sure to plan for not only the short term but also the long term. Set goals and establish the activities you need to do in the short, medium and long term to see that those goals are accomplished. Having a clear idea of the big picture keeps you from getting caught up in less strategic decisions that won’t necessarily help your hotel in the long term.

An effective revenue management strategy is one that forecasts the future, keeps in mind possible revenue traps, and make smarter decisions all around. 

10. Use technology to your favor 

Technology is your friend and be sure to use available tools such as those provided by Mews’ revenue management software, and other market data that can be used to price rooms better. Machine learning and algorithms can help you optimize prices and thereby achieve the most revenue per available room. You can also use rate shoppers and other tools that will help you keep better track of market trends and dynamics. 


In this article, we’ve looked at ten effective revenue management strategies that can help contribute to increased profitability. By putting into practice these tips you can ensure that your hotel gets the room price, timing, and channel right for the right customer so that you can maximize revenue, continue to grow, and stand out against the competition.