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How to Increase Hotel Revenue in 2021

How to Increase Hotel Revenue in 2021

How do you balance the current state of the hotel industry with online travel, reduced foreign travel and restrictions on room availability – yet still create a workable strategy that will maximise hotel revenue once customers start booking again?

In a difficult global climate, planning ahead and being strategic with your assets is absolutely essential.  Knowing which market segment to target and selling the right room to the right traveller requires looking at historical data, room rates, your distribution channels and utilising yield management with your revenue management system to determine effective pricing strategies and increase revenue.

Understanding how to increase hotel online sales and how to manage your revenue is an important first step in planning for 2021 and being ready to attract the right customers to the right rooms and get heads on beds once the restrictions are lifted and the market is ready to open fully again.

What is Revenue Management

Revenue Management is the process of strategically distributing your hotel rooms, and tactically pricing the property’s perishable inventory – aiming to connect with the right guests at the right time on the right channels and increasing your bottom line by boosting revenue growth with a targeted yet flexible approach.

It requires targeted marketing (augmented by automated tools to increase efficiency), analytical structure (utilising historical data and current information gathered by collecting specific data sets), and a segmented sales approach that is effective for the audience you’re trying to reach.

Why is Revenue Management Essential

Why is Revenue Management Essential for Your Hotel?

To make the most of your hotel assets, it’s not enough to just know your audience or to generically market the rooms. You need to anticipate the current and future demand for the rooms and services you provide, then optimise their availability and pricing – allowing you to identify hotel revenue management trends, the most popular distribution channels for your business and undertake channel management which leads to an increase in revenue.

Taking the time to evaluate how your hotel has previously performed, examine what your competitors have been doing (and how well they’ve done or not), setting up analytic touchpoints to collect data, and following news developments on incoming trends and potential impactful events is absolutely essential – if you don’t know where your hotel currently stands, or how well various channels and strategies are performing, you won’t be able to tell what’s a good use of your capital, what is or isn’t working for you, and how you can improve going forward.

Once you’ve got your baseline to work from, you will be in a stronger position to determine how to maximise hotel revenue and improve sales.

Strategies To Increase Revenue Management

Strategies to Increase Revenue Management

There isn’t just one tried and tested or absolute strategy when it comes to revenue management, there are a lot of working parts that need to be carefully selected and optimised for your specific needs.

Segmentation and Price Optimisation

To be able to market and sell your rooms to the right people at the right time, you need to segment your customer base, diving them into specific categories or types. Doing this will require analytic collection from your distribution channels and historical data.

Before you can start to optimise your prices for these audiences, you first need to determine your categories – evaluate the types of customer you are attracting, for example – are they business customers on short stays, are they families looking for larger rooms over longer periods of time, etc – once you divide up your customers into types, you can look at what rooms or facilities they most commonly book and / or use, and what other habits they have in common (for example – business travellers may want to avail themselves of an early breakfast, where as families may prefer a later breakfast or brunch).

Once you know what these customers are using, when they are booking, and what they expect to see from you, then you can begin to optimise your prices for each segment. One of the advantages of taking this strategic approach is that it keeps you on trend with customer needs (which can then be additionally promoted through your marketing) and allows you to keep price changes minimised in certain areas where price consistency is an important booking factor.

Departmental Collaboration

Departmental Collaboration

Whilst your hotel is one business as a whole, there are lots of moving parts and co-operation between the departments is essential if you want to improve your revenue management. Working together with the key decision-makers in each department doesn’t just benefit one area of the business – with everyone on the same page and striving for the same goals, there’s reduced wastage of time or resources, and important decisions can be implemented with faster and more precise actions.

Working together also helps to present a unified image of your brand – for example, if your sales and marketing teams are working closely with the revenue management teams, they will know exactly what types of people they should be targeting, the amenities that will appeal to them, and the times of the year when those guests are more likely to book – this will naturally increase the success rates of the sales and marketing teams and improve the bottom line whilst reducing costs.



Determining future demand and revenue is one of the most important elements of a revenue management strategy, and it relies largely on historical data as well as an understanding of incoming trends, local and global events, and being clued in and up to date with industry developments.

To improve your accuracy when forecasting, it’s essential that accurate records are kept; these need to include occupancy levels, RevPAR, customer spend and costs.

Even in times when there is unprecedented upheaval (such as the 2020 COVID pandemic), forecasting can still be undertaken, looking at current bookings, competitors’ performance, local events, and wider trends.

Search Engine Optimisation

Search Engine Optimisation (SEO)

The use of the internet for booking hotel rooms is enormous, with 45% of UK travellers feeling comfortable enough to research, plan and book their entire trip on their mobile alone, and with 52% of Millennial customers visiting hotel websites for more information before booking.

Optimising your content to rank highly on search engines such as Google is essential; a successful SEO strategy will increase your hotel visibility, attract audience attention, and help reduce traffic to OTAs which will lead to reduced third-party fees and a better bottom line.

Mobile Optimisation

As mentioned above, a huge number of people are using their phones to book their trips, and if your content, pages and ordering processes aren’t responsive (suitable for mobile devices), you’re going to lose their bookings.

Your website must load quickly, display properly across all devices and be fully functional. Optimising your booking process to work through mobile capitalises on audience interest without sending them to another device and delaying their booking – which could potentially see them lost as a customer altogether.

Pricing Structure

Pricing Structure

Choosing the right pricing strategy for your hotel will depend on your venue, your customers, and your specific needs. To determine what you should be doing, you need to look at the audience you’re trying to attract, what you have to offer, how your offerings can be made more valuable (with upselling), and what strategies your competitors are employing.

A competitive structure will look at establishing prices based on competitors’ rates with a view to offering more value or lower prices. Often during slow periods, discounts are applied to rooms as its considered better to have a low-paying customer rather than an empty room; but overdoing a ‘value’ approach can lead to degradation of the brand value – if a customer consistently sees rooms for lower ‘offer’ rates, they are not going to pay full price – they’ll simply wait for the next price reduction.

Upselling products, services and amenities as well as offering package deals and other value increased opportunities should be considered before any price cuts or discounts are considered.


The number of distribution channels you work with will depend on the size and needs of your business, but generally working with a third-party result in fees deducted or levied against your bookings.

To maximise your revenue, a strategic approach towards direct bookings – where you’re not paying a commission and can offer a wider range of upselling opportunities – should be a part of your revenue management strategy.

Incentivise the direct approach but handle it in a similar manner to your pricing structure – if you’re too quick to offer discounts, you’re missing an opportunity to offer a value that doesn’t actually cost your business any extra.

Examples of cost-effective incentives include loyalty programs with point-based rewards, use of facilities that would otherwise be unused or at low occupancy, and exclusive opportunities – such as priority room service.

Working with Professionals to Manage Your Revenue

The right room, at the right price, to the right person, at the right time – this is the concept behind your Revenue Management, but as we’ve seen, it’s more complicated than just deciding on who you want where and when.

Sometimes the most effective and cost-effective course of action is to bring in professionals – people who know the industry, who are familiar and competent with the programs they need to be operating and the software they need to be running, and who have experience in bringing together the different teams under one umbrella.

What ever revenue management strategy you decide is best for your hotel, you need to make sure you carefully work out who your audience are, what the trends that will impact your business are, what is happening in the industry, and how you can offer the most value for the lowest cost.

When it’s done correctly, Revenue Management is an effective approach to improving your bottom line.

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