What Is Hotel Revenue Management?

Hotel revenue management, also called yield management, is the practice of selling the right room to the right guest at the right price, at the right time and through the right channel. It relies on forecasting demand and adjusting prices, restrictions and distribution to maximize revenue. Its main indicators are occupancy, average daily rate (ADR) and revenue per available room (RevPAR). Digital marketing works hand in hand with it, by generating demand when and where the hotel needs it.

Key takeaways

• Revenue management maximizes revenue, not only occupancy or price.
• RevPAR combines occupancy and average rate in a single indicator.
• Marketing campaigns are more effective when they follow the revenue strategy.

Which KPIs does revenue management use?

• Occupancy rate: rooms sold ÷ rooms available.
• ADR (average daily rate): room revenue ÷ rooms sold.
• RevPAR (revenue per available room): room revenue ÷ rooms available, or ADR × occupancy.
• TRevPAR: total revenue, including restaurant, spa and other services, per available room.
• GOPPAR: gross operating profit per available room, which also takes costs into account.

Example: a 50-room hotel that sells 40 rooms at an average of 200 euros has 80% occupancy, an ADR of 200 euros and a RevPAR of 160 euros. Read our article on hotel analytics.

What are the main levers?

• Forecasting: booking pace, history, events and seasonality.
• Dynamic pricing: rates that change with demand and competition, tracked with a rate shopper.
• Restrictions: minimum length of stay, closed to arrival, cancellation conditions.
• Segmentation: leisure, business, groups, packages, each with its own rates.
• Distribution mix: balance between direct bookings and OTAs, taking commissions into account.

Revenue management systems (RMS) use these data to recommend prices. See how AI and data science help hotels.

How is revenue management linked to digital marketing?

The revenue manager knows which dates need demand and which segments pay the best rates. Marketing uses this to launch campaigns on low periods, push the right offers to the right markets and favor direct bookings, which cost less than OTAs. In return, marketing data on searches and website visits can help anticipate demand.

How does Influence Society work with revenue managers?

Revenue management is not our core expertise: at Influence Society, we work alongside the hotel's revenue manager. We align Google Ads, metasearch and social campaigns with the dates and segments to fill, and share marketing data that helps read demand.