In the current market, the predominant hotel brands have transformed into asset-light global operators. They’ve transitioned from ownership to management. The core business is no longer about owning and operating hotels, but about managing brand systems, loyalty platforms, and fee structures.
NB: This is an article from Duetto
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The guest loyalty programs of the big hotel companies aren’t just engines of illusions and aspirations for the countless travelers navigating the constraints of mid-tier status (you, dear reader, may be among them); they’re also engines of investor value and lead generation.
This shift has changed the distribution of power. Hotel chains focus on growing their memberships and planting brand flags, while operational and financial responsibilities shift to franchisees and real estate investors.
For the chains, the goal’s to collect the royalty checks – usually between 8 and 12% of gross room revenue, with much of what’s paid for marketing, technology, and reservations counted in the price.
For hotel owners, though, the math just gets tougher. Today’s investors look to real estate first and don’t mind paying good money for it. They’re yield-driven and risk-sensitive.
When it comes to hotels, they see them as financial instruments valued on CAP (capitalization) rate compression and not much else. And with the cost of capital rising sharply – particularly over the past two years, NOI (net operating income) optimization isn’t just important; it’s essential.
People now talk more about GOPPAR (gross operating profit per available room) than RevPAR (revenue per available room).
And while fewer people discuss profit per square foot, every square foot – physical or virtual – remains under the financial microscope.
- Is there a way to monetize the ballroom?
- Can back-of-house space be converted into short-term storage or retail?
- Does the rooftop contain an F&B concept that stimulates both positive cash flow and brand buzz?
Today’s revenue and profit story
Revenue management has become a multidimensional function, integrating space and meeting optimization, spa, golf, ski, F&B, parking, and channel mix profitability.
AI and machine learning tools play a major role here. They offer real-time, demand-sensitive pricing models that maximize yield while minimizing labor dependency.
Add to that the power of the Revenue & Profit Operating System (RP-OS), which aligns revenue strategies with actual profitability and uncovers business opportunities to boost top-line revenue while increasing GOP (gross operating profit), all while managing costs and maintaining service quality.
Sales, marketing, and revenue teams have become commercial strategists who use big data to identify high-margin customer segments, optimize channel costs, and turn loyalty into a repeatable, trackable ROI (return on investment).
