The current industry dialogue confirms a harsh truth: a strong top-line no longer guarantees a healthy bottom line, and the painful truth is: Volume without profit is just activity.
NB: This is an article from Travhotech
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The era of RevPAR as a sole performance indicator is over. It has to be over, because if this is the only thing we are truly capable of optimizing today, the industry is structurally broken. The industry has been discussing this strategic migration for some time now, yet the tension between this ambition (talk/ideas) and the current systemic reality (action/capability) is the core structural challenge. The new scoreboard demands Total Profit Optimization (TPO), driven by metrics like GOPPAR. This is the goal of Total Profit Optimization Hospitality.
However, GOPPAR in many ways is a macro KPI. It is a long way from the real-time optimized pricing and revenue across the full product line, with underlying real-time discipline for Cost of Goods (COG) and Cost of Service (COS) in these same product lines. That real-time discipline is the definition of a realized environment to truly deliver Total Profit Optimization.
For too long, the industry suffered from a siloed mindset, treating revenue optimization as a pricing function isolated from the true cost of acquisition and delivery. We have been cognisant of this holistic profit opportunity for a very long time and have agitated in the industry for toolsets and operational technology platforms to move in this direction. The fundamental technological capability needed to optimize cost and process already exists. However, the failure is one of strategic choice: leadership actively refuses to deploy these mature operational solutions, preferring instead to remove key cost management roles and limit the analysis resources that would expose true operational inefficiency.
The core question remains: how do we transform revenue management into profit leadership? The answer requires matching tools with manpower to deliver a profitable outcome. The current reality exposes a deep-seated structural weakness – an organizational, technological, and talent deficit – that makes this shift more of a pipedream than a viable strategic plan today. This is the challenge of moving beyond RevPAR profit strategy.
The Rooms-Only Reality Gap: Why Profitability Stops at the Door
The intense, almost singular focus on Rooms Revenue has created a competency and technology gap that directly compromises Total Profit Optimization. This was done at the expense of other product lines. A hotel’s restaurant or spa, for example, is a calculated strategic asset built with operational intent, not an accident. This gap is the Rooms-Only Reality Gap.
