Promotions can be exciting – bookings spike, dashboards light up, and it feels like you’ve cracked the code. But then the P&L hits… and the numbers tell a different story.
NB: This is an article from Topline Revenue, one of our Expert Partners
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As a revenue management company, we’ve seen it all: promos that looked smart on the surface but quietly wrecked ADR, dragged down RevPAR, and trained guests to wait for discounts. If your strategy is simply “more bookings = more revenue,” it’s time to rethink the math.
Because here’s the truth: more bookings don’t always mean more profit.
his post is about how to evaluate whether your hotel promotion actually made you money, or whether it just looked pretty in the pickup report and quietly eroded your bottom line.
Don’t Let Vanity Metrics Fool You
Let’s start with the most common trap: judging a promotion by occupancy lift, website clicks, or revenue on the books. These are vanity metrics. They look good, but they don’t mean much unless you connect them to actual profit.
If your occupancy jumped 15% but ADR dropped 20%, guess what? Your RevPAR probably fell, which means you’re now working harder (servicing more rooms) for less money per room. If those extra guests also got free breakfast, free parking, and late checkouts, you may have just filled your hotel with a bunch of net-negative bookings.
Let’s fix that. Here’s how to crunch the numbers before and after a promo to see if it actually worked —or just boosted volume at a cost.
[Step 1] Calculate the Break-even Point Before You Launch
Start with this question: How many extra bookings do we need to make this promo worth it?
Let’s say your standard rate is $100, and you’re thinking about offering 20% off, bringing it down to $80. That means you lose $20 per booking. At 60% occupancy, you were making $6,000 per night (60 rooms sold x $100). To make the same $6,000 at $80 per night, you need to sell 75 rooms — a 25% increase in volume.
Let that sink in. You’re taking a 20% hit on rate and betting that you’ll magically pick up 25% more bookings. Can your market support that kind of lift? Is there even that much incremental demand floating around? And will those extra guests actually show up, or just shift from another channel?
If the answer is no, this promo is going to cost you. And that’s just looking at topline revenue. We haven’t even touched profit yet.
