Have you ever wondered why, despite all your efforts to tweak room rates and chase occupancy, your bottom line still feels stuck?
NB: This is an article from LodgIQ
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For years, hotels have relied on revenue management as the engine of profitability. But revenue management was never meant to stop at the room door. What started as a science of pricing rooms has now evolved into something far more powerful… and far more demanding.
The truth is, the old playbook no longer works on its own. Today’s hotels are ecosystems: every outlet, from your restaurant to your spa, from meeting spaces to parking, plays a part in your profit story. And yet, many managers still focus exclusively on RevPAR, but this metric tells only half the story.
Looking at our industry today, I see it facing a major transformation. Profit optimization isn’t a passing trend. It’s the new definition of performance. In this article, we’ll have a look at how we got here, what it means for your business, and how you can start thinking and acting beyond rooms to unlock your hotel’s full potential.
From Revenue to Profit: The Evolution of a Discipline
If you’ve worked in hospitality for a few years, you’ve witnessed this shift firsthand.
It all started with yield management, a tactical approach focused on selling the right room to the right guest at the right time. It was powerful, but limited. We measured success in occupancy and average rate. Then came revenue management, expanding the scope with more data, better segmentation, and the first generation of RMS systems.
But as markets grew more competitive and costs rose, the limitations of that model became clear. Maximizing revenue wasn’t enough when distribution costs, marketing spend, and operational inefficiencies could erode margins. That’s when the industry began evolving toward total revenue management, and ultimately, toward profit-oriented revenue management (PORM).
Profit management shifts the question from “How much revenue did I make?” to “How much profit did I keep?” It requires understanding not just how to generate revenue, but how each euro earned relates to its cost of acquisition.
Here’s how the shift looks in practice:
