Throughout the last century, the role of hotel revenue managers revolved around one goal: optimizing room inventory to maximize profitability. While the core objective remains, modern tech solutions have propelled revenue management beyond traditional boundaries. The focus has shifted to better space utilization and diverse revenue streams. Welcome to hotel revenue management 2.0.

When is a hotel room no longer a room?

At first, many of the changes in the roles and responsibilities of hotel revenue managers were subtle. Lately, however, a significant shift in mindset has started to unfold, ushering in a revolution in revenue management. In this new generation of hospitality, a hotel room is no longer a room. Instead, it is a space that can – and should – be optimized.

New avenues for revenue growth

Revenue management 2.0 encompasses an array of offerings. Being able to cater both to guests and the wider community is transforming hospitality’s approach to demand and pricing strategies. Suddenly, previously unimaginable opportunities are ready for those creative enough to grab them.

The latest technological leap lets hoteliers manage revenue not only from room bookings but across a spectrum of products and services. From parking spots to co-working spaces, event venues to spas, the scope of revenue management has expanded.

And it’s merely a natural consequence of changes in travel dynamics and cultural preferences. We’ve all witnessed the game-changing impact of shared economies and innovative service offerings on the hospitality industry. So, how can hoteliers capitalize on various revenue streams?

Top opportunities to explore

Let’s start with parking spots to see whether you’re leaving money in the driveway. New revenue management strategies support optimizing parking space usage and pricing based on demand patterns. That’s a double win: more convenience for guests and additional income to your property.

If that sounds like managing room rates and inventory, you’re right – it’s the same thing. Plus, the technology already allows you to manage it all from within the same platform.

Workspaces are another lucrative revenue opportunity. Remote work reshaped the corporate landscape, opening a huge niche for hoteliers. Purpose-built office spaces, transformed lobbies, or day-use rooms are all prime examples of revenue-managed workspaces. They help hotels attract new customers, including digital nomads and business travelers seeking comfortable space that supports work.

We’re also seeing a transformation in revenue management practices in event spaces. With dynamic pricing and management of event venues, hotels can now optimize revenue during peak periods while driving more bookings during slower periods. The best part is that anything can work, from cinema rooms and karaoke to pop-up hairdressers and weddings. The more willing you are to get creative, the more revenue you open yourself up to.

Pros and cons of expanded revenue management

Diversifying revenue streams not only ensures more revenue but also brings diversity, making a business more resilient. When you rely too heavily on one source of revenue, even a temporary setback could be disastrous for your business. The ability to attract a varied customer base is a significant advantage, especially during unforeseen global events.

Diversifying revenue goes hand in hand with community building. Thinking locally is one of the societal shifts mentioned earlier, and it translates to eating, working and experiences. Revenue managers now have endless opportunities to connect with their local communities. Let’s go back to those parking spaces. You’re already tracking the itinerary and usage for guests – so why not do the same for non-guests too? If you’re using the same software, it only requires a small upfront administrative effort.

By embracing diverse revenue sources, hotels contribute to community building, aligning with the growing trend of supporting local businesses. However, expanding revenue management comes with its challenges, especially for hotels lacking adequate technological infrastructure. If you’re still using spreadsheets or manually assigning rooms and spaces, more revenue management will mean more workload. Coordination across departments and accurate forecasting are imperative for seamless integration and execution.

The crucial role of data and technology

Technology is at the core of modern-day revenue management. Specifically, Revenue Management Systems (RMSs) driven by sophisticated algorithms and machine learning. These systems process vast amounts of data, providing actionable insights for optimizing pricing strategies in real-time.

According to a 2021 Skift report, only 28% of hotels use RMSs, despite their massive benefits. Data analytics tools aid in identifying demand patterns, helping hotels make informed decisions to boost revenue and profitability. Automation, a core feature of smart RMS software, streamlines processes, freeing up hotel staff to focus on delivering exceptional guest experiences.

Managing time as well as space

While managing various space types is essential, it introduces a new layer of complexity – the need to factor in different time periods. Traditional room bookings are based on a nightly basis, but other spaces may require more flexible time units. Choosing software that accommodates multiple time units is crucial for effective revenue management, as it allows hoteliers to optimize pricing based on demand fluctuations throughout the day.

Future trends and strategies

As technology continues to advance, early adopters stand to gain the most from the ongoing revenue management revolution. Seeking external expertise, leveraging training, and investing in the right hotel tech are key steps for hotels looking to stay ahead. Personalization and sustainability are emerging as critical focuses. Revenue management 2.0 lets you tailor pricing and services to individual guest preferences and promote environmentally friendly offerings.

Conclusion

Only you know where you want your hotel to sit. Will you keep a room-first revenue mentality, or will you start to think more creatively and use the tech at your disposal to diversify your business? The era of Revenue Management 2.0 beckons, presenting a landscape where everything is managed with precision, from rooms to parking spaces, workspaces, and beyond. The future belongs to those who can adapt, innovate, and strategically navigate the new era of the hospitality industry.

Learn more with this diversifying revenue guide.

About Mews

Mews is the leading platform for the new era of hospitality. Powering over 5,000 customers across more than 85 countries, Mews Hospitality Cloud is designed to streamline operations for modern hoteliers, transform the guest experience and create more profitable businesses. Customers include Generator-Freehand, The Strawberry Group, The Social Hub, and Airelles. Mews was named Best PMS (2024) and listed among the Best Place to Work in Hotel Tech (2021, 2022, 2024) by Hotel Tech Report, as well as World's Best Hotel PMS Provider (2023) and World's Best Independent Hotel PMS Provider (2022, 2023) by World Travel Tech Awards. The company has offices in Europe, the United States and Australia.

www.mews.com/en