What is revenue maximization?
Revenue maximization is the process of taking advantage of every opportunity to realize your full revenue potential. This means thinking beyond rooms and overnight stays and looking at metrics other than average daily rate (ADR) and revenue per available room (RevPAR).
The most successful hoteliers are those who take a strategic “30,000-foot view”, seeing every space, service and guest touchpoint as an opportunity to make more money. Those who embrace this approach are reaping the biggest rewards, especially in an industry where guest expectations are constantly evolving, and competition is fierce.
With that in mind, let’s break down the five key building blocks of revenue maximization and how the right technology can serve as your engine behind smarter revenue strategies. With these tools in place, you can optimize rates, spaces, payments and currencies to drive measurable results across all aspects of your hotel operations.
The five building blocks of revenue maximization for hotels
1. Optimization – smarter revenue, simplified
Revenue optimization is essential for profitability, but setting room rates manually is like forecasting the weather without technology. And while you might say, ‘I’ve got a PMS and historical data,’ you’re probably still only able to look a few days out. It’s slow, reactive and prone to mistakes that can be costly.
AI is changing the game with revenue management. Not only can revenue management software (RMS) take away time-consuming and risky manual processes, but it can spot trends in real time and respond to unexpected changes in an instant.
Whether that’s competitors changing rates or a sudden flood of demand for rooms, AI-powered pricing tools gather data from a variety of locations and apply an algorithm to dynamically set the best rates – giving you a leg up on the competition and boosting your revenue. In effect, this ensures your hotel’s pricing is always optimized, taking away the what ifs and guesswork for more accurate, profit-driven decisions.
Wondering just how much of a difference an RMS can make? Hotels using Atomize, a Mews company, report up to 35% higher RevPAR, 37% higher ADR, increased occupancy and 20 hours saved per month per revenue manager. That’s serious revenue optimization.
2. Diversification – new revenue, new spaces
Rooms alone won’t generate enough revenue to keep your hotel growing and attract travelers who are looking for more than a bed. It’s time to start thinking creatively, because every space around your hotel holds untapped potential.
Most hotels have underutilized spaces that could be reimagined – meeting rooms, co-working areas, parking spots and even rooms that can be used for day-use. If done right, these spaces can attract new guests, help you adapt to changing market demands and become repeatable revenue streams. The challenge? Managing and monetizing them without adding unnecessary complexity (or yet another spreadsheet into the mix).
That’s where technology comes in. By using a modern, innovative platform, you can easily turn any space or service into a bookable service and manage those bookings in the same place you manage room bookings.Automated rules, rates and flexible booking options – whether by the hour, day or month – mean you can squeeze maximum value out of every space, effortlessly.
3. Collection – fast payments, zero hassle, total accuracy
In an era when payment friction can make or break the guest experience, relying on manual processes or third-party payment systems can create roadblocks – not just for guests, but for cashflow and reaching your revenue potential.
An automated, fully embedded payment system removes these barriers. By streamlining transactions directly within your PMS, hotels can speed up check-ins and check-outs, reduce admin time, and eliminate the risk of chargebacks or fraud (more on that later). Payments are processed securely in real time, giving guests a frictionless experience and hoteliers full visibility over cash flow.
And it’s not just about transactions. Automation unlocks additional revenue through pre-authorization of payments, seamless upsells and subscription-based services. Whether it’s room upgrades, late check-outs or bundled experiences, a smarter payment system turns every interaction into a revenue opportunity.
4. Enhancement – elevating guest experience and revenue
The guest journey is full of endless opportunities to enhance both guest experience and revenue. With pre-authorized payments in place, hotels can offer relevant upsells and add-ons at precisely the right moments throughout a guest’s stay.
That could mean online check-in prompting room upgrades and parking for the hour or the day. Or self-serve kiosks promoting spa treatments and fitness classes. Whatever your property offers, technology takes care of the sales so staff can focus on genuine hospitality.
A PMS like Mews takes this one step further, complementing these interactions by offering complete guest profiles and AI-powered smart tips. By empowering front desk staff with guests’ preferences at their fingertips, teams can make richer, more relevant offers that simultaneously increase revenue and build lasting guest loyalty. You can learn more about the ways we think about the guest experience here.
5. Protection – securing revenue and trust
want to ensure you keep all the revenue you earn, to the slightly less obvious: the impact security issues can have on your reputation and, in turn, guest loyalty.
When we talk about protecting revenue, we’re talking about everything from ensuring hackers can’t access your revenue, sensitive information or guests’ financial details, to fraud protection and chargebacks. And there’s still one more layer: regulatory compliance. All these factors impact your bottom line.
Let’s start with chargebacks. According to HotelTechReport, in 2019, merchants lost 4.4% of revenue to chargebacks. Chargebacks may be caused by human error or fraudulent activity. Either way, when a charge is disputed, it costs money and time. The positive is that you can take control of chargebacks and reduce their impact by using a payment platform that prioritizes security and automates manual processes – preventing incorrect entries and questionable charges. You can learn more about chargebacks here.
Something else that should be table stakes is how seriously your payment provider takes regulatory compliance. One simple way to validate this is to look at their certifications.
Among the most important ones are:
- PCI DSS (Payment Card Industry Data Security Standard): this ensures the security of credit card transactions and cardholder data.
- ISO 27001 (International Standard for Information Security Management): provides a framework for an Information Security Management System (ISMS) to manage risks and protect sensitive information.
- SOC2 (System and Organization Controls 2): evaluates how a company manages customer data based on the Trust Services Criteria: Security, Availability, Processing Integrity, Confidentiality and Privacy.
Security and protection of your revenue shouldn’t be something you have to think about. The best solution is one that automates security, including tokenization. Tokenization replaces credit card details with an encrypted token, so sensitive data is neither seen nor stored.
With Mews Payments, this happens automatically when card information is entered into the PMS, either during online booking or on-site with a Mews Terminal. Not only does this automate security and protection, but it also means the card can be saved on the guest profile and used for additional payments with one click – without the need for the card to be present.
At the end of the day, all this technical payment information means you can focus on hospitality knowing your revenue is secure.
The results speak for themselves
Properties implementing this comprehensive approach through the Mews ecosystem have seen remarkable results:
- 290% ROI over three years
- 31% decrease in manual human error
- 24% increase in front desk staff efficiency
- 7.3% ADR growth
Looking ahead
The future of hospitality revenue management is without a doubt integrated, data-driven and technology led. By embracing all five building blocks, properties can deliver exceptional guest experiences while maximizing their full revenue potential. The most successful properties will be those that can efficiently optimize their entire operation – from room rates to ancillary services – while ensuring operational excellence and guest satisfaction.
For modern hoteliers, the question isn’t whether to evolve your revenue management strategy, but how quickly you can implement a solution that supports all five building blocks. In an industry where market demands and conditions are constantly shifting, having a flexible and comprehensive revenue management system isn’t just an advantage – it’s a necessity.
5 strategies for revenue growth
In this episode, we explore five powerful ways hoteliers can increase their revenue. Matt dives into diversifying and optimizing revenue streams, smart pricing strategies, leveraging revenue management technology, protecting your profits, and key strategies you can start implementing today.
