While net unit growth (NUG) — a measure of the increase in available hotel rooms over a period of time — has been a key performance indicator for many hospitality brands, many hoteliers are now prioritizing net revenue growth (NRG) — the rate at which a company’s net revenue increases over time.
This shift is driven by economic pressures, shifting consumer behaviors, and regulatory challenges that make revenue maximization a more sustainable and profitable approach than mere expansion.
The factors favoring NRG over NUG
With the rise in cost of living, the financial landscape for hotel development has changed significantly. Borrowing costs are at all time highs which has made expansion less appealing than previous years. Combined with persistent inflation and labor shortages, operational costs are skyrocketing, reinforcing the need for hotels to extract higher revenue for existing properties rather than investing in new ones.
Demand for travel is also evolving. Five years on, we’re still recovering from the impact of COVID-19, with demand favoring hotels that optimize for revenue per available room (RevPAR) over those investing in expansion. There’s also been a significant generational shift in travel, with younger demographics opting for more authentic, meaningful experiences, over typical luxury travel, with a huge increase in live tourism, where large numbers are traveling for once-in-a-lifetime events.
Political instability further complicates expansion efforts. Entering new markets often means navigating complex taxation structures, environmental requirements, and government regulations, like those enforced in Barcelona to prevent overtourism. The knock on has been a push for more sustainable and efficient operations in favor of unchecked footprint growth.
How to achieve sustained NRG
If you’re looking to drive sustained profitability, you must adopt a multi-faceted approach that includes advanced revenue management, a focus on direct bookings, strategic upselling, improved operational efficiency, and a diversification of revenue streams.
The first component of this is dynamic pricing. By using a revenue management system (RMS) and leveraging automations, you can adjust rates in real time based on market demand, competitor pricing, and booking trends. Personalization is also essential, with the use of customer segmentation unlocking tailored promotions that drive direct bookings and build brand loyalty, a key finding highlighted in our 2025 hospitality trends report.
You can look to optimize direct bookings to reduce your reliance on online travel agencies (OTAs). Improving the experience of your own brand channels (website, apps etc.), offering exclusive incentives, and expanding loyalty programs, you can encourage guests to book with you directly.
You can also optimize ancillary revenue streams like spa treatments and food and beverage (F&B). By dynamically pricing event spaces for corporate and group segments, you can generate a steady source of revenue. Alternative revenue streams could also be beneficial, such as offering subscription-based stays for remote workers, short-stay options, and expansion into branded residences and timeshares.
Operational efficiency plays a crucial role and not just for revenue teams. You can apply AI-driven automation to staffing and housekeeping, and adopt smart energy solutions to reduce utility costs. Additionally, supply chain optimization helps control inventory expenses and minimize waste.
Strategic partnerships and tech integrations play a vital role. Working with airlines, travel platforms, and credit card companies can drive direct bookings, while AI chatbots and virtual concierges enhance the guest experience, giving them more control over their stay, whilst reducing your staffing costs. With an improved guest experience you can justify higher rates, with smart room technology and personalized experiences contributing to a perception of better value.
Last but by no means least, we can’t ignore the role of sustainability in long-term revenue growth. The more sustainable you are, the better it reflects on your brand. A great example of this has been the global adoption of B Corp status, where companies strive to “meet high standards of social and environmental performance, transparency and accountability.” Sustainability initiatives, like the B Corp certification and responsible tourism, appeal to eco-conscious travelers, helping build brand loyalty.
5 reasons why we’re the best RMS for NRG
- Unlike traditional fixed best available rate (BAR) pricing models, with our Open Pricing you can set rates at any BAR level. You’re free to dynamically adjust prices across segments, channels, and room types. This means you can implement different strategies across rate codes, from static rates for contracts to fully dynamic rates that react to real-time demand, with the flexibility to price strategically rather than reactively. It ensures every room is sold at its most profitable price, minimizing revenue leakage, and adapting seamlessly to changing market conditions.
- We give you the ability to manage your pricing strategies at a portfolio level, to ensure a cohesive and profitable approach for all properties, with the flexibility to make changes at a granular level to meet specific market demands. Our seamless integrations with property management systems, channel managers, distribution platforms, and other tech platforms improve your operational efficiency, bringing your data into one platform.
- With our RMS, you can also personalize your pricing, to create loyalty offers and custom deals for your different segments, leading to an increase in direct bookings and reducing reliance on costly third-party distribution channels.
- We also help you to optimize your ancillary revenue streams, from F&B and MICE, to spa services and parking, ensuring that every guest interaction contributes to your overall profitability. Combined with our customizable dashboards and advanced analytics, you can get a complete view of your overall performance.
- We give you a competitive advantage, by continuously monitoring competitor rates and learning from historical and real-time data from third-party providers. Our ability to adapt and evolve makes us the ideal solution for overcoming the challenges of a demanding geopolitical landscape.
The time for NRG is now
Prioritizing NRG over NUG is essential to overcoming the challenges of a demanding geopolitical landscape.
But, to achieve sustained revenue growth you need to embrace technology, like Duetto, to adopt Open Pricing strategies, focus on direct bookings, enhance ancillary revenue streams, centralize management of multiple properties, personalize pricing, optimize ancillary revenue streams, and gain a competitive advantage.
We’re the optimal RMS solution to optimize your pricing, streamline your operations, and maximize your profitability.
