Why Net Revenue Growth is Replacing Net Unit Growth as the hospitality industry’s top priority
Mar 21, 2025
In the hospitality industry, there’s a shift from focusing on Net Unit Growth (NUG) – the expansion of hotel room inventory — to Net Revenue Growth (NRG), which emphasizes increasing revenue from existing assets. This transition is driven by rising operational costs, changing travel preferences, and regulatory hurdles, making revenue maximization a more strategic and sustainable goal than expansion.
Key takeaways
- Economic pressures (high borrowing costs, inflation, labor shortages) make expansion less viable; increasing revenue from existing properties is more profitable.
- Evolving traveler behavior favors experiences and meaningful stays over traditional luxury, with strong demand for RevPAR-optimized hotels.
- Regulatory challenges and overtourism concerns complicate expansion into new markets.
Sustainable NRG strategies include:
- Dynamic pricing using RMS and automation.
- Increasing direct bookings through better brand channels and loyalty incentives.
- Upselling and diversifying revenue (e.g., spa, F&B, event space, subscriptions, timeshares).
- Boosting operational efficiency via AI, energy management, and supply chain optimization.
- Leveraging strategic partnerships and smart tech to enhance guest experience.
- Embracing sustainability to strengthen brand appeal and loyalty.
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