Culture Shift: Moving from Revenue Management to Profit Management in Hospitality

With demand softening and operating costs climbing, the shift from revenue management to profit management is more critical than ever. For hotels and hospitality companies, the focus should be on optimizing profitability across all revenue-generating areas, not just rooms.  

Here are five actionable steps hoteliers can take to transition from a revenue management mindset to a profit management mindset: 

1. Incentivize profit over revenue: Shift departmental goals and rewards to prioritize profit generation instead of just driving revenue. Encourage all teams to think about the most cost-effective and profitable ways to operate. 
2. Optimize labor costs: Focus on improving labor efficiency by aligning staffing levels with demand and using labor management tools that optimize workforce deployment. 
3. Expand focus beyond rooms: Optimize profitability across all revenue-generating areas of the hotel, such as food & beverage, spa, and events, rather than focusing solely on room revenue management.  
4. Leverage data-driven insights: Use comprehensive data analytics to inform decisions across departments. Centralizing and analyzing data from various hotel operations enables more strategic actions that drive profitability. 
5. Adopt advanced financial tools: Implement financial tools that provide clear visibility into P&L data, enabling hoteliers to set profit-focused benchmarks, monitor performance, and make informed decisions aimed at maximizing profit. 

For hoteliers, it’s no longer just about driving revenue; it’s about strategically driving the most profitable revenue. 
 

Key Resources for Moving from Revenue Management to Profit Management 

Here are five key resources to help you implement a culture shift from revenue management to profit management within your organization: 

Webinar 
Hospitality Business Intelligence Insights That Drive Profits

Learn from leaders at Pinehurst Resort, Otelier, and Agilysys how centralizing data from across your hotel and portfolio will provide actionable insights that lead to more profitable strategies.   

Whitepaper 
35 Ways to Implement Your New Hotel Profit Optimization Strategy 

Amid challenges like flatlining demand and increased pricing pressure, this report identifies specific data-driven strategies to help hoteliers across each department operate more efficiently and drive profitability. 

Blog 
A Culture Shift in Hotel Commercial Strategy

Forward-thinking hotel commercial strategy teams are shifting their focus from driving revenue to driving profitability. 

In the News 
Hotel News Now: Otelier Product Leader Discusses Profit Management at HDC

At the 2024 Hotel Data Conference in Nashville, Otelier Chief Product Officer Niki Johnson joined experts from Sage Hospitality Group, Ashford, and Mint House to discuss the change management process from revenue management to profit management. 

Whitepaper
Data-driven Hotel Revenue Strategies to Move Beyond Rooms Revenue

Understanding labor and amenity costs, analyzing non-room revenue trends, and centralizing data from all revenue sources is arming hotel revenue management leadership with the right data to make more profitable decisions.

A Closer Look: Profit Management by Department 

Profit Management in Hotel Operations  

Hotel operations team members can drive profits by aligning expense projections based on market conditions to inform staffing levels and purchasing. Streamlining data consumption with Otelier IntelliSight can reduce manual reporting costs, and setting housekeeping benchmarks will ensure appropriate staffing based on occupancy.  

Profit Management in Hotel Commercial Strategy  

Shifting toward profit management requires a deep understanding of the correlation between demand, revenue and profit – starting in the commercial department. Using Otelier IntelliSight, consider a Total Profit Optimization strategy, which involves broadening the revenue team’s focus to include all revenue-generating areas of the hotel, and optimizing the profitability of each.   

Profit Management in Hotel F&B  

To drive profit margins in the Food and Beverage department, team members can use data analytics from Otelier IntelliSight to inform decision-making, focusing on higher revenue areas and labor cost optimization.   

Profit Management for the Spa Team  

 Team members in the spa department can drive profits by optimizing opening times and retail pricing strategies based on booking patterns and occupancy trends, and then aligning staffing levels with demand. Additionally, using Otelier IntelliSight to analyze the performance of treatment offerings and therapists can enhance operational efficiency and guest satisfaction, ultimately impacting the bottom line.  

Profit Management on the Golf Course  

 Team members in the clubhouse can drive profits by dynamically pricing tee times based on supply and demand and creating dynamic packages that combine room, golf, and F&B. Additionally, with Otelier IntelliSight, innovative teams are analyzing the profitability of golfers versus non-golfers and optimizing retail offerings by time-of-day to maximize profit. 

The Critical Role of Accounting  

Integrating accounting data, which reveals detailed expenses by line item and department, is critical to an accurate and informative profit management strategy. By mapping General Ledger data according to a uniform system of accounts to business intelligence software like Otelier IntelliSight, hoteliers can clearly visualize the flow-through of revenue to the bottom line. Metrics like Gross Operating Profit, GOPPAR and EBITDA PAR can be analyzed by department, by month, and compared to historical performance. 

Conclusion: Leverage Data for Profit Management 

Leveraging data and technology, particularly through the Otelier IntelliSight business intelligence platform, is a pivotal step for hoteliers aiming to transition from revenue management to profit management. By centralizing and analyzing data across all departments, this platform empowers hoteliers to make informed, profit-focused decisions. The comprehensive insights provided by Otelier IntelliSight allow for the optimization of labor costs, fine-tuning of operational efficiencies, and the maximization of revenue opportunities beyond just room bookings. This strategic approach ensures that every decision made is aligned with the overarching goal of increasing profitability across the entire property. 

Ultimately, Otelier IntelliSight transforms data into actionable insights, enabling hoteliers to visualize their financial performance with clarity and precision. The platform not only simplifies the complex process of profit management but also equips hotels with the tools needed to set benchmarks, monitor progress, and implement strategies that drive sustainable growth. By adopting Otelier IntelliSight, hoteliers are making a smart investment in technology that not only supports their current operations but also positions them for future success in an increasingly competitive market. 

See Otelier IntelliSight in action.