Finance & DevelopmentFinanceTips to Achieve Total Revenue Management

Tips to Achieve Total Revenue Management

It’s an exciting time to be in the hospitality industry. The stock market is offering better returns to investors, metrics are hitting all-time highs in occupancy, and developers are considering and building hospitality-related investments again. In positive growth periods like these, I often hear from hoteliers who are faced with a bit of a conundrum. They’ve raised their rates to a sustainable value point, which will hopefully avoid negative consumer feedback regarding value for price paid. But the fact remains that there is still a bevy of unconstrained demand. What can a savvy hotelier do to harness this demand and maximize their profits for ownership? One solution is to employ total revenue management.


Total Revenue Management

While simple rate and even mix revenue management may fall short in today’s environment, there are significant gains to be had in the low-hanging fruit of total profit maximization. The term ‘total revenue management’ has been broadly applied to a variety of concepts, but for the purpose of this article, we define it as optimizing the monetization of every part of a hotel’s available space, functionality, assets, and products, working within the concept of time-perishable inventory.

Regardless of a hotel’s scale or market, there are a variety of ways this can be applied. The most important thing is to be creative in utilizing, monetizing, and marketing available assets. Often the hospitality industry follows trends set by others. Instead, consider what service or experience people are looking for that our industry has yet to provide. Based on your positioning and offers, is there a way your hotel can meet that need?


Upsell and Cross-Sell

Of course, even a hotel’s standard processes have untapped opportunities. Many hotels have some type of upsell program to encourage front desk staff to sell upgraded room types at check-in. But what about the ancillary streams? Are the reservations and front desk teams motivated to cross-sell other departments—for example, confirming reservations at the hotel’s on-site restaurant or spa on the spot to capture guest spend before they leave the property? Is your upsell program limited to a specific dollar amount and specific activities, or do you use commission-style rewards that guarantee ROI to incentivize all monetizing activities?

Once a property has a strong upsell and cross-sell program in place, it’s time to explore the way the cash flows through these ancillary departments. Dig deep into the financials and metrics such as revenue per available seat hour (RevPASH) and revenue per available treatment hour (RevPATH) to understand the full scope of available opportunities and how revenue management concepts can be applied to each revenue center. While a full-blown revenue management program for a restaurant or spa can be a big undertaking, the insights pay big dividends.


Make the Most of Metrics

Finally, when it comes to a hotel’s statistics and processes, be sure to use all available metrics to find the right path for your individual property. Make strategic improvements to the existing room revenue processes for transient and group sales to ensure they focus on the net profit of each type of business versus the gross room rate. Also, establish solid metrics that allow each department to define success. The industry is quickly moving towards profitability metrics such as gross operating profit per available room (GOPPAR) to better understand the true performance of an asset versus only measuring topline RevPAR metrics. In the absence of benchmarking for GOPPAR, using total revenue per available room (TrevPAR) from existing tools is a step in the right direction.

By applying some of these strategies, hoteliers can take an asset that seems to be already performing at its peak to the next level in profitability and set the property up for success no matter what the future of the industry holds.


Lily Mockerman


About the Author
Lily Mockerman founded Total Customized Revenue Management in 2012 and is the company‘s president and CEO. Mockerman is a passionate and devoted leader and practitioner in the revenue management field.



  1. You make an interesting point that once a property has a strong upsell and cross-sell program in place, it’s time to explore the way the cash flows through these ancillary departments. This must be really helpful when it comes to raising revenue for a company. I wonder if these principles are valid for other types of services.

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