In the last post of our series ‘Top 3 priorities for hospitality in 2025’, we talked about why operational efficiency is taking center stage. But efficiency isn’t the finish line, it’s the foundation for smart, sustainable, profit-led growth.

According to our latest customer survey, 45% of hospitality leaders have made growth and profitability their top focus for the year ahead.

Why?

Because the playing field is changing. Costs are creeping up. Revenue is levelling out. And doing “more of the same” just isn’t cutting it anymore.

It’s no longer just about filling rooms and crossing your fingers, it’s about finding revenue in new places, getting the most from what you’ve got, and building a business that runs lean without feeling it.

Here’s what’s driving this shift, and why thinking beyond RevPAR could be the smartest move you make this year.

Why all the focus on profitability?

Growth is cooling off

CBRE’s 2025 Global Hotel Outlook shows the party’s slowing after a stellar 2024.

• In the US, RevPAR is set to grow about 2%, steady, not spectacular. Business travel’s picking up, international guests are coming back, but rising costs are squeezing margins.
• Europe’s holding steady with solid RevPAR growth, backed by local and international demand. Some political shifts might cause fluctuations, but the outlook remains stable.
• Asia-Pacific is on the rise, with more visitors from China and better flights nudging occupancy up. Growth won’t break records, but it’s moving in the right direction.
• And the Middle East? Dubai and Abu Dhabi are still blazing, with visitor numbers up double digits. That momentum’s set to keep going.

Costs? They're not slowing down

Labor, utilities, maintenance, you name it, it’s getting pricier. And for operators in high-wage regions like the UK and Australia, these costs are starting to outpace room revenue altogether.  

• In the US, labor, the biggest cost factor, increased by 4.8% in 2024. Operators are now paying 22.1% more than in 2019 for 7.4% fewer hours worked (CBRE)
• In the UK, rising taxes and business rates mean over 70% of hospitality businesses may need to cut staff, reduce hours, or hold back on investment (Caterer).
• In Australia, the hospitality industry faces ongoing skilled labor shortages that are driving up labor costs and causing operational inefficiencies.

The margin squeeze is real.

Profit-led metrics are taking over

 RevPAR might get all the attention, but industry leaders focus on the full picture. Metrics like TRevPAR , GOPPAR, and NetRevPAR reveal what you’re really keeping, not just what you’re bringing in. It’s time to move beyond top-line thinking and start measuring what actually matters.

It’s a lot, we know.

You don’t need to solve everything at once to start seeing results. With a few focused strategies, you can make real progress, one smart move at a time (and yes, RMS has a few tools up its sleeve to help). 

Got 12 months? Start here.

Profitability isn’t just about pushing more sales, it’s about getting clever with how you sell. Start with these five plays: 

• Dynamic pricing beyond rooms
• Direct booking
• Plug revenue leaks
• Smart packages
• Pre-arrival upsells

1. Dynamic pricing, not just for rooms

Dynamic pricing helps you adjust rates in real time based on demand, availability, and operational capacity. But the biggest opportunity? Extending this approach beyond your base rooms. By applying tailored pricing to premium rooms, bundled packages, and popular add-ons, you can unlock revenue gains and better match what guests are willing to pay.

Tip:

To make dynamic pricing work for you, start by setting clear price rules in your PMS, not just for your standard rooms but also for your premium categories, which often sell out faster. Pay attention to busy times like holidays or local events, and add triggers like how far in advance a guest books or your current occupancy levels to adjust prices automatically as demand changes. Don’t forget to extend this strategy beyond rooms, apply it to popular extras like late check-outs, breakfast, or upgrades to increase revenue. And importantly, make it a habit to regularly review and tweak your pricing rules so they stay in line with shifting market trends and guest behavior.

2. Make direct bookings the easy choice

Every direct booking is a chance to boost profit and build loyalty. This strategy is about reducing friction on your website, adding compelling incentives, and guiding guests through a seamless, book-direct journey, whether they’re on mobile or desktop.

Tip:

Your booking engine is where you can really make direct bookings count, beyond just matching OTA prices. Highlight exclusive packages and perks that guests can only get by booking with you. Use personalized pre-stay emails and SMS to keep guests informed and offer relevant upgrades before they arrive. And don’t forget to make sure the whole process works smoothly on mobile, it makes a big difference. With exciting new booking engine technology launching this year, there’s never been a better time to level up your direct bookings.

3. Close the gaps: plug revenue leaks

Missed charges. Unbilled extras. Manual errors. Revenue leaks often fly under the radar, but they quietly chip away at your profits. The key is spotting these gaps early and tightening processes with automation, better visibility, and staff training.

Tip:

Start by auditing common leak points like late checkout, F&B, or untracked add-ons like parking, spa treatments, or shuttle services. Use automation to flag and apply routine charges automatically, so nothing slips through. Keep your team sharp with clear SOPs and regular training on catching mistakes.

4. Smarter packages, tailored to traveler types

Not all guests want the same thing, so why offer them the same upgrade? By tailoring packages to different travel motivations (romance, relaxation, family fun), you make your offers more relevant and boost the chances of conversion. It’s a win-win: guests feel seen, and you unlock new revenue streams.

Tip:

Start by grouping your offers by guest type or stay purpose, think “Date Night,” “Family Adventure,” or “Solo Escape.” Use your booking engine to surface the most relevant packages during the booking flow. Need inspiration? Scroll social media to see what types of experiences guests are sharing, just like restaurants use it to shape menus, you can use it to build packages that feel fresh and on trend.

5. Upsell before they arrive

The time between booking and check-in is a golden window. Guests are excited, plans are being made, and they’re often open to enhancing their stay. A well-timed offer for late checkout, a bottle of wine, or a local experience can boost revenue and guest satisfaction.

Tip:

Start by reviewing your average lead time: that’s what your golden window looks like in practice. Use automated email and/or SMS communications with one or two focused offers per message, think upgrades, early check-in, or add-ons. Personalize  using:

• Dynamic tokens (like guest name or arrival date), and
• Tailor content based on booking details. For instance, a guest on a family package might want activity ideas and childcare info, while a corporate booker may prefer early check-in or meeting room options.

As you go, monitor performance, test variations, and expand your offer set. A quarterly refresh helps keep things relevant and effective.

Profitability isn’t one big move, it’s a series of smart ones

If there’s one theme running through the strategies above, it’s this: profitability isn’t about chasing more. It’s about doing better with what you’ve got.

It’s about pricing dynamically, not just on rooms, but on the extras that guests already want. It’s about making direct bookings feel like the obvious choice. It’s about plugging the quiet leak and crafting offers that actually resonate, to deliver more value without more effort.

Each strategy on its own can make a difference. But together? They build a more resilient, more profitable business.

Next up?

We’re talking guest experience and loyalty. Because profitability isn’t just about what happens before check-in, it’s also about what guests remember long after they leave.

By Maud Bruyere
Customer Advocacy Manager