What is one of the significant top revenue management mistakes hotels make?

Counting revenue dollars as equal from all distribution channels is a significant mistake in revenue management for hotels because it overlooks the differences in cost, value, and profitability associated with each channel. Different distribution channels—such as direct bookings through the hotel’s website, online travel agencies (OTAs), and global distribution systems (GDS)—often have varying commission rates and costs associated with them. For instance, while OTAs can attract a high volume of customers, they typically charge commissions that can significantly reduce overall profit margins.

By treating revenue from all channels equally, a hotel may over-rely on less profitable channels and fail to effectively optimize its pricing and distribution strategy. This can lead to missed opportunities for maximizing revenue. A more effective approach involves analyzing each channel’s performance, understanding the associated costs, and making informed decisions that prioritize those channels that offer greater profitability, thereby enhancing the overall financial health of the hotel. Understanding the nuances in revenue generation from different channels can enable a hotel to strategize more effectively, ensuring a balanced and optimized revenue stream.