One of the biggest advances in the hotel industry is the continued expansion of technology optimization and AI-driven insights.

Increasing the profit per guest booking is a competitive undertaking watched closely by all stakeholders. It may be especially true for hotels in U.S. markets, as tourism declines amid international travel concerns.

“This competition for a limited number of guests often leads to rate wars,” notes Miri Vasilevsky-Pinto, vice president of global hotel asset management for CBRE Hotels. “If hotels can’t achieve sufficient volume growth through reduced rates, they may face a decline in RevPAR (revenue per available room), which negatively affects profitability.”

To help get ahead of potentially soft future markets, hotel operators are continually reviewing booking terms and conditions to stay competitive.

While fees attached to parking, pets, early arrivals and late departures are a quick way to bolster RevPAR, it can be to the detriment of the customer and longer-term sales.

To address challenges, Vasilevsky-Pinto says hotels are enhancing their offerings through packages with extra amenities and new outreach to customers to aid upsells.

Food and beverage consumption plays an important role in a guest’s experience. But customers coming in at lower booking rates often tend to move outside the premises to get more economical options.

Hotels have begun to address these issues by adding everyday dining experiences, as opposed to more high-end options that can sometimes have an air of exclusivity to them. Luxury options are still a key component in maximizing revenue from all client types, but they can be accompanied by lower-cost offerings.

Operators are becoming more strategic with their amenity and F&B offerings. Technology is opening new ways to personalize guest experiences while also providing lucrative upsell opportunities.

“In this more challenging current environment, hotels and owners need to be more strategic and intentional with their distribution and channel mix,” says Kristi Gole, executive vice president of strategy for Global Hotel Alliance.

Is RevPAR Still the Best Metric?

Technical progress is changing the face of hotel operations and their optimization efforts. That may also mean a reevaluation of the way in which guest value is tracked.

While RevPAR as a metric is used by large and small hotel operators alike, it may not be the best all-encompassing indication of hotel guest monetization and value. It’s been argued that RevPAR fails to capture key revenue streams from amenities like resort offerings and dining facilities.

One metric that has seen increased use is TRevPAR (total revenue per available room), which encompasses room revenues and all income from the operations of different departments across the hotel’s offering.

Hotels, cruise lines and casinos may also be shifting towards per-available-guest models.

As hotel operators become more sophisticated in how they view room offerings and what a booked room actually entails for the customer experience, the analytical approach to bottom lines will evolve.

Darren Student, vice president of sales-gaming for Agilysys, reminds operators that guests “are no longer just booking a bed.

“They’re seeking tailored experiences, on-property dining, spa treatments, upgraded services and exclusive amenities. The revenue potential per guest can far exceed the cost of the room—but only if hotels have systems and strategies in place to recognize and act on that opportunity.”

In coming years, operators may grow these opportunities with personalized offers and tailored packages alongside curated upsell strategies and enhanced guest experiences. Much will be driven by hotel system advances and the adoption of AI, as well as robust data analytics—all of which must be tracked and would not be captured by traditional RevPAR.

Vasilevsky-Pinto suggests that as brands start to focus on understanding guest lifetime value, the industry may see an increase in the use and spread of the revenue-per-available-guest method.

“This emerging metric allows operators to assess revenue opportunities based on the total guest experience rather than solely on room revenue, providing a more holistic view of profitability,” she says.

Technology Aids Growth

While technology has long been used by large hotel operators to manage room rates and customer experience and drive growth, its use has become increasingly customizable and specific over the years.

There’s been a rise in dynamic pricing for add-ons and systems that address real-time demand. The price of leisure offers can be adjusted to each amenity’s occupancy levels and daily sales goals. Additionally, this type of flexible pricing can be used to offer room upgrades.

“The technological landscape aimed at enhancing TRevPAR is continuously evolving. A variety of advanced reservation systems and API tools are now available, enabling hotels to offer paid room upgrades, various add-ons and retail options within the reservation process,” Vasilevsky-Pinto says.

“This allows guests to seamlessly book spa services, dining experiences and other activities while finalizing their room reservations.”

Property-management and point-of-sale systems have been common features of hotel operations for many years. Now they’re starting to be consolidated into a single platform, representing a sophisticated modern take on guest data.

Hoteliers are learning the benefit of viewing single sources of customer data in real time, which allows them to act on revenue opportunities instantly.

This system consolidation lets hotels reduce operational friction, be that in everyday usage or when it comes to system upgrades or patches. Modernizing one system at a later date is far easier than trying to adapt a multitude of splintered platforms.

“When systems operate in silos, critical guest data such as dining preferences or spa usage remains fragmented,” notes Student. “A unified platform connects these touchpoints, delivering a complete view of each guest’s behavior. This enables more targeted, in-the-moment engagement.”

Systems that are driving modern hotel orchestration are property and revenue management. Together, these are the day-to-day backbone of hotel operations and key drivers of revenue growth when utilized successfully.

Today’s property management systems do more than handle bookings and check-ins. They track guest journeys across a multitude of touchpoints, all actionable and maximized by clever operators.

Property management systems can capture detailed guest preferences and enable personalized interactions while also ensuring continuity of service across departments. A well-run process enables hotel workers to personalize the guest experience, as opposed to treating guests as another transaction in a line of transactions.

On the other side, revenue management systems use sophisticated algorithms to price inventories in real time. They can identify patterns and leverage historical data to suggest the most optimal rates minute by minute.

If successfully brought together, these systems can work in tandem, identifying segments and consumer patterns and subsequently notifying operators about offers that could be used to boost total guest values.

“If a guest frequently orders vegetarian meals and books spa treatments, a unified system can surface these preferences in real time, allowing the front desk to suggest a wellness-focused upgrade or a curated healthy dining option at check-in, precisely when the guest is most receptive,” says Student.

The Rise of AI Personalization

Nearly everyone has scoffed at some AI announcement or system upgrade that promises the world.

However, AI is used across most industries, and while it may not bring about a complete revolutionary upheaval, it does provide competitive advantages when used correctly.

In the hotel sector, AI has been used to support revenue management systems by enabling dynamic forecasting and price adjustments. The technology has also been used to tailor guest experiences by creating more robust customer profiles. These allow operators to offer increasingly tailored guest experiences and offerings.

“By customizing the guest journey, hotels can enhance satisfaction and drive additional revenue, ultimately contributing to TRevPAR growth,” according to Vasilevsky-Pinto.

Hotel guests are increasingly using automated processes that reduce friction in bookings and stays. Automated systems on the customer side are most evident with self-checking systems.

Katie Halfhead, senior communications manager at management product supplier Mews, notes that cloud-native platforms and open API ecosystems are helping hotel operators drive optimized tool development.

Additionally, tools such as chatbots and generative AI programs are becoming more commonplace.

“Another major shift is the rise of direct bookings through generative AI platforms, like ChatGPT,” Halfhead says. “As travelers increasingly use non-traditional search tools for trip planning, hoteliers must strengthen their digital presence and leverage technology to ensure visibility and capture direct demand, reducing reliance on online travel agencies and boosting profitability.”

Hotel Optimization Systems

Operators look to hotel optimization systems to address or enhance revenue management and operational efficiency.

One example of a hotel optimization system is Duetto, which recently acquired HotStats to bolster its AI capabilities. HotStats allows Duetto to integrate benchmarking tools that assess accounting KPIs and hotel efficiencies. One component of HotStats is its ability to provide competitor performance comparisons.

“The integration of HotStats into Duetto is particularly promising, as it enables the platform to provide insights not only on top-line revenue but also on the performance of various operating departments,” says Vasilevsky-Pinto. “This comprehensive view empowers hotels to make informed decisions that enhance overall efficiency and profitability.”

Hospitality and the hotel sector are experiencing the same undulation of technology as most industries. In turn, it could drive new measures of value and ways of measuring progress.

The gaming sector and its many resort-focused offerings could be the driving force behind a metric shift. Casino resort operators have long seen the benefit of evaluating guest values outside of the four walls they book.

As technology advances and hotel optimization increases, so will the evaluation of guest value in more precise methodologies.