How do hotels make the most money?

In the competitive world of hospitality, understanding where hotel revenue comes from and how to maximise it, is key to long-term profitability. With rising guest expectations, evolving booking behaviours, and a surge in short-term rental competition, hotel owners must think beyond just selling rooms. So, how do hotels make the most money?

1. Rooms are still the core revenue driver

For most hotels, the majority of income, typically 60–80%, still comes from room bookings. This includes both leisure and business guests, and success here hinges on two things:

Maximising occupancy: Filling more rooms, more often
Optimising rates: Selling at the highest possible price point without sacrificing volume

Tech-savvy hotels use dynamic pricing tools, real-time demand forecasting, and booking engine integrations to keep their rooms competitive, and profitable.

2. Ancillary services boost guest spend

While rooms bring in the bulk of revenue, high-performing hotels tap into ancillary services to grow profits. These can represent 20–40% of total revenue when done right.

Key revenue-boosting services include:

Food & Beverage: Upscale dining, room service, or grab-and-go options
Events & Meetings: Renting out conference rooms or hosting weddings and local events
Wellness: Spas, gyms, yoga sessions, or even wellness retreats
Extras: Paid parking, airport transfers, or premium Wi-Fi

These not only generate income but enhance the guest experience, leading to better reviews and higher return rates.

3. Smart hotel management = higher margins

Revenue growth isn’t just about what you sell, it’s about how well you manage operations. Efficient hotel management plays a huge role in cost control, guest satisfaction, and revenue performance.

Hotels that invest in professional management typically see:

Lower overheads through better staffing and scheduling
Faster response to maintenance or guest issues
Increased upsell opportunities through well-trained staff
Improved guest loyalty from consistent service delivery

A modern hotel management system can centralise operations, automate tasks, and provide real-time performance insights, all of which directly impact revenue.

4. Direct bookings = higher profitability

Every time a guest books through an Online Travel Agency (OTA), hotels pay a commission, often 15–25%. That’s money straight off your bottom line.

Encouraging direct bookings through your website can significantly increase net revenue. How?

Offering incentives (e.g. free breakfast, late check-out)
Improving your website’s user experience and speed
Investing in SEO and paid ads to drive traffic
Capturing guest emails for personalised re-marketing

5. Technology-driven strategies make the difference

From AI-powered pricing to automated guest messaging, smart technology gives modern hotels a serious edge. Some key areas of innovation include:

Revenue management software to fine-tune rates
Channel managers to streamline OTA listings
Guest experience platforms to personalise interactions
Property management systems (PMS) for operational control

Ready to maximise your hotel revenue?

At GuestReady, we help hotels and property owners unlock their full earning potential. Whether you’re running a boutique hotel, urban rental, or multi-unit operation, our expert hotel management solutions combine local market knowledge with cutting-edge tools to increase your revenue and simplify your operations.

Want to grow your hotel’s income the smart way?
Fill in our contact form today and let’s help you unlock your property’s full potential.