Revenue Management (Hotel)

Revenue management is the practice hotels use to decide which room to sell, to whom, at what price, through which channel, and when, so that total revenue across the property is as high as demand allows. It studies historical patterns, current pace, and forecasted demand to set rates and allocate inventory across dates, room types, and distribution channels.

The discipline sits above two narrower tools. Yield management varies rates by demand to maximise yield per available unit, while dynamic pricing adjusts rates in real time based on market signals. Revenue management governs both and is measured by metrics such as RevPAR and ADR, which combine rate with occupancy rate.

A core revenue-management decision is channel cost: a room sold through an OTA carries a commission, whereas a direct booking does not. A travel brand running its own affiliate program treats affiliate and referral channels as part of the same channel-cost calculation, comparing partner commission against OTA commission per booking.