Should Revenue Managers become Profitability Managers?

Revenue management used to be about filling rooms and maximizing rate. The equation was simple: more occupancy plus higher ADR equals greater revenues. But hospitality has evolved and the old revenue mindset no longer captures the full picture. The smartest hotels are no longer asking, “How much did we make?” but rather, “How much did we keep on the bottom line?”

If you factor in the distribution costs, marketing spend and commissions that high ADR looks quite different in the end. OTA booking may take 15–25% right off the top. Direct business avoids commission, but this business is not free. Many hotels quietly add an 8–10% cost in the net rate calculation process to cover loyalty programs, web maintenance, digital marketing and guest service support. When we start measuring net revenue per room, the story of “best channel” often changes.

This shift from revenue to profitability comes from the evolution of our revenue practice. Profitability manager looks beyond topline metrics like ADR and RevPAR to understand the real return of every segment. We should ask which markets bring the healthiest margin once acquisition costs are stripped out? Which distribution partners truly add value versus volume? Which promotions drive repeat guests rather than rebookers and one-off discounts? To do this well, revenue professionals must get closer to finance and operations. Profitability lives in collaboration.

Forecast shouldn’t just project occupancy. It should inform staffing, utilities and purchasing plans. A 90% occupancy forecast may sound like victory, but if the kitchen runs overtime and the housekeeping team doubles in size, the profit can vanish overnight. Finance can’t see that in real time and operations can’t see this in everyday context. Think of it as a revenue manager role having the capacity of bridging the two. This requires retro analysis, forecasting the cost incorporated in managing the business mix and above internal communication.

In my career, I had situations where I asked the revenue manager reporting to me what the CPOR (cost per occupied room) for this hotel was and they didn’t know. Often this information is used only when the general manager complains about guest profile in correlation to the lowest rate and then determining what the lowest rate is based on the CPOR. For example, if it costs us 80 euros/dollars per night to cover the cost, then we should not lower the rates to 90 euros/dollars, as an example. This is something that we should know and incorporate in our pricing regardless of the hurdle rate.

Shifting to a net revenue model also reframes how performance is judged. Instead of celebrating record months of revenue, teams should be celebrating efficiency and how much of that revenue became gross operating profit. This perspective encourages smarter distribution mixes, more intentional segmentation and healthier long-term strategies. In practice this really requires collaboration.

I have witnessed some of the smart companies in my career hiring the bridge between finance and revenue or finance and operations, but if you don’t have the budget to hire such a position, then the revenue manager should take that role and get educated on how to manage revenue with the profitability mindset. Profitability management is born out of complexity. It’s about seeing the whole chessboard, not just the next move. The future of the role lies in this wider view where data, costs and collaboration combine to drive not just revenue growth, but sustainable business growth.

The job title might not change overnight, but the mindset already is. The best revenue managers are already thinking like profitability managers. They just haven’t updated their email signatures yet.