Revenue Management for The Hospitality Industry: Top Challenges

It’s been a challenging few years in revenue management for the hospitality industry as a result of Covid-19. From restricted travel and social distancing to fear among would-be hotel guests, hospitality industries across the globe have experienced a decline in customers and revenue.

However, even as we move away from the height of the pandemic, the hospitality sector is still struggling. Some of the key challenges that businesses in the industry are facing include labor shortages, supply chain disruption, and changing customer expectations which are all impacting revenue management for the hospitality sector.

Labor Shortages: Hiring and Retaining Employees

The hospitality industry has always been known previously for its high turnover rates in employees but this has been accelerated even more by the Covid-19 pandemic.

Inflation is driving lower-wage earners to look for higher wages and following the pandemic people’s outlooks have changed. For example, according to a poll conducted in late 2021 of 13,000 job seekers, more than half of U.S. hospitality workers said they wouldn’t go back to their jobs, while a third said they aren’t even considering reentering the industry.

Some of the reasons given for this include workload, lack of appreciation, and salary. This labor shortage has a knock-on impact on revenue. The employees that stay or whom you manage to hire, want higher salaries and better working conditions. This means hotels may be unable to deliver all of the services their guests demand, which again impacts their bottom line.

Changing Consumer Demands

After everything that has happened due to Covid, customers' expectations are higher

than ever, with people wanting more for their money compared to life pre-covid. This can be seen clearly in the hospitality industry with customers expecting more in terms of hygiene and cleanliness such as higher cleaning standards in rooms, sanitizing stations etc.

This change in consumer demand alongside staffing shortages makes it much harder for hotels to live up to customer expectations and provide the expected quality of service.

The latest technologies and innovations can be both beneficial to the hotel industry, and present challenges. Technology has the potential to improve hotel management, and the guest experience. However, the latest technologies also increase guest expectations at hotels.

For instance, keyless entry and contactless check-in are almost expected in today’s hotel industry. Hotels that don’t provide these technologies fail to meet guest expectations.

This increased demand for technologies creates a challenge for revenue management. It’s costly to keep up to date with the latest digital solutions.

Reputation Is More Important Than Ever

Hotels today depend on reservation platforms such as,, TripAdvisor and others to bring in customers (and revenue). Hotel customers check the reviews and ratings before booking their stay.

These reviews have a persuasive power in influencing customers’ choices and so put pressure on hotel management to maintain a high standard of guest experience. One bad review can ruin a hotel’s reputation and reduce the number of customers. This, in turn, can have a negative impact on revenue and demonstrates the challenges faced in revenue management in the hospitality industry.

Growth in Competition

Besides the impact of Covid on the hotel industry, another challenge for hotels is the popularity of other aggregators such as Airbnb. Airbnb is valued much higher than some of the biggest hotel brands around the world with the platform valued at about $113 billion in 2021. Airbnb, VRBO and others offer an alternative choice to the traditional hotel rooms with properties available to rent on the website with much more of a home aesthetic, compared to hotels.

With such room availability, Airbnb offers the same or even better rates than regular hotels attracting huge numbers of customers each year. The increased competition in the hospitality industry raises customer expectations even more and makes it difficult for hotels to bring in customers and maintain revenue, emphasizing the problems in revenue management for the hospitality industry.

Digital Solutions to Drive Revenue

Contactless Check-in

One of the key solutions to the challenges of revenue management for the hospitality industry is the installation of digital check-ins / contactless entry to hotels. Adopting this can augment workers if a hotel is short-staffed, enabling the business to maintain revenue despite the shortage of workers in the industry.

This solves short staffing issues, and also enhances the customer’s experience by reducing queuing in hotel lobbies. While contactless check-ins can solve staffing problems and improve the customer experience, it can be a significant digital transformation project with lots of different stakeholders across the business. Consider whether the initial outlay is worth the investment for your business.

Virtual Reality

Virtual reality tours are another great solution for hoteliers to consider. A VR hotel tour provides website visitors with the opportunity to see your premises in a quick and efficient manner, whether they are looking for accommodation or a conference location.

This new technology shows that your hotel is up to date with the latest software and will help to increase occupancy rates and maintain a steady revenue. Once the videos/images have been acquired, the system doesn’t require on-site technology, and is hosted on the website. The digital experience can be relatively simple to implement and provide a good ROI.

Pest Management Solutions

Another solution to some of the challenges in revenue management for the hospitality industry is advanced systems to counter common hotel issues, such as pest control. Reputation is an integral component of the hotel industry. Therefore, the cleanliness of rooms should take top priority when looking at the management of your hotel. However, with labor shortages particularly affecting the industry after the pandemic, and with customer hygiene expectations higher than ever, the best pest management solutions are essential for the hospitality industry to stay on its feet.

At Spotta, we’ve developed a device that continuously monitors bed bugs, to place in your hotel rooms. The device alerts you about an outbreak before it really takes hold. The introduction of this service allows hotels to maintain high levels of hygiene standards. Finally, Spotta’s solution doesn’t use the hotel WiFi systems and doesn’t need to go through the IT team, so installation is quick and simple.