The new path to hotel profitability

Why Net Revenue Growth is Replacing Net Unit Growth as the hospitality industry’s top priority

In the hospitality industry, there's a shift from focusing on Net Unit Growth (NUG) - the expansion of hotel room inventory — to Net Revenue Growth (NRG), which emphasizes increasing revenue from existing assets. This transition is driven by rising operational costs, changing travel preferences, and regulatory hurdles, making revenue maximization a more strategic and sustainable goal than expansion.

Key takeaways

• Economic pressures (high borrowing costs, inflation, labor shortages) make expansion less viable; increasing revenue from existing properties is more profitable.
• Evolving traveler behavior favors experiences and meaningful stays over traditional luxury, with strong demand for RevPAR-optimized hotels.
• Regulatory challenges and overtourism concerns complicate expansion into new markets.

Sustainable NRG strategies include:

• Dynamic pricing using RMS and automation.
• Increasing direct bookings through better brand channels and loyalty incentives.
• Upselling and diversifying revenue (e.g., spa, F&B, event space, subscriptions, timeshares).
• Boosting operational efficiency via AI, energy management, and supply chain optimization.
• Leveraging strategic partnerships and smart tech to enhance guest experience.
• Embracing sustainability to strengthen brand appeal and loyalty.

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