5 Ways Revenue Leaders Can Protect Profitability

Operating costs are rising faster than revenue growth. Labor, technology, marketing, and distribution expenses continue to pressure margins while owners remain focused on profitability. During a HSMAI Revenue Optimization Advisory Board meeting, we focused on one of these urgent challenges.  

1. Manage Distribution Costs 

One area of agreement among Advisory Board Members was distribution cost management. Revenue teams have an opportunity to understand the true cost of acquisition across channels and make more intentional channel mix decisions. Distribution expenses can grow quickly when commissions, accelerators, travel ads, and other program costs are layered together. Optimizing channel mix remains one of the most direct ways revenue leaders can influence profitability. 

2. Connect Revenue Insights Across Functions 

Education across functions was another theme that emerged from the discussion. Revenue leaders often have the deepest understanding of demand patterns, channel performance, customer behavior, and profitability. Connecting those insights to operational decisions helps commercial and hotel leaders understand how changes in distribution, pricing, or segmentation affect the entire business. 

3. Look Forward on Profitability and Demand Quality 

The group also discussed the importance of shifting from purely historical analysis to a more forward-looking approach. Rather than focusing only on what happened, revenue teams can help forecast future profitability, evaluate demand quality, and support decisions that improve owner returns over time. 

Participants noted that discounting rates to replace missing demand can simply trade down guests who would have booked anyway. Revenue leaders must use data to validate whether additional demand exists before lowering price. 

4. Align Metrics and Incentives 

Several participants noted that profitability metrics must be reflected in incentive plans and organizational scorecards if businesses want revenue, sales, marketing, and operations teams moving toward the same objective. When departments are measured against different KPIs, alignment becomes difficult. 

5. Capture Ancillary Revenue 

Ancillary revenue opportunities also emerged as a high-impact lever. Dynamic pricing for upgrades, parking, fees, and other services can create incremental revenue with meaningful bottom-line impact. 

The discussion also touched on total revenue forecasting, demand quality, profit-focused decision making, and the need for greater alignment across revenue management, sales, marketing, distribution, and ownership groups. As costs continue to rise, these conversations remain central to protecting margins and maintaining strong hotel performance. 

Recommended Reading 

• The Crisis Crushing America’s Hotel Owners 
• Hotel Profitability in Transition: Cost Pressures and Budgeting Priorities for 2026 
• AHLA Survey: Hotel Owners Cite Rising Costs and Staffing Challenges as Main Concerns 
• How to Combat the Rising Cost of Everything 
• Operating Cost Trends & Lessons Learned 

 Questions for Teams 

1. Where can revenue optimization most directly influence profitability, specifically through pricing, mix, or channel decisions, without increasing operational complexity or cost for owners? 
2. Which decisions currently owned by revenue teams have the greatest potential to reduce cost pressure indirectly, such as lowering distribution expense, smoothing labor demand, or improving demand quality? 
3. If we had to prioritize just one or two revenue levers to help owners adapt to a permanently higher cost base, which would deliver the most immediate and sustainable impact?