NASHVILLE, Tennessee — As hoteliers feel the squeeze on profit margins, they're looking for new and innovative ways to create additional sources of revenue.
Not all revenue streams are created equal, as there may be an associated cost that cuts into the potential profit.
The higher a hotel’s class, the more diverse its revenue streams, said Claudia Alvarado Cruz, senior analytics manager, financial performance at STR, in the "Find the extra 5%" session at the 2026 Hotel Data Conference. Along with food and beverage, the higher classes may have spa, golf, gym and parking fees along with a miscellaneous category that can include resort fees and cancellation fees.
What’s interesting is that while there’s a positive correlation between higher classes and revenue diversity, it’s the opposite for profit margins, she said.
“The higher the class, the lower the profit margins,” she said.
That’s not a big surprise because some of the hotel departments are labor intensive and have more expenses, she said.
As hotels in the lower classes try to diversify their revenue streams, they’re seeing expenses increase as well, Alvarado Cruz said. The question is whether it’s worth diversifying the revenue streams given the associated increase in expenses.
“When we’re looking at the profit margins here by department, and this is for the low-tier hotels, you cannot blame them for trying to diversify. There is a very strong profit margin coming from other departments,” she said.
The likely reason it’s different for higher-end hotels than lower ones is that the revenue sources at the high-end hotels are more labor intensive as the staff must be at the top of their game, she said.
“They need to have people — pretty much everyone around the hotel — to take care of the customers because that is the expectation for the high-end hotel,” she said.
Front-desk opportunities
Guests are more open to spending money when it comes to experiences, conveniences and making their stay flexible, said Jenna Fishel, chief commercial officer at First Hospitality.
“They’re definitely willing to pay for time: the early check-ins, the late check-outs,” she said. “Dramatically more than we saw even five years ago.”
Travelers often get to their hotels early, hoping they can check in before the appointed time, said Courtney Jones, senior director of business development and hospitality at Plusgrade. That makes it important to present guests with the option to pay for an early check-in before they arrive at the hotel. There’s only so much a front-desk associate will be able to capture in an interaction because of the amount of available time and potentially a line of other guests waiting their turn.
“It’s a different sell as well,” she said. “You have a guest in front of you, and they know that room is available. Is that agent really going to ask for that extra money? That takes a lot of guts sometimes.”
By presenting the early check-in option earlier in the process, the guest knows there’s a value associated with checking in early and would be more willing to pay for it, Jones said. An upsell at the front desk is not always the most effective approach.
For example, Sarah Duignan, director of client relationships at STR, said she was asked at a front desk when checking out of a hotel in Dubai whether she’d like to check out late.
“Yes, I would have had you asked me maybe last night, and I would have paid for it, but not when I packed all my stuff up and I’m leaving now,” she said.
The way to handle front-desk upsells with staff is to not send a message that there will be repercussions if they don’t try, Fishel said. First Hospitality offers customized incentives to its teams. Every hotel has a different room mix, so for some hotels, there might be a flat amount per upgrade or a percentage per upgrade. At a higher volume hotel, the goal might be a number of upgrades, early check-ins or late check-outs.
“There’s an incentive, and there should definitely be some type of recognition and ‘hoorah’ behind that,” she said.
Being creative
A big focus for First Hospitality this year is robust programming calendars, Fishel said. At its hotel in Sedona, Arizona, there’s a moonrise ceremony every day because Sedona is “all about the woo-woo,” she said.
Every evening, the general manager holds a ceremony and rings a gong, she said. People show up early to get a front-row seat for the experience. While they wait, the hotel serves cocktails.
“One can turn into two, and two can turn into, ‘We might as well stay for dinner. We’re relaxed here. We have these beautiful views,’” she said. “It’s a great opportunity to capture guests in house for their spend.”
Hotel pantries offer a lot of opportunities, Fishel said. There’s the traditional Coke, Diet Coke, chips and candy bars, but much like streaming, people want what they have at home. Protein is popular, so pantries should be stocked with protein shakes, cheese sticks and yogurt, too.
Beer tap walls can create a “huge profit margin” for hotels, she said. They’re basically self-service, so along with the profits for alcohol, the model reduces the labor margin. Guests go up to the front desk, show their ID and pre-purchase the number of ounces of beer or wine they then serve to themselves.
Offering guests a food-and-beverage credit is a way to drive revenue ahead of time, Jones said. Hotels could offer a $90 credit for $75, and it’s not just for breakfast.
“I’m going to allow them to use it anywhere in the hotel that they would like — again, flexibility and convenience,” she said. “Presenting these opportunities in front of people, they will buy. You bring it to them. You build it, they will come.”
Hotels can do the same thing with spa offers, Jones said. Instead of offering a 60-minute massage, hotel spas can have 70-minute massages if the guest books in advance or at the front desk at arrival. It gives the perception of getting an extra 10 minutes for free.
Knowing ahead of time the number of people going to the spa, golf course or other amenities helps hotels figure out staffing models, which in turn can help reduce costs, she added.