An Introduction to Profit-oriented Revenue Management

In the face of an increasingly complex and competitive hotel landscape, traditional revenue management methods have shown their limitations. Hotels need a more comprehensive and proactive approach to maximize their profitability. This whitepaper introduces Profit-Oriented Revenue Management (PORM), a transformative strategy that shifts the focus from top-line revenue to profit generation. PORM provides a holistic perspective of the hotel’s financial performance, accounting for all costs associated with generating revenue, including Customer Acquisition Cost (CAC) and the cost of goods sold (COGS). It redefines the concept of ‘profitable customer’ by recognizing that not all revenue is created equal, and strategic allocation of resources to high-profit segments can significantly improve bottom-line performance.