INSIGHTS: Finding New Revenue Inside Your Hotel

From idle meeting rooms to spare parking bays, rooftops and wellness corners, five senior operators explain how hotels can turn underused space into lasting profit without nickel-and-diming the guest.

Walk through almost any hotel on a quiet Tuesday afternoon, and you will see the same thing. The ballroom is dark, the meeting rooms are empty, the pool is deserted, and a block of parking bays sits unused behind the building. Every one of those spaces was costly to build and is costly to maintain, yet for many properties they contribute little or nothing to profit. As owners and operators look for ways to strengthen their margins, a growing number of senior executives believe the next big opportunity is not a new building or a higher room rate. It is the assets the hotel already owns.

That was the central message from a recent panel of five hospitality leaders who gathered to discuss ancillary revenue and where hotel profit may grow next. 

Moderating was Glenn Haussman, host of the No Vacancy Live podcast. Joining him were Mary Beth Cutshall, chief growth officer of Vision Hospitality Group; Heather Davis, senior vice president of operations for select-service at Aimbridge Hospitality; Ethan Glass, CEO and cofounder of Ocra; Navid Kapadia, president of LOGIK Management; and Dave Montrose, chief operating officer of First Hospitality.

Haussman made one thing clear from the outset. The aim is not to pile extra charges onto the guest bill. “It’s not about nickel and diming,” he said. “This is going to be a conversation about creating great positive reasons for people inside and outside the hotel to spend more money with you and do that in a way that makes them happy.”

For Montrose, the search begins with a simple exercise: dividing the hotel into two categories. The first is made up of spaces that have traditionally produced no revenue at all. “The traditional non-revenue-generating spaces are things like lobbies, outdoor spaces, pools, exercise facilities,” he said. The second is made up of areas that already earn money but are not working as hard as they could. “And then the second bucket is optimization,” he explained. “Looking at our revenue-generation spaces like banquets and catering, restaurants and bars.”

Meeting rooms show just how large the prize can be. According to Montrose, traditional meeting room occupancy sits at around 40%, which means the space is empty 60% of the time. “It’s already built, and it’s staffed and has tables, chairs, etc.,” he said. The arithmetic is striking. Lifting utilization by just 10 percentage points at a traditional hotel with 10 meeting rooms could generate roughly $2 million in incremental revenue.

Finding the right opportunity, however, depends on knowing who is actually walking through the door. Davis argued that operators too often lose sight of this. “I think people forget about who the client is, who’s coming in as your guest, and what they want,” she said. At Aimbridge properties in New York, that insight has led to umbrellas, souvenirs and other convenience items appearing in the hotel market. 

Guests there tend to arrive at the last minute and want something close at hand. “So you have to be creative and make sure that it fits the market,” she said.

The same thinking can be applied on a much larger scale. Davis encouraged operators to look hard at their biggest spaces and ask whether they could offer something more memorable. “Is there an underutilized banquet space that you can make into an experience, into a creative experience?” she said.

Vision Hospitality Group applies this approach both when it develops a hotel and long after the doors open. Cutshall pointed to the company’s Embassy Suites in downtown Chattanooga, Tennessee, where a street-facing coffee shop and a rooftop restaurant and bar were added to draw in hotel guests and the surrounding community alike. At the Edwin Hotel, Autograph Collection, the company is taking an even bolder step, removing an underused rooftop pool to make way for a new catering and events venue.

“It’s very important to rethink what space you have and sometimes go big and do something really dynamic.”

“It’s very important to rethink what space you have and sometimes go big and do something really dynamic and look for where the white space is in that comp set,” Cutshall said.

If meeting rooms and rooftops are the obvious candidates, parking may be the most overlooked. Glass described it as a significant and high-margin opportunity. Most hotels, he noted, have several kinds of parking demand, including guest parking, staff parking, and parking for food and beverage outlets and banquets. Yet many properties still have spare capacity. “If you have an asset that’s near an airport or an event venue, or in a commercial business district, there’s substantial revenue to generate from those excess parking spaces,” he said.

Glass compared parking bays to guestrooms, since both are perishable inventory. “You can’t sell Tuesday’s space back on Wednesday,” he said. Importantly, the idea is not to take space away from guests. “We’re just adding incremental revenue beyond, and it’s a high-margin asset class, too.” More than 80% of that revenue can flow to the bottom line, he said, and a hotel with 40 to 50 excess spaces could potentially add $100,000 to $200,000 a year in net operating income.

Cutshall sees similar promise in electric vehicle charging and wellness, but she cautioned that success depends on listening closely to what customers really want. 

On charging, her advice was blunt. “Don’t give me a slow charger,” she said. “Give me a fast charger, and give me more than one because there’s nothing worse than going to the property and you can’t charge your car or you don’t have enough time.”

Wellness, in her view, remains largely untapped. “I don’t think we’re tapping into the $1 trillion business that we’ve got,” she said. She is not asking for lavish investment. “I’m looking for certain equipment, and it doesn’t have to be expensive, but it’s beyond the basics. I’m looking for healthy items in the grab-and-go.”

She also urged operators not to give up on an idea after a first attempt falls flat. “You have to investigate more, be a little bit more creative and find that audience and understand what they need,” she said. “Sometimes, it’s trial and error.”

For select-service hotels, which often have fewer facilities to work with, Kapadia said LOGIK Management has found opportunities by partnering with local attorneys and banks that need meeting rooms for mediations and other short-term uses. The harder task, he said, is turning a one-off booking into a dependable income stream. 

“We want to be able to continue to grow with these types of streams,” he said. “We’ve got to set parameters, SOPs and KPIs for them, and then have that accountability built in.”

Montrose agreed that structure matters, but he also stressed the value of giving property teams room to think for themselves. First Hospitality calls this “freedom within a framework,” and it has produced ideas as varied as bourbon tastings in Louisville and sunset experiences in Sedona. Each is shaped by the character of its local market. “Establishing a safe zone for teams to really experiment and get creative” can improve the guest experience and add value at the same time, he said.

The lesson running through all five perspectives is that ancillary revenue can no longer be treated as an afterthought. Hotels have spent decades applying rigorous discipline to the way they price, forecast and sell guestrooms. Bringing that same discipline to lobbies, parking bays, rooftops and meeting rooms can turn overlooked assets into a meaningful and recurring source of profit and give guests good reasons to spend more along the way.