Mike Bellisario, senior research analyst and managing director at Baird, joins the podcast to discuss the broad expectations for the upcoming earnings reports for publicly traded hotel brand companies and real estate investment trusts, including what companies are best poised to succeed.

DEEP DIVE

Reactive pricing remains a common revenue management weakness among independent and boutique hotels. It occurs when a hotel adjusts room rates only after occupancy begins to increase, rather than anticipating demand and capturing higher-value bookings in advance. By the time a property reaches 80% occupancy, the strongest opportunity to maximise revenue may already have passed: early bookers have secured lower rates, competitors have adjusted pricing, and the remaining inventory may be insufficient to recover the revenue opportunity lost. The underlying issue is not necessarily poor pricing judgement, but the absence of a structured process to identify demand signals early and translate them into commercial decisions.

Three leading indicators can help hotels identify high-demand dates before they peak: forward booking pace, local demand drivers and competitor pricing behaviour. Booking pace should be assessed against the same period last year, where comparable historical data exists, to identify dates where reservations are accelerating faster than expected. Local concerts, sporting events, trade fairs, festivals and public holidays can provide advance visibility of potential demand surges, sometimes months ahead. Competitor rate increases and declining availability offer an additional market signal. However, these indicators should be assessed collectively rather than in isolation. A competitor increasing rates does not automatically justify a price increase, and an isolated event does not guarantee sufficient demand to support premium pricing.

Operational discipline is what converts these signals into measurable revenue improvement. A practical approach is to implement a weekly pricing review covering the next 30–60 days, supported by an event calendar extending two to six months ahead. On Monday, review reservation pace and flag dates performing ahead of expectations. Mid-week, assess competitor rates and availability for those dates. Before the weekend, implement appropriate rate adjustments and restrictions where demand fundamentals support them. Pricing should generally increase in measured increments, allowing the hotel to test market acceptance while retaining flexibility. Minimum-stay restrictions may also protect peak nights from low-value bookings that displace more profitable multi-night stays. The objective is to establish a repeatable commercial process, not simply to increase rates whenever occupancy rises.

From an asset-management perspective, the critical distinction is between maximising occupancy and maximising profitable room revenue. Hotels should evaluate pricing decisions through ADR, occupancy and RevPAR, while also considering channel acquisition costs, contribution margin and the profitability of displaced business. A higher ADR achieved through direct or lower-cost corporate channels may deliver a stronger financial outcome than equivalent revenue generated through commission-heavy online travel agencies. Equally, increasing rates too aggressively can reduce conversion and leave inventory unsold. Performance should therefore be reviewed after each high-demand period against the original forecast, including actual occupancy, ADR and RevPAR, to establish whether pricing decisions improved the result. Competitor rates should inform this analysis, but the hotel's own demand, inventory position, cost structure and distribution mix must determine the final decision.

The strategic opportunity is to embed proactive pricing into the hotel's operating rhythm rather than rely solely on manual intervention or individual experience. A consistent weekly review can establish the foundation, while revenue management technology can consolidate booking pace, competitor pricing and market demand signals to improve the speed and quality of decisions. For a hotel portfolio, the next step is to standardise this process across properties while allowing each asset to retain its own demand assumptions, competitive positioning and pricing strategy. Success should be measured by incremental room revenue, RevPAR growth, net revenue after distribution costs and contribution to GOP—not simply by whether rates increased. The commercial advantage lies in identifying demand earlier, acting before competitors capture the opportunity, and converting each available room into the highest sustainable financial return.