Hotels earn money primarily through selling room nights. They set a price per night for each room, and this price can vary depending on demand, the season, and the location of the hotel.
Apart from room revenue, hotels also earn money through addititive services such as food and beverage sales, event spaces, and other amenities.
Furthermore, some hotels have retail shops on their premises, and a percentage of the sales from these shops contribute to the hotel’s revenue.
Lastly, large hotel chains often earn revenue through franchising and management fees. They allow individual hotel owners to operate under their brand name in return for a percentage of the hotel’s revenue or a fixed fee.
For hotels, the ultimate goal is to provide high quality service while earning a sustainable level of income so that they can continue to operate. Because parts of the revenue drive from selling room nights, it is imperative for hotels to sell enough rooms. Therefore, they may offer discounts for customers who will be staying for a longer period of time. Even if hotels may lose money if they provide discounts to customers for staying a longer time, it still would be a large earning for them if they are able to sell the room. As an example, a hotel room price may be $400 for 1 night, but $350 if the customer is booking for more than a night. This way, the customers have an incentive to stay there longer, which will be a stable source of revenue. Rather than earning nothing for the empty rooms they would much prefer to earn a smaller amount, as they are earning something than nothing.
In summary, there are a lot of sources for hotels to earn money, but they mainly derive from.
