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[Sponsored] Duetto explores four questions hoteliers can use to strengthen budgets, assess technology investment, and make more informed profitability decisions.
London’s hotel revenue is growing. You might expect profit margins to follow. But the latest HotStats EMEA snapshot shows a different picture: London, Paris and Rome all grew revenue while losing margin. Costs rose faster than the top line, leaving less of that growth in gross operating profit.
Some of those costs are easy to miss if you’re focused on RevPAR. Across Europe, credit card commissions are rising more than twice as fast as revenue. Loyalty program costs are outpacing revenue too. A budget that assumes higher room revenue will bring higher profit could miss both.
For an independent boutique hotel, that gap can be hard to ignore. You may be setting the commercial strategy, reviewing the forecast and explaining the results to ownership, sometimes in the same meeting. Whether or not you have a finance director, someone will ask why revenue is up, but profit isn’t keeping pace. Your budget needs to answer that question.
The same revenue growth can produce very different results
HotStats’ regional data makes this clear. In Northern Europe, revenue and profit grew at almost the same rate, leaving little improvement in margin. Eastern Europe’s revenue growth was modest, but profit grew nearly three times as fast. And while Southern Europe had the strongest revenue growth, its latest monthly figures showed profit per available room dipping slightly even as revenue continued to rise.
One month doesn’t establish a trend. It does give hotels a reason to look more closely at where their revenue growth is going.
Two properties could report similar RevPAR growth and still end the year in very different positions. One might keep more of each additional pound it earns. The other might spend much of it on the cost of attracting and serving that business.
That’s why RevPAR needs company in your 2027 budget. GOPPAR, cost per occupied room, and margin by segment help show whether growth is reaching the bottom line.
Four questions your budget needs to answer
If you’re asking an owner, investor or lender to back a new investment, be ready to answer four questions:
- How soon could it pay for itself?
- What return do we expect?
- What will it cost us to keep working as we are?
- How confident are we in those estimates?
The third question is often the hardest to put a number against. Start with your own results. Where did revenue grow without a corresponding improvement in profit? Which costs rose faster than expected? What would happen if those patterns continued next year?
You don’t need to pretend every pound of lost margin is recoverable. But you do need a clear view of the problem before you decide what is worth spending to address it.
Where revenue technology actually earns its place
“We need better revenue technology” is the easiest line to write into a budget and the hardest to get approved, because it’s usually argued on features rather than outcomes.
At Duetto, we call this discipline Performance Engineering: treating revenue and profit as one connected system rather than two separate reports. Three categories tend to matter most for independent and boutique properties specifically:
- First, pricing and forecasting. If demand varies significantly by segment, channel, and room type, a single blanket rate strategy can leave money on the table in strong periods and fail to respond quickly enough in softer ones. The more useful question is whether your pricing decisions reflect where demand is actually coming from and what it is worth. This is the specific gap tools like Duetto’s GameChanger are built to close.
- Second, profitability benchmarking. RevPAR tells you how much revenue you’re generating relative to your competitive set. It doesn’t tell you how much of that revenue you’re keeping. Visibility into GOP and department-level costs provided by Duetto’s HotStats can reveal a profitability gap that RevPAR alone won’t show.
- Third, consistent forecasting. If the forecast feeding your budget is built in a spreadsheet once a quarter, while day-to-day commercial decisions are being made from a different set of assumptions, the two can quickly diverge. A useful forecast should give the team a shared view of demand, revenue and profitability that can be updated as conditions change. Duetto’s ScoreBoard exists specifically to keep that view current rather than static.
Whichever of these challenges matches what you’re seeing in your own property, every month you budget around RevPAR alone instead of margin is a month that gap can keep compounding. That’s the argument for addressing it in this budget cycle, rather than filing it under “next year’s project.”
Making the case for investment
When you bring a proposal to ownership, lead with the problem you can see in your own results. A flat-margin month at your property will mean more to an investor than a broad industry average.
Then show what you believe could change, what it would cost, and how you would measure success. If a vendor claims their technology will deliver a return, ask for comparable customer results, the assumptions behind their figures and a reference you can speak to.
Kanwarpreet Kanwar, former group revenue and distribution director at Ovolo Hotels, described the team’s experience with Open Pricing this way: “Open Pricing just made so much sense, so the team here happily adopted it and has used this to maximize our revenue performance. This shows in our figures where we have grown compared to competitors and in markets where most of them declined.”
That’s a useful perspective, but your own business case should still stand on your own numbers. Want help building a business case for hotel technology? Watch this webinar where Triptease, Duetto, and L+R walk you through it.
What to take into budget season
The HotStats data offers a clear reminder: higher revenue does not guarantee a healthier margin. For 2027, put GOPPAR and cost per occupied room alongside RevPAR. Look closely at which segments and channels bring in business, and what it costs to win and serve it.
If you’re considering new technology, write down both sides of the decision: the expected cost and return of investing, and what you expect to happen if nothing changes. That gives owners and investors a clearer basis for saying yes, and gives your team a better way to judge whether the investment worked.
If you want to see how a margin-first approach translates into an actual budget conversation, Duetto is built around this exact discipline.
