Hospitality

Should you pursue more occupancy or a different mix of business?

A property may fill more rooms while generating less contribution after acquisition and servicing costs. Another may turn away demand because housekeeping, maintenance or a supporting amenity cannot sustain the advertised offer. An annual occupancy average can conceal both peak shortages and weak shoulder periods.

Arcus’s central thesis is that hospitality strategy should connect the contribution from a defined guest segment and period with the capacity and experience needed to serve it. Occupancy, revenue per available room and operating profit answer different questions. Improving one does not establish that the investment creates value. This is Arcus analytical synthesis, not original empirical research or a validated score.

This page focuses on the commercial and operating decision across the hospitality business. General pricing and customer research provide supporting methods; property development, specialist facility advice and sector-specific club governance require their own scope. A hotel finding should not be transferred automatically to a resort, private club or residential community.

What does hospitality research tell leaders?

Enz, Canina and Lomanno’s 2009 study of US hotels during 2001–2007 found that properties pricing above their competitors had lower relative occupancy but higher relative revenue per available room. The authors lacked profit and comprehensive business-mix data; resorts and extended-stay properties were excluded. This historical observational evidence challenges occupancy-led decisions, but does not prove that raising prices causes higher profits or that discounting is always wrong.

Dev and colleagues’ May 2026 Cornell research brief reports different spending, repeat-booking and lifetime-value patterns for online-travel-agency and direct customers in one global multibrand hotel company. Its allocation simulations favour using both channels for growth, including the acquisition efficiency of intermediaries. These company-specific findings are not a causal guarantee or a channel allocation for an independent property. The repository abstract is the evidence reviewed here.

Statistics Canada’s December 2025 release on accommodation services in 2024 reports revenue growth alongside a declining operating profit margin for hotels, motor hotels and motels. This grouping also includes resorts and other specified accommodation categories. National industry aggregates cannot set a property’s target margin or identify why its results changed. They reinforce the need to examine revenue and costs together.

The evidence supports investigating the economics rather than prescribing a universal rate or channel policy. Current local demand, property condition, guest expectations, contracts and delivery capability must determine the actual choice.

Worked illustration: a busier property can earn less contribution

Consider a fictional 100-room-night period. At 70 sold nights, a $200 rate, a 10% acquisition charge on room revenue and $50 variable servicing cost per sold night, contribution is 70 × ($200 × 90% − $50) = $9,100. A broad offer selling 85 nights at $170 with the same assumed charge and unit service cost produces 85 × ($170 × 90% − $50) = $8,755. Occupancy rises from 70% to 85%, but contribution falls $345.

This is a transparent management illustration, not a property forecast or client result. It excludes fixed costs, tax, ancillary contribution, cancellations, additional staffing steps and any future customer value. It assumes the lower rate applies to all 85 nights. A fenced offer that reaches genuinely additional demand without repricing existing bookings could perform differently.

At an otherwise unsold date, one additional booking can make a positive contribution if its net receipts exceed the costs it creates. On a constrained date, compare it with the contribution of business displaced. Assess the incremental cost of packages and amenities, not their headline selling price. The right response depends on the counterfactual and operating requirements, not a blanket rule against discounts.

What should owners examine before approving investment?

Build a bridge from gross bookings to net receipts, operating contribution and cash requirements. Reconcile cancellations, channel charges and package inclusions without double counting. Separate costs that vary by occupied night from those triggered by opening another building, extending a season or adding a shift. Full property overhead matters for long-term viability even when it does not change with a single booking.

Test a base case and plausible downside around demand, achievable price, staffing and transition disruption. Include maintenance and capital renewal alongside growth expenditure. A project with an attractive stabilized forecast can still require unaffordable cash during launch. Do not treat industry margins as a substitute for the property’s actual cost structure.

Align incentives across commercial and operating teams. If one team is judged on occupancy and another on payroll alone, both can meet their targets while damaging contribution or service. Agree a small shared set of measures and decision rights for inventory release, offer approval and exceptions.

Safety, accessibility, planning and technical compliance require appropriately qualified advice. Arcus can integrate specialist findings into the management decision; a strategy review is not an engineering assessment, valuation or assurance of compliance.

Discuss the hospitality decision you need to resolve

Tell Arcus the type of business, the pending decision, timing and the evidence available. A useful initial discussion can begin with general context; identifiable guest records are not needed. Relevant capabilities include pricing analysis, customer insights and organizational review. Experience is presented through the central consultant directory.

Related hospitality service areas

The retained service routes address more specific settings. Their separate articles have not been reassessed in this revision.

• Private Clubs
• Resorts
• Golf and Leisure
• Residential Communities

Retained historical consulting context

These broader service examples, historical testimonial and media links are retained context, not measured hospitality outcomes. The quoted role is historical.

Below is a sample of the range of services that Arcus has provided to clients.

• A survey of 2,350 consumers and 1,320 business leaders for feedback on sustainability trends
• Architecting a multi-year change strategy for a Fortune 500 company
• Mentoring a CEO on organizational change
• Excellence transformation of a leading B2B services company
• Creating a new sales deployment model for a healthcare company
• Developing a position evaluation and compensation model for a professional medical association   
• Improving services to customer segments by deepening their understanding of customer attitudes

“Arcus manages to consistently deliver tangible results on market research and strategy projects. They combine deep business expertise, powerful research capabilities, and innovative thinking to deliver substantial value.”

– Vice President, Nikon

Media Coverage

Arcus has been quoted extensively in media on a range of topics and can offer research studies, insights and ideas. Here are some examples from the Globe and Mail, CTV, Global TV and others.

• Nordstrom countdown to opening begins – Toronto Star
• No lineups outside stores in five years – BNN
• Black Friday retail, marketing, and cross-border shopping trends  – BNN
• Does global expansion need a local flavour? – Globe and Mail
• Art of the Pitch – Protect company’s interests when approaching giants – Globe and Mail
• Off-the-shelf technology or a custom design?  – Globe and Mail

Original hospitality illustrations