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A Secret Weapon to Counter Rising Labor Costs

Inflation has been a hot topic for quite some time now, and with it comes a big concern for hoteliers: labor costs are on the rise. Wages were up 5.4% for leisure and hospitality workers in the summer of 2023. Hoteliers continue to struggle to fill their staff shortages even at higher wages.

Simply continuing to absorb higher labor costs is not a sustainable option for these hotels and generating profit is mission critical. So, where should you turn to counter rising labor costs?

Cash, Profit, and Pricing

Some hoteliers are trying to control costs by cutting back on amenities. But turning a full-service hotel into a limited-service hotel is a risky strategy – one that might frustrate many guests and put future profits at risk.

Since profit is king right now, the question savvy hotel executives are asking is: how much lost profit can we make up with pricing?

The answer is nuanced. In certain circumstances, you may be able to push price without a dramatic impact on demand, driving bottom-line revenue. In other scenarios, driving price could cost you precious bookings. That would further drain profit, which is the last thing anyone wants.

A Solution

N2Pricing™ RMS is uniquely positioned to fight back against rising labor costs and inflation. Three core capabilities help hotels respond effectively, maximizing profit:

  • Accounting for Costs. N2Pricing’s price optimization algorithms account for costs. As labor and other costs rise, users can update the cost parameters in the system to make the optimization aware. This could lead to the system seeking higher prices, as discounting would be less profitable.
  • Measuring Price Sensitivity. The question of how much price we can drive centers around the notion of price sensitivity. How will my demand respond to changes in price? N2Pricing measures price sensitivity (aka price elasticity) and re-calibrates the measurement frequently. It identifies dates and times when price sensitivity is lower and automatically looks to drive price there. It also sees high price sensitivity and will look to drive bookings by holding rate or even using targeted rate decreases where they will be most effective.
  • Profit Optimization. N2Pricing has profit optimization at its core. So, the algorithm takes inputs like costs, price sensitivity, forecasted demand, and competitor rates and uses them to optimize rates to maximize profits. In other words, it thinks like an owner!

If you’re fighting inflation, it’s time to expect more from your RMS. Connect with an expert on our team to see how it can keep rising costs from crushing your bottom line.

Dax Cross

Dax Cross, the CEO of Revenue Analytics, is proud to lead an incredible team and to partner with customers across multiple industries to create value and enrich lives. Working together, we have driven over $1 billion in revenue growth.


Dax Cross, the CEO of Revenue Analytics, is proud to lead an incredible team and to partner with customers across multiple industries to create value and enrich lives. Working together, we have driven over $1 billion in revenue growth.

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