Your ADR hasn't moved in 18 months. Occupancy looks solid, operations are running smoothly, but rates are stuck. You're not alone - and the fix isn't as complicated as you think.

At dhi Hospitality, we recently partnered with a 150-room property that was struggling with rate optimization. In just 6 months, we took their ADR from $220 to $248 year-over-year, improving their ARI (Average Rate Index) from 96 to 106. Here's exactly how we did it - with strategies you can implement immediately.

Five Proven Steps that moved ARI from 96 to 106

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1. Segment Mix Optimization: Break Free From Low-Yield Dependency

The Problem

The property operated on a first-come, first-serve inventory model. Negotiated wholesale and corporate segments had longer lead times - 60 to 90 days out, and were systematically locking up inventory during high-demand dates at $185. Meanwhile, retail guests with shorter booking windows were willing to pay $280-320 for the same dates, but the hotel had already sold out to lower-paying segments.

The Fix

We introduced dynamic segmentation controls that prioritized inventory allocation based on demand forecasting, not booking sequence.

What we did:

• Analyzed 12 months of pickup patterns across all segments

• Identified 45 peak demand dates where retail willingness-to-pay exceeded contracted rates by 40%+

• Implemented inventory restrictions: limited wholesale/corporate to 25 rooms during verified compression periods

• Released majority inventory to higher-yielding retail and qualified corporate at premium rates

The hotel's reaction: They panicked. The security of contracted volume felt safer than chasing uncertain retail demand. We held firm with the data.

The impact after 6 months:

• $2,400+ incremental revenue per peak night

• $108,000 additional revenue across peak periods

• Retail segment contribution grew from 32% to 51% during high-demand windows

• Corporate relationships maintained with transparent communication

The lesson: first-come, first-serve is leaving your highest-paying guests with no room at the inn.

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2. Direct Channel Strategy: Stop Funding OTA Marketing Budgets

The Problem

The property celebrated $240 ADR from OTAs—until we calculated the real cost. With base commissions, overrides, and promotional placements, their average commission payout exceeded 20%. Direct bookings lingered in single digits. They were essentially paying OTAs to own their customer relationships.

The Fix

We deployed our digital solutions to make the direct channel competitive, visible, and conversion-optimized.

What we did:

• Revamped the website with streamlined booking flow, mobile optimization, and trust signals

• Implemented direct rate messaging: "Book here, pay less—guaranteed"

• Priced direct channel at $230 (below OTA display rates, above net revenue)

• Invested commission savings into Google Ads targeting branded and local searches

• Added value to direct bookings: flexible cancellation, room upgrade priority, loyalty benefits

The impact in under 4 months:

• Direct bookings doubled from 8% to 16% of total production

• Net ADR increased from $206 to $226 (accounting for blended commission costs)

• $218,000 additional annual revenue projected from channel shift alone

The math is undeniable: would you rather show $240 and keep $192, or show $230 and keep $230?

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3. Room Type Differentiation: Make Your Pricing Defensible

The Problem

The property had three room types with minimal differentiation. "Deluxe" was the same room on a higher floor for $25 more. Suites at $295 had low occupancy (42%) because guests couldn't justify the jump from $220 Standard. The value proposition wasn't there.

The Fix

We re-allocated room type classifications based on actual size, features, and tangible amenities—not floor levels. Then rebuilt the rate architecture with decoy pricing to make premium options feel logical.

What we did:

Restructured room categories with real differentiation:

• Standard Room ($220): Base room, standard amenities, 280 sq ft

• Premium Room ($265): Corner units, 340 sq ft (+20% larger), Nespresso machine, upgraded bath amenities, work desk with ergonomic chair, premium toiletries

• Suite ($295): 480 sq ft, separate living area, sofa bed, kitchenette, premium minibar, luxury bedding, guaranteed late checkout

Applied decoy pricing psychology: The Premium Room at $265 acts as an anchor. Now the Suite at $295 looks like exceptional value—only $30 more for dramatically more space and features. Guests compare the $75 jump from Standard to Suite against the $30 gap from Premium to Suite. Suddenly, the Suite becomes the "smart upgrade."

Added value-driven inclusions:

• Suites included welcome amenity (local artisan product), daily coffee/tea service, express laundry

• Premium Rooms got guaranteed high-floor placement, priority housekeeping

The impact over 6 months:

• Suite paid occupancy increased from 42% to 68%

• Premium Room captured 48% of bookings

• Overall mix-adjusted ADR rose from $234 to $251

• Guest perception shifted: "I can see why it costs more"

The suite pricing stayed at $295, but the perceived value increased dramatically. Guests weren't buying "a bigger room"—they were buying a genuinely better experience.

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4. Dynamic Pricing for Room Types: Stop Using Static Differentials

The Problem

The hotel maintained static differentials regardless of demand: Standard to Deluxe was always $25, Standard to Suite was always $75. This ignored a critical reality—demand for room types fluctuates independently. Some nights, Suite demand is stronger than Standard demand, and vice versa.

The Fix

We mapped all room types (not just base) onto rate shopping tools across the competitive set and made differentials dynamic based on actual demand signals for each category.

What we did:

• Integrated all room types into competitive rate shopping (most hotels only track Standard rates)

• Analyzed demand patterns: business travelers favored Suites on weekdays; leisure guests preferred Standard on weekends

• Implemented dynamic differentials that respond to category-specific demand:  

• High Suite demand nights: $30-40 differential (vs. old static $25)

• High Standard compression: $80-95 Suite differential (vs. old static $75)

• Balanced demand: differentials narrow to drive mix toward Premium/Suite

The impact over 6 months:

• Premium Room differential ranged from $35-55 depending on demand

• Suite differential ranged from $65-110 based on category-specific pickup

• Captured $840+ incremental revenue per peak night from intelligent differential pricing

• Total contribution: $37,800 across monitored peak periods

The principle: your room types don't have uniform demand. Why should they have uniform pricing gaps?

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5. Reputation Management: Leverage What's Already Working

The Problem

The property sat at a 3.9-star rating on Google. Rates above $240 faced booking resistance—not because of poor service, but because perception lagged reality. Interestingly, Suite reviews consistently scored 4.4+, while Standard room reviews pulled the average down.

The Fix

We analyzed the review disparity and realized the opportunity: leverage Suite satisfaction to improve overall reputation while addressing Standard room friction points.

What we did:

• Identified that Standard room complaints centered on dated furniture and WiFi dead zones

• Prioritized targeted improvements: refreshed 40 Standard rooms, upgraded WiFi infrastructure

• Implemented post-stay feedback system to catch issues before they became public reviews

• Actively promoted Suite experiences in marketing: "Our highest-rated rooms—see what guests are saying"

• Responded personally to every review, especially negative ones, with specific action plans

The impact over 6 months:

• Overall rating improved from 3.9 to 4.2 stars

• Standard room review scores rose from 3.7 to 4.0

• Suite reviews maintained 4.4+ and drove halo effect on property perception

• Achieved $12-15 rate premium vs. comparable 3.9-rated competitors

• Booking conversion improved 18% at rates above $240

In 2025, your star rating isn't a vanity metric—it's a revenue multiplier.

The dhi Hospitality Difference

We don't work from generic playbooks. Every property has unique constraints, competitive dynamics, and stakeholder concerns. Our approach:

Diagnostic precision: Understand where you're actually losing money Tailored strategy: Build solutions specific to your property and market Implementation partnership: We don't just recommend—we help execute Measurable outcomes: Track what matters—ADR, ARI, net revenue, profitability

We work with independent properties, branded hotels, and multi-asset portfolios across 15+ markets. What remains constant: focus on financial results that show up in your P&L.

Let's Analyze Your Revenue Performance

We'd welcome the opportunity to examine your specific situation with the same rigor we brought to this 150-room property.

Schedule a revenue performance audit with dhi Hospitality.

We'll identify where revenue is leaking, quantify the opportunity, and outline a practical 6-month roadmap.