Finding the Right Balance in Room Categories: How Simplifying Room Types Drives Revenue Growth

My clients inside Inevitable Hotel Success Programme are always asking, “How many room categories should my hotel have, and what should they be like?” It’s a common dilemma: Too many categories can hurt sales, while too few can leave potential revenue on the table.

Too Many Room Categories: When your hotel offers too many room types, you’re actually creating confusion for your guests. The sheer number of options can overwhelm them, leading to decision paralysis or simply pushing them to abandon the booking process. Having too many categories also makes it harder to manage inventory and optimize pricing strategies. Often, we see that guests tend to book from the first three to five categories. Beyond that, the additional room types may end up sitting empty or unsold.

Too Few Room Categories: On the other hand, having only one or two room categories limits your ability to appeal to a variety of guests. You miss the opportunity to upsell to those who are willing to pay for more premium experiences, such as suites with pools, better views, or exclusive amenities. Offering just a couple of room types also caps your flexibility in pricing, leaving potential revenue untouched.

The key is finding the sweet spot—just enough room types to cater to different guest needs and budgets, but not so many that it complicates their decision-making process.

This year, I’ve been working with a hotel in the Greek islands to restructure their room offerings. After conducting a thorough GAP analysis, it became clear that while the hotel management had initially wanted to enhance the guest experience by creating various room types, this approach had not proven effective after two years of operations.

In year 2024 we started to work on the project to reduce the number of room types, with the goal of increasing revenue and occupancy by minimizing the gaps between reservations during room allocation in 2025. Additionally, this restructuring allowed us to optimize inventory usage during high-demand periods, ultimately boosting the hotel’s profitability.

This strategic shift has shown how simplifying room categories can unlock greater efficiency and revenue potential.

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Key Takeaways from my project: How Room Type Reduction Will Drive Revenue Growth

By simplifying and optimizing your room categories, you can dramatically increase both revenue and guest satisfaction. Here’s why:

• Minimize Revenue Loss: Reducing the number of room types minimizes the chances of having rooms closed out due to limited availability. This ensures that you’re maximizing your available inventory.
• Sell More Room Nights: With more rooms available in each category, you’ll have fewer closed-out days. This allows you to keep inventory open for longer booking windows, capturing more last-minute bookings and increasing occupancy.
• Boost ADR and RevPAR: Simplified room categories, particularly with premium options (like suites with pools or sunset views), become more visible and appealing. This encourages guests to book higher-end rooms, driving up your Average Daily Rate (ADR) and Revenue per Available Room (RevPAR).
• Simplify the Guest Experience: When guests see fewer, clearly defined room categories, their booking decisions become easier and faster. This translates to a more seamless experience, making it more likely they’ll complete their reservation.
• Facilitate Longer Stays: More open inventory in each room type allows guests to book longer stays, especially in higher-demand periods. This further increases occupancy and revenue per guest.
• Increase Guest Satisfaction: With clearer room descriptions and fewer categories, the chances of misaligned guest expectations drop. This reduction in room type complaints leads to happier guests and better reviews.

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By adopting these strategies, your hotel can unlock untapped revenue potential, improve guest experiences, and build a foundation for long-term profitability. The goal isn’t just about selling rooms—it’s about selling the right rooms in a way that maximizes both guest satisfaction and revenue.

If you’re looking to implement these proven strategies for your hotel, I’m here to help you get started!