Focus Areas in a Flat Growth Environment: Strategic Imperatives and Winning Ways for 2026

Why hotels must move beyond price increases and cost cuts to deliver sustainable revenue growth when traditional levers have been exhausted.

For three years, the global hotel industry has enjoyed a simple formula for profit growth: push rates higher and cut costs deeper. The “revenge travel” wave following the COVID pandemic created a seller’s market where average daily rates rose aggressively, capitalising on pent-up demand and limited supply. Simultaneously, hotels reduced staffing, limited services and deferred maintenance. The strategy worked brilliantly, until it didn’t.

The challenge facing hotel executives in 2026 is that traditional levers have been exhausted. Growth is forecast to be near flat, with upper upscale and luxury segments performing best and select Asian markets showing modest prospects. Over three years of excessive reliance on pricing and cost-cutting, the industry has failed to improve productivity or increase brand premium. Cost-cutting has reached levels that demonstrably impact guest experience, eroding the very differentiation that justifies rate premiums. The competitive landscape has intensified with accommodation rentals, experience-based travel and a proliferation of new brands all competing for the same guests.

Yet despite these stagnant conditions, the top 20% of companies will significantly increase market share and profitability whilst others risk devaluation or failure. What separates winners from losers?

This article builds on our assessment of the global hotel industry in 2026 and identifies the strategic priorities and practical focus areas for winning when market growth stalls. It translates the required characteristics of Discipline, Data and Differentiation into six strategic imperatives and ten practical “winning ways” that exploit opportunities created by current market conditions, technology capabilities and evolving consumer behaviour.

The Three Characteristics That Define Success: Discipline, Data and Differentiation

In flat growth environments, success requires mastering three interconnected characteristics that separate top performers from those who struggle.

Discipline means rigorous commercial and operational excellence. When you cannot influence overall demand levels, being exceptionally good at fundamentals becomes paramount. Missing an opportunity to sell a room for £1 more represents lost revenue. Discipline manifests in elevated standards across sales, distribution, yield management and total revenue optimisation, requiring systematic processes, consistent execution and relentless focus on doing core functions exceptionally well rather than merely adequately.

Data transforms from supporting analytics to competitive weapon. Understanding customer propensity to buy becomes critical to improving productivity and revenue performance. This extends beyond traditional business intelligence measuring transactions to customer intelligence capturing needs, behaviour, sentiment and intent.

Differentiation through authentic brand experience becomes essential to protect and expand market share. Physical attributes establish baselines, but experience determines which properties capture disproportionate demand and maintain pricing power. Differentiation requires translating brand promises into tangible experiences guests value sufficiently to pay premium rates for, then delivering consistently across all touchpoints.

“These three characteristics interconnect and reinforce each other. Discipline provides the foundation for exploiting data effectively. Data enables more precise differentiation by revealing what guests truly value. Differentiation justifies the investment required for disciplined execution and sophisticated data capabilities.”

Strategic Imperatives: Organisational Priorities That Enable Success

Before hotels can execute specific initiatives, they must establish the right organisational priorities and resource allocation strategies. These six strategic imperatives represent the foundational decisions that senior leadership must make about how their organisations operate, where they invest, and what they prioritise.

Think of these as the “what” and “why”: what must change at an organisational level, and why these changes matter strategically. They translate the characteristics of Discipline, Data and Differentiation into concrete organisational commitments.

The footprint, segment, geographic markets and business model of each company means all travel and hospitality companies require different priorities and sequencing. However, these six imperatives provide the framework that most companies should consider when establishing their strategic direction.

1. Allocation of Resources: Following Growth Where It Exists 

Even in weaker market conditions, opportunities exist to shift share, target different customers and markets, disintermediate, cross-sell and upsell, and strengthen guest affinity. The imperative is to refine resource allocation to exploit these opportunities rather than spreading effort uniformly.

This does not mean abandoning flat markets entirely. Hotels must defend market share in established territories. But it requires disciplined analysis of where additional resources (marketing investment, sales focus, management attention, capital expenditure) will generate the strongest returns. If Asian source markets are growing faster than American ones, marketing budgets should reflect that reality. If leisure weekends show stronger demand than midweek business travel, yield management and promotional strategies should adapt accordingly.

Success requires granular analysis of which markets, segments, channels and customer types offer the best growth prospects, then systematically directing incremental resources towards those opportunities. The discipline lies in making these allocation decisions based on rigorous analysis rather than historical inertia or political convenience.

2. Brand: Sharpen Positioning and Experience Delivery 

When revenue growth is flat, brand clarity and customer relevance become essential. In crowded markets where every hotel appears relatively similar, differentiation separates those who thrive from those who merely survive.

Guest experience creates the fastest, most cost-effective differentiation. Hotels can immediately improve customer service, personalise interactions and deliver memorable experiences that distinguish them from competitors—without waiting for capital-intensive refurbishment.

This requires working backwards from what guests genuinely value, then defining the behaviours, standards, processes and training that enable consistent delivery. Success depends on systematic transformation approaches that bridge the gap between brand ambition and operational delivery. As explored in our analysis of creating purpose-led guest experience, it means identifying the aspects of guest experience that truly differentiate—whether eliminating friction points, delivering personalised recognition or creating seamless service across touchpoints—then systematically building capability to deliver them reliably.

3. Marketing: Increase Precision, Efficiency, Engagement and Digital Discipline 

Given the rapid innovation and market adoption of digital technology, consumers have expanded and easy access to choice. They have become more discerning and demanding at all stages of inspiration, consideration and experience. Scientific, data-driven marketing has evolved from a competitive advantage to a competitive necessity.

This imperative encompasses two complementary requirements. First, hotels must become more scientific about how they reach markets through digital channels: using data, automation and analytics to target communications precisely, personalise content and measure response. Content has become a critical success factor in marketing, particularly at early stages of consideration.

Second, exceptional discipline at commercial basics becomes mandatory. These disciplines are sciences. Being averagely good or basic at them is no longer sufficient. The goal is conducting mass consumer marketing on a one-to-one basis, personalised for each consumer segment and customer journey stage.

4. Commercial Strategy: Elevate the Basics to a Higher Level 

Commercial strategy becomes the core engine of share and margin growth. Lifting the threshold of standards across the basic disciplines of sales, distribution, yield, mix and total revenue is mandatory, not nice to have.

Commercial strategy is about achieving A-star performance: getting sales, revenue management and distribution right not just on the revenue side but also the margin side—looking at things that provide value to guests whilst remaining profitable, not just implementing amenities because you assume guests like them.

This requires asking honestly: are we truly exceptional at these fundamental commercial disciplines? What would it take to elevate our capabilities, consistency and results across the organisation? The discipline imperative means establishing rigorous standards, implementing systematic processes, measuring performance relentlessly and holding teams accountable for exceptional execution.

5. Technology: Modernise and Automate End-to-End Processes 

Evolving from the legacy of “black box” functional solutions to modern, integrated, cloud-based technology services is critical to enabling innovation at speed and improvements in productivity.

Technology is about evolving from point solution tools to service-based platforms that automate end-to-end business processes. True productivity gains come from automating entire workflows, not just making individual tasks more efficient. Point solutions merely make tasks easier when performed; process automation eliminates work entirely.

Without modern infrastructure, everything takes too long and costs too much, making it impossible to innovate quickly enough to remain competitive.

6. Operating Model: Focus on Higher-Order Company Goals 

The highest returns come from fundamentally restructuring how organisations work: collaborating across functions around higher-order goals, creating hybrid teams, sequencing delivery, simplifying processes and reducing variation.

Most hotel organisations remain structured around functional departments pursuing separate objectives. Marketing focuses on awareness. Sales pursues conversion. Operations optimises service delivery. Revenue management maximises yield. Each department has its own systems, measures and priorities. This structure creates sub-optimal outcomes and prevents the coordinated execution required for success in flat growth environments.

“The imperative is reversing the way people think about their jobs. It’s not one department over another achieving their departmental KPIs. It’s about having higher-order KPIs and everybody coming together as a hybrid team to achieve them.”

This means creating hybrid teams focused on company-level objectives, establishing clear playbooks for achieving them and ensuring all relevant functions understand their roles and coordinate execution. Without this imperative, the other five strategic priorities remain isolated initiatives rather than integrated transformation.

Winning Ways: Tactical Initiatives That Deliver Results

Strategic imperatives establish organisational direction and priorities. Winning Ways translate those imperatives into specific, executable initiatives that deliver measurable results. These are the “how”: how do companies actually implement the strategic imperatives through concrete programmes, technology deployments, and operational changes?

Whilst strategic imperatives might take months or years to fully embed across an organisation, winning ways represent initiatives that can be launched, measured, and refined within 12-24 month timeframes. They’re the practical building blocks that, when executed well, deliver the strategic outcomes the imperatives demand.

Whilst the prospects for unit revenue growth may be diminishing, the market is still growing and has proven resilience. Macro drivers including rising digital maturity, technology innovation (including AI) and the rise of values and purpose-driven travel all create specific opportunities where companies can practically take advantage now.

During 2026 and the following years, these ten “winning ways” represent where priority areas of winning companies will focus. Standing still means being left behind. Consider, prioritise and sequence.

1. Pricing and Inventory Structure

Revenue management technologies have made significant strides in forecasting, managing mix, yield management and optimising revenue across lines of business. However, changing customer behaviour and the digitalisation of how consumers search, filter and book creates opportunities to innovate pricing and inventory structure to better allow customers to pick exactly what they want and pay for what they value.

Most hotels don’t define inventory with precision. Rooms with significantly different attributes (bathrooms, configurations, views, locations within the property) are bundled under generic categories. Guests value these attributes differently and would pay premiums for preferred options.

The opportunity lies in being more precise about inventory definitions and pricing attributes. This means understanding which room attributes guests value, defining inventory accordingly and adjusting pricing to reflect value. Pricing encompasses deposit requirements, minimum stay lengths, validity periods, mandatory conditions and inclusions like breakfast.

The principle is enabling guests to pick exactly what they want and pay for what they value, whilst maximising revenue by capturing willingness to pay for preferred attributes.

2. Marketing Automation 

Marketing suffers from the least technology maturity of all commercial functions and represents the greatest opportunity to reduce cost and improve ROI. Automating the end-to-end process of planning, targeting, creating offers, communicating and measuring responses is at the heart of transforming marketing productivity.

Unlike sales, revenue management and distribution, marketing in most hotel organisations relies heavily on manual processes, disconnected tools and fragmented workflows. Marketing automation focuses on automating end-to-end processes: planning campaigns, segmenting customers, creating targeted offers, managing multi-channel communication, measuring responses and optimising performance.

When these capabilities work as unified workflows rather than disconnected point solutions, marketing productivity improves dramatically. Campaigns that previously required days or weeks to plan and execute can be automated and optimised continuously. The end goal is to conduct mass consumer marketing on a one-to-one basis, personalised for the consumer segment and stage of the customer journey.

3. Content Management

Digitalisation, the growing consolidation of digital media and eRetail players, and the shift to agentic AI engines to search and filter options means all travel and hospitality companies need to excel at high-quality, well-structured and organised content, automated content management and delivery, and scalable content of all forms (video, audio, images, text, UGC, local stories) to address the different phases of the customer journey.

Content increasingly determines visibility in digital channels, influences consideration at early journey stages and shapes brand perception. Well-structured content in all forms—text, images, audio or video—and the ability to personalise it becomes incredibly important when it comes to visibility and differentiating what you have to sell.

What guests need are comprehensive room views from multiple angles, clear facility photographs that convey ambience and atmosphere, authentic location context and detailed amenity information. The content that drives consideration and conversion is factual, comprehensive and enabling rather than aspirational and abstract.

4. Customer Targeting 

Most companies have developed business intelligence platforms and reporting that measure transactions: bookings, cancellations, stays, revenue. This is useful for understanding historic business performance but crucially missing customer intelligence: understanding customer needs, behaviour, sentiment and propensity to buy.

Almost every hotel company categorises customers based solely on frequency, recency and value. They understand transactions but don’t understand needs, behaviour or propensity to buy something because they don’t collect the information that reveals it.

The opportunity lies in capturing event-based information about customers: what they’re shopping for, when they shop, what they book, what they don’t book, what they browsed but didn’t book. Where did they fall off the page? Perhaps when the price was revealed, which might tell you they want this but think it’s too expensive.

“A guest who repeatedly browses weekend offers demonstrates propensity to buy weekends even if they haven’t yet booked one. Understanding propensity to buy transforms segmentation and targeting from transaction history to demonstrated interest and likely future behaviour.”

Capturing every event from customers at every brand touchpoint helps identify expressed and implied needs and when a consumer has a propensity to buy. This allows for a much higher level of recognition and personalisation and as a result greater engagement with brands.

5. Brand and Guest Experience Delivery 

Consumers increasingly care about the brand experience, not just the facility and its product features. Ensuring brands deliver a consistent, high-quality and relevant service as well as enabling flexibility and empowerment to respond to guests effectively is critical to delivering on the expectations the brand promises.

The challenge is turning brand ambition into operational reality. To deliver this, define what target guests genuinely care about for the kind of hotel you are and the kinds of guests that stay. What’s the blueprint of what a guest should experience to amplify your brand preference? Then define the behaviours to train staff in, the standards, processes, procedures and training that make delivery easy.

6. Customer Ownership 

Whilst media and digital retailers are often the first point of contact for consumers given their access to choice and content, the battle to engage the guest must be a battleground brands strive to win.

Hotels pay substantial commissions when guests book through online travel agents, and even higher commissions to tour operators. These commissions significantly erode margins. Direct bookings eliminate commission costs and provide direct customer relationships that enable ongoing engagement, better personalisation and higher lifetime value.

Customer ownership is about owning the relationship with the customer. Even if they book through a travel agent, you have their name and address when they stay with you. Connect with them. Find reasons why doing business with you directly—them wanting to communicate with you, you wanting to communicate with them, it being reciprocal—is valuable. Because then next time they’ll come to you direct because they know you and you give them a reason.

7. Distribution Optimisation 

Artificial intelligence is rapidly changing the way consumers, retailers and media companies search, surface and display brands. Distribution functions need to understand these changes and the critical success factors that drive them.

The way in which your brand and product is sold is evolving rapidly. Traditional distribution relied on periodic updates, pushing inventory and pricing to channels once or several times daily. Modern distribution increasingly uses real-time connectivity, pulling live availability at the moment of inquiry to ensure accuracy and capture late-developing demand.

AI-driven search engines analyse content, reviews and attributes to match hotels with consumer needs in ways that differ from traditional keyword search. Technology is changing the way you can appear in travel agents and digital retailers. You need to examine and optimise the way your brand appears to give the most accurate, most appealing, most attractive view of your property. It is increasingly scientific, data-driven and technology-dependent rather than relationship-based and manual.

8. Technology Architecture

Many leading technology vendors are transitioning their systems to modern platforms with exposed technology services through published and supported APIs. That said, most platforms still store their own versions of customer profiles, inventory, pricing, content and revenue and require interfaces with many other systems, creating burgeoning complexity and cost to maintain.

The hotel industry has grown up with a legacy of black box solutions: a solution for booking a restaurant, a system for ordering food, a system for booking a hotel room, a system for checking guests in, a system for housekeeping. None of them talk to each other naturally. In order for them to work, you have to build interfaces between all these different systems, and they all have their own storage of inventory, pricing and customer information. There isn’t a single view of the business.

The problem is if you as a guest contact that hotel through different channels (travel agent, front desk, call centre, website), you’re going to get a different experience. You’re going to see different availability, different access to services.

The strategic imperative is changing the architecture so that the business can see every interaction of the guest and understand the guest better, and the guest can get a seamless experience. It doesn’t matter who they talk to or where they go, they will get the same consistent information and it will be accurate.

9. Operating Model 

Many companies invest in systems, programmes and initiatives but fail to adapt their operating model to exploit these investments. This winning way focuses on the practical implementation: ensuring every initiative includes explicit operating model changes.

Technology and programmes don’t deliver results—changed ways of working do. When launching a new VIP service, CRM system, or marketing automation platform, success requires defining how people will work differently. Who does what? Which tasks are centralised versus distributed? What new skills are needed? How do handoffs between teams change? What gets measured differently?

Practical considerations include: centralising high-skill, low-frequency tasks, standardising processes to reduce labour cost and training complexity, outsourcing where there are clear upsides, clustering distributed functions, and empowering local teams with more tools and fewer tasks. Be explicit about how the future state organisation, resources, delivery approach, management systems, governance and culture will differ from today—then manage that change actively.

10. Artificial Intelligence 

AI is making major improvements every month and leveraged carefully can deliver continued waves of improvement to efficiency and productivity. Important to note, AI can be best exploited by well-organised, comprehensive and accessible data, a modern technology architecture, and an operating model adapted to deliver, learn and enhance over time.

Rather than rushing to implement AI tools everywhere, the priority is preparing organisational foundations for effective AI adoption: unified, clean and accessible data; service-oriented architectures; and operating models that allow experimentation, measurement, learning and scaling of successful approaches.

With these foundations in place, AI adoption becomes faster, more effective and more likely to succeed. The strategic message is clear: invest in the infrastructure, architecture and operating model changes that enable AI exploitation rather than pursuing disconnected AI pilots that cannot scale or deliver sustained value.

The Strategic Reframe Required for 2026

Three fundamental shifts separate winning hotel companies from those that will struggle in the years ahead. These are not tactical adjustments but strategic reorientations of how companies create value.

The shift from optimising transactions to orchestrating relationships. For three years, hotels have optimised individual transactions—maximising revenue per available room through aggressive pricing and cost management. This transactional mindset pervades everything: measuring bookings not guests, counting stays not lifetime value, optimising departmental KPIs not customer journeys. The strategic reframe required is moving from “how do we extract maximum value from each transaction” to “how do we build relationships that generate compounding value over time.” This isn’t merely about loyalty programmes. It demands reimagining resource allocation (following customers not just markets), technology architecture (unified guest profiles not departmental systems), operating models (cross-functional teams serving customer outcomes not departments serving functional metrics), distribution strategy (owning relationships not just capturing bookings) and marketing automation (orchestrating journeys not broadcasting campaigns). Companies that continue optimising transactions will find themselves competing purely on price. Those orchestrating relationships will command pricing power through relevance and trust.

The infrastructure-before-innovation imperative. The article outlines ten winning ways spanning pricing structures, marketing automation, content management, AI adoption and more. The pattern across all of them is identical: success depends not on the initiative itself but on the foundational infrastructure enabling it. Marketing automation delivers returns only with unified customer data. AI capabilities require modern, service-oriented architecture. Attribute-based pricing demands integrated inventory management. Content excellence needs structured, accessible digital asset systems. Distribution optimisation requires real-time connectivity. The strategic insight is that investment sequencing matters more than investment amount. Companies rushing to implement AI tools, launch new loyalty features, or deploy chatbots without first modernising their technology architecture, unifying their data, and transforming their operating models will see modest returns at best. The winning sequence is foundation-first: unified data architecture, then process automation, then intelligence layer, then customer-facing innovation. This requires patience and discipline that contradicts the “move fast and ship features” culture in many organisations. But it’s the only path to sustainable advantage.

The paradox of commoditisation creating differentiation opportunity. As the market has commoditised through OTA dominance, brand proliferation, and rate parity, conventional wisdom suggests competing on price or pursuing expensive physical differentiation through refurbishment. The paradox is that commoditisation has actually increased the value of authentic differentiation—but specifically through dimensions that commodity markets cannot replicate. The six strategic imperatives and ten winning ways cluster around capabilities that intermediaries cannot provide: proprietary customer intelligence revealing individual propensity to buy, personalised experience delivery requiring organisational memory and empowerment, content that conveys authentic context and feeling, direct relationships enabling recognition and reciprocity, operational excellence in orchestrating seamless journeys across touchpoints. These are all anti-commoditisation moves, but critically, they don’t require physical refurbishment or dramatic capital investment. They require organisational capability development: better data, smarter processes, more coordinated teams, empowered frontline staff. The strategic opportunity is that whilst others wait for capital to fund physical upgrades, leaders can build differentiation through organisational transformation—faster, cheaper, and more defensible.

“Success belongs neither to the boldest nor the best-capitalised, but to the most strategically coherent: those who recognise that sustainable performance in flat markets comes from compounding small advantages across interconnected capabilities rather than seeking breakthrough moves in isolated areas.”

These three strategic reframes share a common thread: they all demand that executives resist the temptation to “just do things” and instead invest the harder work of reimagining how their organisations create value, sequence investments, measure success, and coordinate execution. The top 20% will outperform not because they implement more initiatives, but because they implement the right foundations, in the right sequence, with the right organisational coherence. The year ahead rewards strategy over tactics, integration over innovation, and disciplined execution over bold moves.

PACE Dimensions is a research and consulting firm founded in 2010 with deep industry experience and a practitioner’s expertise in helping Travel & Hospitality companies excel through strategic clarity and operational excellence. The firm specialises in translating market insights and strategic imperatives into practical initiatives that deliver measurable performance improvement. Its consultants bring proven track records of success working with hotel groups of all sizes across upscale and luxury segments, combining rigorous analysis with pragmatic implementation approaches that drive sustainable results.

References

¹ STR Global (2025). “Global Hotel Performance Forecast 2026.” Available at: https://str.com/data-insights

² Cornell Center for Hospitality Research (2024). “Revenue Management Optimisation in Flat Market Conditions.” Available at: https://sha.cornell.edu/research/centers/chr/

³ Hospitality Technology (2025). “Marketing Automation Adoption in Hotels 2025.” Available at: https://hospitalitytech.com/

⁴ Kalibri Labs (2024). “Customer Intelligence and Propensity Modelling in Hospitality.” Available at: https://kalibrilabs.com/resources/

⁵ Skift Research (2025). “Hotel Technology Architecture Trends.” Available at: https://research.skift.com/