# Why an Empty Room Tonight Is Worth Nothing Tomorrow
It is 11:58 PM. A 200-room hotel has 40 rooms still unsold. In two minutes, those 40 rooms become worthless. Not discounted. Not carried over. Worthless. The revenue they could have earned tonight is gone forever, and tomorrow the clock resets with a fresh batch of 200 rooms to sell.
This single fact shapes almost every pricing decision in travel and hospitality. Understand it, and you understand why a hotel room, an airline seat, and a cruise cabin behave nothing like a can of soup on a shelf.
Perishable inventory means a product that loses all its value if not sold by a specific moment. A hotel room-night, an airline seat on a specific flight, a restaurant table on Saturday at 8 PM: each expires on a deadline.
Compare this to a physical product. If a shoe store does not sell a pair today, it sells them tomorrow, or next month, at the same price. The inventory waits. Travel inventory does not wait.
This creates a strange asymmetry:
That second point is the hinge everything turns on.
A hotel's costs are mostly fixed costs: expenses that do not change whether you sell 10 rooms or 200. The mortgage, property taxes, insurance, front desk salaries, and lobby lighting cost the same on a sold-out night and a dead one.
The cost that actually changes when you sell one more room is tiny. This is the variable cost (sometimes called the marginal cost of an occupied room): housekeeping labor, laundry, toiletries, a little extra electricity. In most full-service hotels this is a small fraction of the room rate, often estimated in the range of 20 to 40 dollars depending on the property.
Here is what that means at midnight with 40 empty rooms:
Selling one at 89 dollars, when your variable cost is 30 dollars, adds roughly 59 dollars of profit that would otherwise be zero. The fixed costs are already spent. They do not care.
This is why a hotel will sometimes sell a last-minute room far below its published rate. It is not desperation. It is math.
If a cheap sale beats an empty room, why not price low all the time and fill the house?
Because you would train customers to wait for the low price, and you would give away rooms you could have sold at full rate. The guest willing to pay 300 dollars would happily pay 89 dollars if you let them.
This tension is the heart of yield management (also called revenue management): selling the right room, to the right customer, at the right price, at the right time, to maximize total revenue.
The goal is not high occupancy. It is not high rates either. It is the best combination of the two.
The industry measures this with RevPAR (Revenue Per Available Room). It blends how full you are with how much you charge.
RevPAR = Total room revenue / Total available rooms
Or equivalently:
RevPAR = Occupancy rate x ADR
where ADR (Average Daily Rate) is the average price of the rooms you actually sold.
Why RevPAR matters: a hotel can be 100 percent full and losing the pricing game, or 70 percent full and winning it.
Hotel B made more money with 30 empty rooms, and cleaned 30 fewer rooms. Occupancy alone lies. RevPAR tells the truth.
You can explore standard industry definitions through the American Hotel and Lodging Association's industry resources, which cover the vocabulary used across the sector.
Revenue managers do not set one price. They open and close rate buckets (price tiers) as demand signals come in.
A hotel watches the booking pace: how fast reservations are coming in compared to the same point in previous years for the same date.
A concrete example: a downtown hotel sees a major conference is in town next Thursday. Bookings are pacing well ahead of a normal Thursday. The revenue manager closes the 129 dollar rate, opens only the 249 dollar and higher rates, and still expects to sell out. The empty-room-tonight logic reverses: when demand is high, the risk is not leaving rooms empty, it is selling them too cheap.
Because some guests cancel or fail to show, hotels and airlines deliberately sell slightly more than they have. This is overbooking. It protects against the perishability problem: an empty seat from a no-show is lost revenue forever.
The trade-off is real. Oversell too much and you must "walk" a guest (send them to another hotel at your expense) or, for airlines, offer compensation to bumped passengers. Good revenue teams model the no-show rate carefully so the gamble pays off more often than it hurts.
The same physical room sells at many prices depending on the customer and conditions:
Each segment has different price sensitivity and different booking behavior. Selling the same unit at multiple prices is how you capture both the deal seeker and the guest with an expense account.
Vérification des acquis
1. What is the defining characteristic of perishable inventory in the travel and hospitality sector?
2. Why does the cost structure of a hotel make selling a room at a low last-minute price still profitable?
3. Why does a hotel room behave differently from a can of soup on a store shelf when it comes to pricing decisions?
4. Select ALL correct answers. Which of the following are examples of fixed costs for a hotel?
Sélectionnez toutes les réponses correctes.
5. Select ALL correct answers. Which statements accurately describe the reasoning behind pricing perishable travel inventory near its deadline?
Sélectionnez toutes les réponses correctes.
The perishable-plus-fixed-cost pattern repeats across the sector, which is why the same thinking travels well.
Airlines were the pioneers. A seat on the 6 AM flight to Chicago is worth nothing once the door closes. Airlines run some of the most sophisticated yield systems in any industry, adjusting fares constantly based on how full a specific flight is and how far out you are booking.
Cruises face it with cabins on a fixed departure date. Car rental companies face it with the fleet sitting in the lot. Restaurants face it with tables during a limited dinner service, which is why dynamic reservations and prepaid tasting menus are spreading.
Even attractions and events live it: an unsold theme park ticket for today, or an empty concert seat, expires at closing.
The common thread: high fixed costs, a hard expiry deadline, and inventory you cannot store. Wherever those three appear, yield thinking follows.
When you face any travel pricing decision, ask three questions:
1. When does this expire? That sets your urgency.
2. What does one more sale actually cost me? That sets your floor price (variable cost, not the full rate).
3. Who else might buy this, and at what price? That stops you from selling too cheap too early.
Hold those three together and you are thinking like a revenue manager, not a shopkeeper.