Profit doesn’t live on a balance sheet anymore. It’s in the front-desk agent who turns a stressful check-in into a five-star review. The engineer who fixes a leaky faucet before it becomes water damage. The revenue manager who spots soft weekends early and pivots rates. It’s in the bellman who moves with purpose, the marketer who crafts a message that actually converts and the housekeeper who takes pride in the details no one else sees.
In short, opportunities for profit can be seen everywhere, which is why it’s now everyone’s job to unlock it. That was the prevailing sentiment from “The Profit Puzzle: How Every Role Adds to the Bigger Picture” panel, held yesterday during the Hospitality Show at the Colorado Convention Center in Denver. The Hospitality Show is presented by Questex, Hotel Management magazine and the American Hotel & Lodging Association.
The panel’s moderator, Eileen Herzog, vice president of account management at Avendra, set the tone early.
“Whether you're the bellman or the receiver or the chef, everybody has a role in profit in hospitality.”
Playing the Long Game
For panelist Mitch Patel, founder and CEO of Vision Hospitality Group, profitability begins with perspective.
“We think that this business is a marathon, not a sprint,” he said, urging operators to focus on what’s within their control. This included the brands a hotel partners with, the markets it’s in and even its debt-service coverage ratio.
Another area Patel argues is completely within a hotel’s control? Its culture.
“This is a people business,” he said. “A people-serving-people business. So we spend a lot of time in our company talking about culture.”
Patel noted that profit is not so much about chasing short-term gains but building resilience that endures when uncertainty hits.
“Anybody can be successful in great times,” he continued. “What does it look like in those difficult times?”
Panelist Thom Geshay, CEO and president of Davidson Hospitality, also knows a thing or two about uncertainty and difficult times. He noted that the pandemic’s upheaval revealed both the fragility and the resilience of the hospitality business.
“We didn’t have a contingency plan for revenue going to zero,” Geshay said. “But everyone got together and said, ‘We’ve got to do better.’”
“Better” was achieved. And it was done so by not just the brands, but the lenders, suppliers, everyone.
“Here we are in 2025 – we made it through,” he continued. “I think the relationship between all the constituents you mentioned is better today than it’s ever been. Today, the brands listen to what owners and operators have to say, and together we're trying to be better – solving that profit puzzle, figuring out where everybody fits in.”
Fellow panelist Keith Pierce, executive vice president and president of franchise and development at Sonesta International Hotels, agreed that this type of alignment has been one of the key performance drivers.
“We look at the sponsor, the owner, the asset, the market, the seasonality and we look for ways to help ownership and management – top line and operating expenses,” he said.
“Ultimately, driving the margin is paramount. If you don't get that coverage ratio, you're going to be answering to the bank. It's absolutely critical that ownership wins. If ownership doesn't win, then none of us win.”
Pierce also acknowledged the often delicate balancing act between brand standards and owner realities.
“Where it starts to break down is where perhaps brands get heavy-handed,” he continued. “They push for standards or compliance, and it’s one brush – and one brush doesn’t fit all, particularly in these times and particularly post-COVID.”
The Owner's New Model
Panelists noted that the balance between upholding standards and protecting profitability is increasingly difficult to strike. Rising costs, delayed renovations and shifting valuation pressures are forcing owners to rethink the traditional model altogether.
This has become such a struggle that Patel warned owners’ business models are “very challenged and cannot be sustainable.” With revenues flat or declining and expenses climbing across labor, insurance and taxes, collaboration is no longer optional. Instead, it’s essential for survival.
“Capital costs are completely out of control – 4 percent of revenue isn’t cutting it anymore,” Herzog added. “What is realistic now? How do we work smarter together – brands, owners, management companies, vendor communities – on capex projects to protect ownership?
Patel believed this problem would only get worse.
“There are thousands of hotels due for renovation, overdue for renovation, and it’s becoming more and more challenging,” he said. “I hope there are lenders and appraisers here, because 4 percent is not enough. I think you all agree – it’s more like 6, 7, even more. But if the industry came together and said it's not 4 percent anymore, we’d lose billions overnight in valuation. So that can’t be sustainable either.”
Instead, Patel believed the answer lies in smarter, more durable design decisions. He referenced Europe where buildings often feature tile that has been there hundreds of years.
“Let’s be smart about selecting materials that last 25, 30, 50 years,” he continued. “Franchise agreements say you must renovate or spend a certain amount – it shouldn’t be that simple, because that model doesn’t work. We just have to be smarter and work together to solve that problem because it’s not sustainable.”
Pierce echoed these sentiments, noting that Sonesta takes a flexible approach to property improvement plans with its 900 franchised hotels. The company is currently selling 114 hotels fully encumbered with franchises to four buyers. He describes those hotels as “capital starved” after being run hard up until the pandemic, then going another three to four years without renovation.
“Now you’ve got a 10-year period where it should have been five to seven [years],” he said. “We didn’t just say, ‘You must do a $30,000- to $40,000-per-key renovation.’ Instead, we looked at each asset.”
After reviewing the portfolio, Sonesta set a $25 million capex plan focused on roofs, boilers and corridors – “things guests don’t see” – to be completed over three years before turning to soft goods.
Geshay agreed that realism, not rigidity, keeps value up.
“It’s where sometimes you get a rub between franchise companies and ownership,” he said. “It’s another place where you just have to align. Realism has to come into play to make sure the bottom line is maintained to keep value up.”
Profit in Partnership
Partnerships don’t end with brands. They extend to the people and platforms that help hotels run more efficiently every day. From purchasing linens and kitchen equipment to negotiating service contracts, collaboration in procurement and sourcing has become a key driver of profitability.
“With any procurement, scale wins the day,” Pierce said. “It’s not about making money on getting a good price and taking a piece of that. If margins are getting chewed up and the top line’s not getting any benefit, insurance is going up, payroll is going up, your cost of capital is going up, then your margin on these businesses is going closer and closer to single digits. If we’re trying to take a piece on every, little transaction, in the end you’re going to lose it on the gross room revenue.”
Geshay added that operators and owners should leverage the partnerships already available.
“Nobody should go it alone,” he said. “There’s a lot of great options in our industry… and that’s part of the profit puzzle. How do you get everything for a few cents cheaper? And every time you can do that, the owner wins.”
Patel offered two small but powerful ideas to boost profitability.
“There should be a payment upon booking with cancellation fees as an industry standard,” he said, noting the hospitality industry’s lag behind airlines and short-term rentals.
He also called for digital tipping.
“E-tipping should become a brand standard or industry standard with the app,” he continued. “Those are our hardest-working people in our industry. An extra $6, $8 an hour or more would go a long way in improving our business model.”
Panelists agreed that small, practical steps like these can have an outsized impact on both morale and margins. It’s the rising tide that lifts all boats: when the people who make a hotel run feel supported, the benefits extend across ownership, management and brand. In a business built on service, profitability rises with its people.