Hotel profitability: how to turn a loss-making hotel around

Hotel profitability is rarely lost in one dramatic moment. It slips away through a weak offer, unclear ownership, missing systems and problems nobody on the outside can see. If you run, own or advise a hotel that is losing money, the question is practical: where do you start, and what actually moves the numbers?

Talia Butt, General Manager of a boutique hotel near Brussels South station, faced exactly that question in her early twenties. She stepped into a family-owned hotel with an accumulated loss of €100K, a business that, in her words, was close to bankruptcy. Within eighteen months that loss had become a €100K profit. Her approach holds lessons for any hotel that needs to turn around.

Why hotel profitability starts with the profit and loss statement

The first step in any turnaround is understanding why the business is losing money. Before changing the product, the team or the brand, you need to know where the loss comes from and whether the hotel has a future at all. The same question applies when building a resort from scratch on a remote island.

That is where Talia Butt began. An early accountant gave her blunt advice: if you cannot make something profitable, go read a book in the park and do not do business. She took it seriously, and treated the hotel as a test of whether she was built for business.

“I analyzed the profit and loss of the company, which was the first thing to do. Why is there a 100 k loss? Why is this company going bankrupt?”

Talia Butt, 5:05

Her questions are a good template for anyone working on hotel profitability:

• Why is there a loss, and which parts of the business cause it?
• Is this business viable, or would your time be better spent elsewhere?
• What is going wrong on the floor and in the back of the house?
• Which decisions need to be made now, at the right time and the right price? This is the daily work of hotel revenue management teams.

Some problems only show up once you work inside the hotel

An analysis tells you where the money goes. It does not tell you everything. Talia Butt found that some flaws in a struggling business are visible immediately, while others only come out once you are really working in it. Those hidden problems led to many setbacks, and she admits they affected her emotionally.

Two lessons follow from her experience. First, expect to clean up the mess that others leave behind. Not everyone starts with a picture-perfect business that only needs a new vision. Second, know when to change course. In her view, some things are not made to work out, and the skill lies in recognising that and moving to another way of working.

Ownership and management structure matter too. Before she took over, the family had no hands-on management and an external party ran the hotel. Over time she acquired 100% ownership, which she says allowed her to focus fully on developing a distinct brand. Other owners grow through a hotel franchise and lean on an existing brand instead. She also kept the business stable and profitable during national crises and secured funding during COVID-19 for a major transformation.

Build an offer the market around you is missing

Cutting losses is only half of the work. Lasting hotel profitability needs a reason for guests to choose you over the hotels next door. That reason often lies in a gap in the local market.

Around Brussels South, the biggest train station in Belgium, Talia Butt saw international chains and corporate hotels arriving with a corporate way of working. What was missing, in her view, was a local, culturally inspired boutique hotel with food and drink in an all-day setting, for travellers and for people from the neighbourhood. The previous offer was a basic bed and breakfast, which she says was enough for the area in the past, but not for a new generation of travellers.

Her decisions show how a small hotel can play to its strengths:

• Stay small on purpose. She does not need 250 rooms; 35 rooms and a strong food experience are her focus.
• Treat food and beverage as a reason to visit. She sees a lack of quality food around the hotel and believes food is an important part of every journey.
• Keep control of the guest experience. Instead of letting an external partner run the restaurant, she created a separate restaurant brand of her own, because a bad meal would affect the guest's whole stay.
• Serve locals as well as guests. The restaurant has its own identity and serves both the neighbourhood and the hotel.

“Give your guests what they are looking for, and you can do it because you're a small curated property who is focusing on this attention.”

Talia Butt, 28:06

Train a team that carries the brand to the guest

A turnaround plan only works if the people who face guests every day understand it. An owner or general manager is not at the front desk all day, so the vision has to travel through the team.

Talia Butt is open that this takes time, especially for a hotel that is new and not yet well known. Training, certificates and a testing phase help the team learn from mistakes during the launch. Her central point is emotional: staff should love the brand and feel connected to it.

“If they don't have this bonding with your brand, with your image, automatically, you will have a hard time passing it on to the guest.”

Talia Butt, 18:47

She also wants staff to see themselves as more than a job description with hours to finish. The aim is to build connections with guests, so that a small property can deliver the attention guests expect from a five-star stay.

Use automation to protect margins and time

Technology is another lever for hotel profitability, as long as it supports people rather than replacing them. Asked what she would do with unlimited resources, Talia Butt said she would automate much of what happens behind the scenes and invest in digitalisation.

She is specific about where to start: the jobs nobody wants, such as sitting behind a printer scanning paper or entering data by hand. She also imagines robots for labour-intensive work, like cleaning or delivering an ordered plate, as long as they do not bother the guest. The time saved goes back into memorable experiences and into the commercial side of the business. As she puts it, at the end of the day a hotel is a company, and it has to make money to keep focusing on its guests.

Her final advice for hospitality professionals sums up the approach. Location matters, but connectivity matters too: stay present with your team, share your vision through every channel available, and do not give up. You can watch the full conversation for her complete story, or explore more episodes in the Lead the Experience series.

Frequently asked questions

How do you improve hotel profitability when a hotel is losing money?

Start with the numbers. Talia Butt began by analysing the profit and loss statement to find out why the business was losing €100K and whether it had a future at all. Then she fixed the problems she found on the floor and in the back of the house, and adjusted course when something clearly was not going to work.

How long does it take to turn a loss-making hotel around?

There is no fixed timeline, and every hotel is different. In Talia Butt's case, an accumulated loss of €100K became a €100K profit in eighteen months. She stresses that some problems only show up once you work inside the business, so setbacks along the way are part of the process rather than a sign of failure.

Can a small hotel compete with international chains?

In Talia Butt's view, yes, if it offers what the chains around it do not. Near a major station full of corporate hotels, she saw room for a local, culturally inspired boutique with all-day food and drink for travellers and locals. With 35 rooms, she argues, a curated property can give guests a level of attention that larger hotels find harder to deliver.

What should a hotel automate first?

Talia Butt would start with the work nobody enjoys: scanning paper, data entry and labour-intensive back-of-house tasks. The goal is not to replace people but to free up their time for memorable guest experiences and for the commercial side of the business that keeps the hotel profitable.