Most hotel software companies can tell you how many properties they signed last quarter. Far fewer can tell you whether the properties they signed two years ago are paying them more or less today. That second number, net revenue retention, is the one that decides whether growth compounds or has to be bought again every year.

This post sets out a working framework for NRR in hotel software, built around the specific ways hotel customers shrink and grow. It covers the formula, the six lines that drive it, the benchmarks that exist and how to put the model on a single page your leadership team reviews every month.

What net revenue retention is

Net revenue retention is the recurring revenue you have now from a cohort of customers, divided by the recurring revenue that same cohort paid twelve months earlier. SaaS Capital's 2025 retention benchmarks define it as December MRR from customers who were already customers in the prior December, divided by total MRR in that prior December. NRR includes upsells, cross-sells and price increases. Gross revenue retention uses the same formula but excludes them, so GRR can never exceed 100%.

NRR = (starting MRR − lost revenue − contraction + price + cross-sell + portfolio and usage growth) ÷ starting MRR

An NRR of 100% means the customers you had a year ago pay you exactly what they paid then. Above 100%, your installed base grows without a single new sale. Below it, every new deal first has to refill the bucket.

The Property Ledger: three leaks and three lifts

Generic NRR advice treats churn as one number. In hotel software it is several, with different causes and different owners. The Property Ledger splits NRR into six lines: three that take revenue out and three that put it back. Each line gets one owner and one monthly number.

Leak 1: Lost properties you could not have kept

Hotels close, are sold, rebrand into a chain with a mandated system or move to a management company with its own stack. This revenue loss is real but mostly outside your control. Tag it separately, because mixing it with competitive losses makes your churn look like a product problem when it is a market one. Ownership changes deserve their own playbook; see what to do when a hotel changes ownership.

Leak 2: Lost properties you could have kept

These are switches to a competitor or back to spreadsheets. HotelTechReport's 2026 Hotel PMS Report, a survey of 450 experienced operators, found 48% would consider switching vendors over system reliability issues and 42% say cybersecurity concerns are enough to make them walk away. Those are controllable causes, and they usually show up in support tickets months before the cancellation. Our guide to customer health scores for hotel properties covers the early signals.

Leak 3: Contraction

Contraction is revenue lost without losing the customer: a group removes properties, a hotel drops a module, a seasonal property pauses for winter, or usage fees fall with occupancy. In hotel software, contraction is often seasonal and reverses. Measure it on a trailing twelve-month basis so a quiet January does not set off alarms, and separate seasonal pauses from permanent downgrades.

Lift 1: Price

Annual price increases and the end of introductory discounts. This is the cheapest lift to execute and the easiest to overuse. A price rise on a customer with a reliability complaint turns a lift into a leak. The approach in raising prices for existing hotel customers applies here.

Lift 2: Product penetration

Selling a second or third module to a property that already uses one. For a PMS vendor that might be payments, guest messaging or an RMS. The number to track is products per property, cohort by cohort. See how to price a second product into a hotel account.

Lift 3: Portfolio and usage growth

More properties from the same group, and transaction or usage revenue that grows as the hotel sells more. SiteMinder's FY26 results show how large this line can be. Reported in Australian dollars, ARPU rose 9.3% in constant currency to $429, but subscription ARPU grew 2.8% while transaction ARPU grew 19.3%, which the company attributed to Smart Platform adoption and deeper product penetration. The number of transaction products adopted grew 29.7% to 45.4k, and LTV/CAC expanded from 6.2x to 6.6x. Most of SiteMinder's per-property growth came from usage and new products, not list price.

The ledger at a glance

Benchmarks, and how to read them

SaaS Capital's 2025 survey of private SaaS companies found NRR rises with contract value. Companies with ACVs between $25,000 and $50,000 show median NRR of 102%, a top quartile of 111% and a bottom quartile of 97%. Across companies with more than $1 million in ARR, median growth was 24%, and companies with NRR of at least 110% grew faster than that median while those below 100% grew slower.

Benchmarkit's 2025 B2B SaaS Performance Metrics put median NRR at 101% and median GRR at 88%, down from 90% over three years. It also found expansion ARR made up 40% of total new ARR, and that the expansion CAC ratio sat at a $1.00 median against $2.00 for new customers. In plain terms, a dollar of expansion revenue cost about half as much to win as a dollar from a new logo.

Two cautions for hotel software. First, many hotel products, especially those sold to independents, sell for well below $25,000 a year, and SaaS Capital found NRR correlates with ACV, so compare yourself with the right band. Second, these samples are general B2B SaaS. Hotel closures, ownership changes and seasonality add leaks that a horizontal SaaS company rarely sees. Use the benchmarks as a reference, then set your own baseline by cohort.

How to run the Property Ledger

1. Pick a cohort: every property live twelve months ago, with its MRR at that date.

2. Tag every change in MRR since then to one of the six lines. Force a choice; "other" is not a line.

3. Calculate GRR from the three leaks and NRR from all six.

4. Review the six numbers monthly with the named owners, starting with Leak 2, because it is the most controllable.

5. Each quarter, pick the single line with the largest gap against your own prior year and fund one fix for it.

The discipline is in the tagging. A company that cannot say how much of last year's churn came from hotel sales versus competitive switches cannot decide whether to spend on product reliability or on customer success. Retention is one part of the wider hotel tech GTM system, and the ledger is how you see which part of it is leaking. If renewals keep surprising you, read why hotel tech renewals are decided early alongside this framework.

If you cannot yet split your churn into the six lines above, a free revenue leak audit will show which leak is costing your installed base the most.

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