A
ADR: Average Daily Rate. It is a KPI used to calculate the average rate for each hotel room sold for a specific day, month or year.
All Inclusive Hotel: besides the room night, it also includes three meals per day (Breakfast, Lunch and Dinner), activities programs and services.
Analytical Market Segmentation: a process used to create optimal revenue management segmentation based on reservation data.
Average Length of Stay: the average amount of nights guests stay at the hotel during a period.
Average Rate per Guest: it is the average Rate per Guest and is calculated by the total room revenue divided by the number of guests.
ARI: the Average Rate Index, a hotel KPI for measuring the performance of their ADR against their comp set during the same period.
Asset Management: structured process of developing, operating, maintaining, upgrading and disposing of any resource owned by the company cost-effectively.
Availability: the number of rooms at the hotel open for sales.
B
B2B (Business to Business): the sale of products or services from one company to another.
B2C (Business to Customer): the sale of products or services to individual customers.
BAR Pricing Strategy: a revenue management strategy, based on the Best Available Rate, meaning the lowest price available at the hotel and define the other rates according to it.
Beach Resort: holiday lodging facility with access to a private beach. It offers a wide range of services and amenities for their guests.
‘Bizcation’: is composed by mixing Business and Vacation, combining work trips and leisure travel.
Booking: the act of reserving in advance an accommodation, a table, a spa, etc.
Booking Curve: an analysis that show how bookings materialize over a certain period in a visual way.
Booking Engine is the application which allows to choose from a wide range of travel products (hotels, air tickets, conference halls etc.) and book them on the Internet.
Business Mix: The combining of different segments that occupy a hotel.
Booking Window: like Lead Time, it is the period of time between the reservation made by the guests or a group and the arrival date to the hotel.
Boutique Hotel: a small and intimate hotel, held in a stylish design decor with a personal note. It owns a unique characteristic that distinguishes itself from other hotel brands.
C
Chain Code: is a two-character code used that identifies hotel chains within a GDS.
Chain Hotel: is a hotel that is part of a series or of a group of hotels operated by the same company or owner. Opposite of an independent hotel it is a ‘chain-affiliated’ hotel.
Channel Management: the techniques and systems used by hotels according to their distribution policy for updating the hotel information like room rates and availabilities across all distribution channels, meaning the hotel’s website and third parties (OTAs, IDS, ADS) and the CRS/GDS.
Close Out: Hotel with unavailability for selling rooms.
Competition Based Pricing: the process of a hotel defining their pricing according to the competitors.
Complimentary: the services or products given to a customer free of charge.
CompSet: is a group of hotels considered direct competitors of an hotel.
Constrained demand: refers to demand being severely restricted in activity. It is used in the hospitality industry – in revenue management – when referring to demand forecasts. Unconstrained demand is your hotels total demand for a particular date irrespective of your capacity. Hotels should identify when unconstrained demand is above the capacity of the hotel. This is an important part of your hotel revenue management strategy.
CPOR: formula that helps to calculate the average cost per occupied room.
CRO: is the Central Reservations Office, a system that allows reservation agents to receive reservation requests by phone and to handle them immediately.
CRS: is the Central Reservations System, a computerized reservation software used to maintain the hotel information such as rates and room inventory to manage the reservation and process.
CTA is Closed to Arrival, it is a yield tool used to close days from reservations arriving on a certain date.
CTD is Closed to Departure, it is a specific set of days guests cannot make their reservation for with this date as check-out.
Cut Off: more used for group and operators, is the case when a hotel defines a time limit between the date the reservation is made and the guest’s actual arrival.
D
DBA: is Days Before Arrival, number of days remaining before the expected arrival date of guests.
Demand: the level of consumer interest and need in the market. Can be applied to different products and services.
Demand-Based Pricing: price adjustments depending upon how much demand there is for it at a given time.
Denial: is when the hotel gives negative responses to potential customers’ requests.
Design Hotel: is the hotel being notable for its design, focused on the visual concept, on its architecture, on interior decoration, on aesthetics style and décor.
Direct Channels: sales made in a specific direct distribution channel such as phone, email, live chat or the official hotel website.
Direct Sales refers to the revenue generated in the key Hotel Market Segments using a Direct channel : official hotel website, phone, email, livechat or messaging solutions… which does not entail the payment of any fees or commissions to a Travel Agency.
Displacement Analysis: is the analysis of business potentially brought by the Group based on the total value of the business compared to the value of the transient business that would be displaced if the group would be accepted.
Distressed Inventory: is referred to rooms that are not expected to be sold at full price, encouraging consumers to book last-minute and not having those rooms going unoccupied.
Distribution Strategy: is the setting of when and through which channels the hotel is going to sell its inventory based upon an analysis of the costs of acquisition of the individual channel.
Destination Management Company, also known as DMC, is a company that provides services, resources and expertise specializing in local knowledge for events, activities and tours for other companies. Destination management companies are used by businesses and other establishments to plan events and activities where the establishment is not located and has no local knowledge of.
Dual-Brand Hotels in the hospitality industry? Also referred to as two pack hotels, dual-brand hotel is a term used to describe a property that combines and houses two hotels which operate separately. Usually these types of hotels combine two brands from the same chain. The economic advantage of this set-up is that both hotels can cater to one demographic specific to their offerings, but are able to share resources like back of house operations. By sharing many resources and expenses, the Dual Brand hotels can reduce their operational costs drastically. The most popular pairings of brands are of select-service and extended-stay hotels under one roof. The dual-brand model offers developers and owners a chance to command a larger market share, maximizing potential cash flows and producing a greater return to the land.
Dynamic Packaging is a method of creating deals or packages based upon the components selected by the customer.
E
E-commerce refers to commercial transactions conducted electronically on Internet.
Early Bird Discount This is a type of promotion that many hotels across the world use to increase revenue.
EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization. This KPI is used to determine how profitable a company or business is with regard to its operations.
Eco Hotel a type of hotel which heavily emphasizes sustainability in all its services and products delivered.
Electronic Distribution: It is a type of distribution that uses purely electronic media. E-distribution is an important component of E-commerce.
Extranet is a website that allows controlled access to partners, vendors and suppliers or an authorized set of customers.
F
Fair Market Share is an indication that a hotel’s overall performance stacks up against its immediate competitors. Fair Market Share = Total number of rooms at the hotel / Total number of rooms in the comp set
Fixed Costs are the non-variable costs, staying relatively constant in value despite changes in production or sales rates.
Flash Sales are highly discounted and time-limited sale promotions in order to sell unsold inventory.
Forecast One way to do this in an organized manner, is to create something called a Forecast. Forecasting can be done at any time of year, by any kind of establishment in the hospitality sector (not only large hotels but also small, independent hotels) across the world. The best way to Forecast future bookings and demand is to use a calculation – to ask a relatively simple question: ‘At our hotel, what is the likely expected revenue in 2016, based on our revenue management team’s analysis of figures from 2015 (occupancy and average rate)?’
Full Service Hotel in the opposite to “Limited service hotel”, this is a hotel which offers a variety of different services and includes all of these services in the price.
G
GBTA Global Business Travel Association consists in a Forum for Business Travel, bringing together leaders in the business travel industry.
GDS or Global Distribution System is a large computer network working as a reservation tool that passes hotel inventory and rates to travel agents.
GOP Gross Operating Profit It is a KPI which refers to the Hotels profits after subtracting all of their operating expenses, giving the operational profitability level of a hotel.
GOPPAR is the Gross Operating Profit Per Available Room
Gross Profit is the profit a company makes after deducting the costs of production from the net sales amount.
Gross Revenue refers to the total sales made by a business, not considering the profits of the company.
Group Displacement Group bookings can help increase profits for hotels, but (perhaps surprisingly) not always! Sometimes reserving rooms for a group booking (and therefore making them unavailable for transient customers) can prove a mistake. There might have been more profitability in refusing a group booking, even if it involved a group consisting of several people who wished to stay for several nights and even over the weekend.
Group Wash: is the difference between the final occupancy from a group and the maximum value of the group block.
H
Hotel Brand is an identity generated by marketing as designs, symbols and words, allowing hotels to differentiate themselves from their competition.
Hotel Capacity is the set number of rooms in a single hotel
Hotel Chain is a company that owns or operates several hotels. They can be total or partial owners of the hotel and they manage their administration, marketing and promotion.
Hotel Franchise is the right to use the brand and the business model of a specific parent company for a prescribed period, allowing that parent brand to expanding business.
Hotel Management Company A company that manages the hotel on behalf of the owner for a fee.
I
Independent Hotel is a hotel that is independently owned and managed. It doesn’t allow any other proprietors to use its name or brand.
Interface is the crossing point or technical connection between different IT systems, allowing direct communication/ connection between those systems.
Inventory is the number of rooms available for a hotel to sell or distribute across all channels is called an Inventory.
L
Length of Stay Discount is a price discount system for guests who stay a preselected amount of days or nights
Limited Service Hotel, is used to describe budget-friendly hotels that offer accommodation without a food and beverage component like a restaurant.
M
MICE for Meetings, Incentives, Conferences and Exhibitions. It refers to a group of tourism that plans, books and organizes conferences, seminars and other events.
MPI : Market Penetration Index MPI is a calculation to measure the hotel´s occupancy compared to the average market occupancy.
N
Net Rate is price that does not include commissions.
Net Revenue is the revenue free from all deductions.
No-Show is a guest failing to arrive to fulfil the booking and does not cancel.
NPV is the Net Present Value, a financial indicator used for evaluating investments, calculated by the income that will result from the investment, minus all the costs.
NREVPAR or Net REVPAR Net Revenue Per Available Room
O
Occupancy is the KPI calculation that shows the percentage of available rooms or beds being sold for a certain period of time.
Opaque Sites: are booking channels and OTA websites where the supplier stays hidden until after the purchase is complete. The customer only sees the product category and the price it costs.
OTA is Online Travel Agency. OTAs are online companies whose websites allow consumers to book various travel related services directly via Internet.
Overbooking is the practice of selling more rooms than are physically present in the hotel to account for cancellations and no-shows.
P
Package Rate is the act of purchasing a room that includes a certain amount of drinks, meals and activities during a stay.
Pace: the rate at which reservations are made for a date where you can see a pattern forming reservations and calculate projected demand.
PMS: is the Property Management System, the local hotel administration system.
Price Positioning is the process of adapting the price towards the position the hotels wants to be in the market.
Pricing Strategy is the value that is put to a product or service and is the result of a complex set of calculations, research and understanding and risk-taking ability.
R
Revenue Generation is the process of creating sales of products and services, generating new income.
Revenue Management: strives for selling the right product to the right customer at the right time for the right price and with the right pack.
RevPAR is the Revenue Per Available Room.
REVPAM is the Revenue Per Available Square Meter, a metric more used for hotels which rent out its space for conferences and banquets.
RevPOR is the Revenue Per Occupied Room RevPOR giving a better understanding of how much profit you make from the guests who actually stay at your property.
RFP is the Request for Proposal, a formal solicitation for bids from suppliers.
ROI is the Return on Investment ROI, a profitability ratio used to evaluate the return generated from an investment.
S
Shoulder Date are dates which fall very close to high demand dates.
Shoulder Season is a season that happens between high season and low season.
Soft Brand is a hotel franchise or chain company.
Static Pricing is when a hotel keeps always the same selling rate, independently of the occupancy, market trends and demand.
T
Target Market is market the product towards a specific audience.
Timeshare is a property with a divided form of ownership or use rights.
Total Revenue is the total amount of income coming from all operational departments.
Transient are those guests who look mainly for on-the-move and seek short stays at the hotel.
Travel Agent is the identity that arranges travels for end clients on behalf of suppliers, simplifying the travel planning providing entire travel packages.
TRevPAR is the Total Revenue Per Available Room.
TRevPOR is the Total Revenue Per Occupied Room.
U
Unconstrained Demand is the quantity of rooms the hotel that could sell if there were no constraints or limits.
Underbooked is a situation of hotel failing to sell the number of rooms that corresponding to their satisfactory booking standards.
V
Variable Pricing is finding the balance between the sales volume and the income of per unit sold, considering other several factors.
W
Wholesaler are companies that buy rooms in bulk then sell them to travel agents and OTAs, allowing hotels to generate more sales.
Y
Yield can refer to the profitability of a hotel’s departments.
Yield Management: is the goal to achieve maximum revenue/profit.