Glossary

A Guide to Terminology Every Hotel Revenue Manager Should Know!

A

ADR – Average Daily Rate

One of the most commonly used metrics – Average Daily Rate measures the average amount paid per room per night. Average daily rate is often referred to in its shortened form ADR.

ARR- Average Room Rate

Average room rate indicates the average room rate, or average daily rate. The terms ARR and ADR are interchangeable. Average room rate measures the average amount paid per night for a room type.

Algorithm

A specification of an automated calculation or data processing task.

B

BAR – Best Available Rate

The best available rate with a flexible booking policy, usually the standard rate at a hotel.

C

CM – Channel Management

Technology that helps connect a travel booking website, such as Booking.com, AirBnB and Expedia, to a hotel, to ensure they keep rates, restrictions, availability and reservations information up to date both ways.

D

Days to Arrival

Days to arrival is refers to the number of days left to the day of arrival, or check in.

K

KPI – Key Performance Indicator

A performance measure used to evaluate the success of an organisation or a particular project.

L

LCR – Last Room Value

The amount of money a hotel can expect to make from its last available room for sale.

LOS – Length of Stay

Length of stay is the term used to indicate the duration of a stayed or booked reservation. As in the length of stay was or is X night.

M

Max LOS – Maximum Length of Stay

Maximum Length of Stay or LOS is the maximum length of stay restriction applied to a range of dates. This restriction determines that during these days, the stay of the guest must be a maximum of X days.

Min LOS – Minimum Length of Stay

Minimum Length of Stay or LOS is the minimum length of stay restrictions applied to a range of dates. It is more commonly applied than Max LOS to ensure than short stays are not booked during high demand dates. This restriction determines that during these days, the stay of the guest must be a minimum of X days.

MICE – Meetings, Incentives, Conference and Exhibitions

MICE refers mainly to meetings, conference and exhibitions. It is often a function or department within the sales team at larger hotels with meeting room or conference space. This is a general term for identifying this separate revenue stream and business area for hotels.

N

No Show

When a guest does not turn up on their day of check in they are deemed a no show. No shows is used industry wide for this scenario which leads to hotels following their communicated cancellation policy.

O

Occupancy Rate

Occupancy rates refers to the percentage of the hotel that is occupied over a defined period of time. This is usually a day, week, month or year. The occupancy rate is calculated by dividing the number of actual stayed nights by the total number of available nights at the accommodation.

OTB – On the Books

On the books is a measure used when looking ahead to see how occupancy or revenue is booked in at a hotel. The amount that is on the books will change as more reservations and cancellations occur until the date or period is arrived at, so it is a measure of a moment in time.

P

PMS – Property Management Software

Property management software refers to a wide number of installation or cloud based tools that allow hotels to manage their property. Traditionally property management software deals with operational elements of running a hotel, such as managing reservations. This is evolving and property management software now includes an expansive range of applications with the core being reservations, housekeeping and guest invoicing.

R

RMS – Revenue Management System

Revenue management system refers to a tool used by hotels to yield their revenue. This tool can be either using rules or using algorithms. In the past a revenue management system, has used rules to determine price changes to increase revenue. The modern version is to use algorithms to analyse large amount of data and inform of price changes which increases revenue.

RevPAR – Revenue Per Available Room

RevPAR is the most used metric for determining how well the hotel is performing for revenue. RevPAR, which refers to the revenue per available room, uses a calculation of the total revenue earned divided by the total occupancy available. If you have 100 rooms and you sell 50 on one day for an average rate of 100, then you have earned 50 RevPAR. If you had sold 75 from 100 at a rate of 90, then RevPAR achieved would be 67.5. Revenue earned per room shows us that a lower overall room rate can yield a higher revenue overall through better room utilisation.

Room Nights

Room nights is the number of room nights booked or stayed in a defined period of time.

S

Shoulder Nights

This is the night either side of a peak day. So an example of a shoulder night is Sunday, which is often lower in demand than Saturday which is a shoulder night.