The web is full of interesting resources for hotel management, but navigating through the technicalities, and the specific language of the hotel industry can be tricky! With the goal to make life easier for every hotelier, we have decided to compile this glossary to give some guidance, and facilitate the navigation through online resources.
Average Daily Rate (ADR)
What is ADR in the hotel industry:
Average Daily Rate (or ADR) is the average income generated by each booked room, on a daily basis.
It is an important performance metric for hotels, providing insights on the income generated on average, by rooms booked.
How to calculate it:
Total amount of revenue generated by bookings / Total amount of rooms booked
If you have 90 rooms booked for a night, and each room's price is $100, then the income generated for that night will be $9,000 and the ADR will be = $100
Average Length of Stay (ALOS)
What is ALOS in the hotel industry:
The Average Length of Stay (or ALOS) indicates how many days on average, customers will stay in a hotel, for a given period of time.
What does B2B Distributor mean in the hotel industry:
In the hotel industry, a B2B distributor is a company that acts as an intermediary between the hotel and a third-party company (B2C) that sells the room to the final guest. For the B2B distributors, hotels are their suppliers and travel distributors such as tour operators are their buyers. The prime B2B distributors available to hoteliers are bedbanks.
What is a bedbank in the hotel industry:
A bedbank is the prime B2B wholesaler available to hoteliers. Bedbanks provide hotels easy access to hard to reach B2B distributors globally including retail travel agents, tour operators, airlines and points redemption programs. For hotel suppliers, such channels offer an opportunity to diversify their distribution strategy, reduce dependence on large OTAs and drive incremental growth.
Best Available Rate (BAR)
What is B.A.R. in the hotel industry:
BAR is a pricing mechanism used in the hotel industry, that consists of offering the best rate for room bookings, in a given period of time.
What is the meaning of bleisure in the hotel industry:
Bleisure is a term formed by merging the words business and leisure. It defines a recent trend in the industry, and it refers to a type of travel in which a customer extends his business trip, in order to enjoy a leisure stay and activities at the same specific destination.
What is the booking pace in the hotel industry:
The booking pace, alternatively known as pick-up pace, it’s a metric that shows what’s the speed at which reservations are made for a specific date or period. Normally, it is represented by an upward curve.
What is the cancellation rate in the hotel industry:
Is the ratio of canceled reservations on total bookings for a specific period.
How to calculate it:
(Number of canceled bookings/ Total number of bookings) x 100
Shall not be confused with the Cancellation fee - the pre-defined amount a hotel can retain in case of cancellations.
Competitive Set, or COMP-SET
What is a competitive set in the hotel industry:
The term competitive set, or simply comp-set, refers to a group of hotels or hotel chains that can be seen as direct competitors of a specific hotel. In the hotel industry, the comp-set is often used by revenue managers to benchmark and compare a hotel’s rate against their competition.
What does Cross-selling mean in the hotel industry:
Cross-selling is the process of selling supplementary, ancillary services and products along with a hotel booking or reservation. Cross-selling techniques aim to increase the revenues by adding to initial service with extra or complementary services (for example a spa treatment or a car-rental service).
What does distressed inventory mean in the hotel industry:
Distressed inventory refers to the rooms that hotels won’t or can’t be sold at full price for various reasons, for instance, rooms made available because of last-minute cancellations.
What are drive-in markets in the hotel industry:
The term drive-in market refers to the group of customers that are located within driving distance to your hotel. Usually, it includes those source markets that are considered domestic or local and neighboring countries
What are fly-in markets in the hotel industry:
Fly-in market defines the customer base that requires a flight to reach the destination of your hotel. Usually, it includes those source markets that are considered international, non-domestic or long-haul.
What does force majeure mean in the hotel industry:
Force majeure is a contractual term that defines unforeseeable events preventing one of the parties to fulfill the terms of a contract.
In other words: an unavoidable circumstance beyond the control of both parties of a contract, that frees one or both from liabilities and obligations.
What is the meaning of forecasting in the hotel industry:
Forecasting is the process of gathering and analyzing data that leads to making predictions about future events. It is a crucial element of any revenue strategy in order to make decisions regarding pricing, and distribution, based on anticipated demand and performance.
GOP - Gross Operating Profit
What the gross operating profit in the hotel industry:
Is a Key Performance Indicator that is extremely useful to measure the operational profitability of a hotel.
How to calculate it:
Gross Operating Profit=Total amount of profits - Total of related operating expenses
What is an extranet in the hotel industry:
A hotel extranet is a controlled-access web platform provided by a distribution channel (Bedbank or OTA) which allows the hotelier to list its inventory and manage the property data such as availability, rates, images, descriptions, and special offers. MaxiRoom is a good example of how a hotel extranet can simplify the hotel’s inventory management.
Hotel Market Segments
What does market segment mean in the hotel industry:
Market segments are groups of consumers that share common character traits. In the hotel industry, each segment can be defined by specific behaviours related habits (for example length of stay, cancellation rate, booking lead time), in order to facilitate the process of targeting your audience.
What does inventory mean in the hotel industry:
The term inventory in the hotel industry refers to the rooms available for bookings through every hotel’s distribution channels.
What is Lead time in the hotel industry:
Lead time is the time between a customer’s reservation or booking, and the actual check-in date.
What is a Metasearch engine in the hotel industry:
Metasearch engines are websites or platforms that allow end-users to compare accommodation rates from different sources such as Online Travel Agencies.
What does net rate mean in the hotel industry:
From the hotel perspective, to distribute net rates means that the hotel knows how much they will receive (net rate) but the decision on the mark-up and end price is on the third-party distributor. This end price may be contractually agreed between the parties. This rate distribution model is called Merchant model and is the most common way to distribute via wholesalers.
What does no show mean in the hotel industry:
The expression no show defines a situation in which a guest with a room booking for a hotel on a specific date and time, and without any anticipated notification, does not show up for their booking
Non-Refundable Rate - NRF
What is a non-refundable rate or NRF in the hotel industry:
Non-Refundable Rate, or simply NRF, refers to hotel rates that don’t guarantee a refund in case of cancellations. These are commonly the lowest rates or promotions offered by a hotel across its distribution channels.
What is the Occupancy Rate in the hotel industry:
The occupancy rate (or OCC) is the percentage of booked rooms on the total amount of available rooms. It’s one of the most important metrics to measure a hotel’s success, as it provides useful insights to forecast revenues and cash flow.
How to calculate it:
(Total number of booked rooms / Total amount of available rooms ) x 100
In a hotel with 100 rooms, 80 of which are booked, the occupancy Rate is = 80%
Online Travel Agency (OTA)
What does OTA mean in the hotel industry:
Online Travel Agencies (or OTA) are online companies functioning as an intermediary between consumers and travel service providers through online portals or websites.
The term outbreak refers to a swift and violent start of unfortunate events such as pandemics, epidemics or wars. E.g. The COVID-19 Outbreak
What does Revenue Management mean in the hotel industry:
It’s a process that starts with data analysis and helps to predict guest’s preferences and behavior, to optimize your pricing and distribution strategy in order to boost revenues and profits.
Revenue per Available Room (RevPAR)
What is RevPAR in the hotel industry:
The RevPAR is a metric that measures the performances of a hotel within a specific period.
How to calculate it:
- Average Daily Rate (ADR) x Occupancy Rate
If your hotel is booked at 90% with an ADR of $100, your RevPAR will be = $90
- Income generated by bookings on a specific period / Available rooms in the same specific period
In a night when 90 rooms are booked at the price of $100 each, the income generated for that night will be $9,000. If this hotel has a total of 100 rooms, the RevPAR will be 9000/100= $90
What does shoulder season mean in the hotel industry:
Shoulder season refers to the moments between peak-season and an off-peak season or vice versa.
What is a source market in the hotel industry:
Source market refers to the country or continent of origin of the guests of a hotel, or destination. Also known as feeder markets or countries.
What does staycation mean in the hotel industry:
Staycation is a term formed by merging the word stay and vacation. Staycation refers to a type of vacation in which travelers will spend their holiday in their own town, region or country rather than abroad.
What does Upselling mean in the hotel industry:
It’s a technique that aims to sell upgrades on a purchase, a booking or a reservation, in order to encourage a guest to opt for superior service or a higher rate. E.g. Upgrade to a superior room.
What does Yield Management mean in the hotel industry:
It’s a pricing strategy specifically designed to maximize revenues through inventory control and management. The aim of every Yield Management strategy is to sell a room reservation at the right price, at the right time, to the right customer.