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 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 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 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 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.
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 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.