HSMAI Glossary

GLOSSARY OF HOSPITALITY TERMS – REVENUE MANAGEMENT & DISTRIBUTION

 

Average Daily Rate (ADR)

Figure derived by dividing actual daily revenue by the total number of rooms sold. Actual Daily Revenue / Total # of rooms sold

 

 

Average Length of Stay (ALOS)

Figure derived by adding the total number of nights and dividing by the total number of bookings. Total # of nights / Total # of bookings

 

 

Best Available Rate (BAR)

The non-qualified, publicly available rate that serves as the baseline for comparison between hotels. This rate serves as the benchmark and typically drives discount and package pricing based on a percentage or dollar amount above or below this rate. BAR replaced Rack Rates as revenue management evolved and became more dynamic.

 

 

Closed to Arrival (CTA)

A room inventory control function. Indicates that a reservation cannot be confirmed for arrival on this date.

 

 

Commission

The payment that a travel agent receives from a supplier for selling transportation, accommodations, or other services.

 

 

Customer Relationship Management (CRM)

The name given to increasingly sophisticated programs to maintain close, lasting relationships between a company and its customers; between a hotel and its guests. CRS Originally, the term used for a Global Distribution System. Now used in the hotel industry to refer to a hotel company’s central reservation system—its CRS.

 

 

Competition

A term describing close cooperation between competitors to achieve a similar end goal—customer satisfaction and increased revenue.

 

 

Dynamic Packaging

Dynamic packaging is the term used to describe the ability of a consumer to create their own packages by choosing the components of the package as they shop. The component prices are not shown to the consumer, just the total package price.

 

 

Global Distribution System (GDS)

These are computerized reservation networks through which users—travel agents, airline employees or travelers—view data on a wide range of travel services, including air, hotel, auto rental and like services. Several GDSs provide their services to users worldwide (e.g., Amadeus, Cendant’s Galileo International, Sabre, Worldspan) while others provide regional or national coverage. Online services and the Internet are increasingly coming to be regarded as global distribution systems as well.

 

 

Gross Domestic Product (GDP)

GDP is the total of all goods and services produced in an economy. As it measures the market value of all final goods and services produced by a nation, it is a fundamental indicator of an economy’s performance. GDP is highly correlated with personal incomes and standard of living. It can be looked at as a true measure of the value added by an economy.

 

 

Gross Operating Profit Per Available Room (GOPPAR)

Figure derived by taking the revenue minus expenses divided by the number of available rooms. (Revenue—Expenses) / # Available Rooms

 

 

Last Room Availability

An agent’s ability to book the last available room in a hotel.

Market Penetration

The ratio in comparing total occupied rooms with the total occupied rooms within a competitive set. Total occupied rooms in hotel / Total occupied rooms in competitive set

 

 

Market Share

Total number of rooms in a hotel as a percentage of total rooms within a competitive set. (Total # of rooms in hotel / Total # of rooms in competitive set) * 100 [results in a percentage]

 

 

Mark-Up

The difference between the supplier’s selling price and merchant’s price offered to the consumer.

 

 

Maximum Length of Stay

A room inventory control function. Indicates that a reservation for arrival on a particular date may not extend past a certain number of days.

 

 

Minimum Length of Stay

A room inventory control function. Indicates that a reservation for arrival on a particular date must be for a minimum number of nights (two or more).

 

 

Multi Channel Distribution

This is the concept of selling a product in many different channels. For hotels, it could means via phone, wireless device, Internet, TV or walk-in.

 

 

Onward Distribution

The process by which hotel content is distributed on to multiple distributors who then in turn continue to distribute the content on to other distributors or affiliates. This process continues on ad infinitum.

 

 

Online Travel Agencies (OTA)

OTAs allow consumers to research and book their own travel through the use of travel Web sites such as Expedia and Orbitz.

 

 

Overselling or Overbooking

The practice of confirming reservations beyond capacity, either in expectation of cancellations or no-shows, or in error.

Pick-up or Pace report

'Pick-up' refers to bookings that have been  made since the last report.  The Daily Pick up or Daily Pace Report tells you how many bookings have been made since yesterday. Some of the things to focus on in the Pick-up report include:

  • Room nights
  • Revenue
  • Bookings

The report provides detailed breakdown of the hotel's monthly pick up by day in terms of Room Nights, ADR, Occupancy and RevPar. It also provides the booking pace by comparing figures with the previous year.

Property Management System (PMS)

The computer system in a hotel that contains information about available and occupied guestrooms, historical and future reservations and guest charges.

 

Price Parity

To ensure an even playing field of pricing or rates across all channels based purely on the price points.

 

 

Product Parity

To ensure an even playing field of pricing or rates across all channels based on products and fences around rates.

 

 

Revenue Management

Also referred to as Yield Management. The practice airlines, hotels and car rental companies use to control the supply and price of their inventory to achieve maximum revenue or profit.

 

 

Revenue per Available Room (RevPAR)

The daily revenue of a hotel divided by the total number of available rooms at that hotel. Daily hotel revenue / Total # of available rooms in hotel.

 

 

Revenue Generation Index (RGI) or RevPAR Index (RPI)

RGI is a ratio of the hotel’s RevPAR divided by the RevPAR of the competitive set. Hotel’s RevPAR / Competitive Set RevPAR

 

 

Revenue per Available Space (RevPAS)

A measurement of efficiency of utilization of meeting space. Similar to RevPAR, the higher the occupancy of the meeting rooms and the higher the average check, the higher the RevPAS. Total Catering Revenue Generated / Total Available Square Footage of Meeting Space

 

 

Revenue Management System (RMS)

The computer system a hotel uses as a tool to assist with the maximization of revenue. The system typically contains information on the hotel’s availability, room types, stay patterns (future and historical), ALOS, etc. The systems can be automated or manual.

 

 

Unconstrained Demand

The amount of demand for a hotel in the absence of any pricing and inventory constraints.