Hotel Revenue & Distribution Management Glossary of Industry Jargon & Definitions
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Full/Fixed Pattern Length of Stay
A pricing pattern indicating whether a rate is open (available) for the arrival date and length of stay. Calculated and deployed by automated revenue management systems (IDeaS, Duetto, EzRMS, etc)
The statistical patterns used for predicting demand, occupancy and revenue.
The lowest acceptable amount that an individual or group can be charged, regardless of conditions, demand, or yield. The property’s operating cost and revenue budget are factors in setting the floor rate.
General Data Protection Regulation
General Sales Agent
A person or company contracted by a hotel chain to promote that chain in a city or country where the hotel chain does not have offices. In some cases, general sales agents accept hotel reservations.
The process of indexing locations using degrees longitude and latitude.
Global Hotel Alliance
Global Distribution System
These are computerized reservation networks through which users – primarily travel agents and also airline employees and travellers – view content and inventory. They search and reserve wide range of travel elements including air, hotel, auto rental and travel insurance services. There are four "native" GDSs that provide their services to users worldwide: Sabre, Amadeus, Galileo and Worldspan.
Guest Name Record
Gross Operating Profit
Basically, bottom line in financials – operating revenues minus costs of goods sold.
Gross Operating Profit Per Available Room
Figure derived from taking the revenue minus expenses divided by the number of available rooms.
Hotel reservations booked with a guarantee of payment. They normally require a credit card at time of booking or deposit within a specified period. The hotel guarantees availability and if it does not have a room available must arrange alternate comparable accommodation.
Hotel Electronic Distribution Network Association
International not-for-profit trade association formed by hoteliers to promote the booking of hotel rooms through the use of Global Distribution Systems. Also known as the “GDS police”, it is a governing body of rules and policies that relate to native global distribution systems.
See 'Opaque'
The code assigned to each property by each GDS.
A package offered by a hotel, sometimes consisting of no more than a room and breakfast, and other times, especially at resort hotels, of transportation, room, meals, sports facilities and various other components.
Hotel Sales and Marketing Association International
Founded in 1927 to support the Hospitality industry through training and events.
Internet Booking Engine
The term used to describe the supply of guest rooms at a hotel and their status – available/sold; open/closed.
Bookings on the books (or currently held for future dates) also sometimes referred to as “B.O.B.”
RMS
A hurdle rate sets the minimum value of a reservation that can be booked on a given day. If the hurdle rate is $200 and the room rate is $150 a guest will be prevented from making a one-night reservation on that date. This is because the total value of their room rates ($150) is less than the total hurdle rates ($200). Hurdle rates are most often present in hotels using an RMS (automated revenue management system) such as IDeaS, a preferred vendor of SKNapp Consulting.
A large hotel room with a partition separating the bed and sitting areas.
A hotel room with a king-sized bed.
Last Room Availability
An Agent’s ability to book the last available room in a hotel.
Length of Stay
The number of nights that a guest stays at a your property. This value is also the difference between the departure date and the arrival date.
A portion of the customers who possess a common set of
reasons for travel
motivations
a combination of unique purchasing (i.e advance purchase vs. walk-in) & usage patterns (i.e. single night vs. weekly)
The difference between the supplier’s selling price and merchant’s price offered to the consumer.
The merchant model is a business model, usually used by online hotel distribution sites. This business model requires the hotel to offer net rates so that the merchant can mark up the rates for sale to the public. Normally, the consumer must prepay their entire stay at the hotel to the Web site, who is the merchant of record.
Meta search engines allow a user to search for travel on multiple sites from one location and book the best available rate. Examples include Kayak.com, Mobissimo.com and SideStep.com.
Minimum/Maximum Length of Stay
A room inventory filter function. Indicates that a reservation for arrival on this date must be for a minimum or maximum number of nights (two or more). Reservations which arrive on a date where this restriction is in place must meet or exceed the defined value. MLOS restrictions are a filter not a force! They filter out shorter stays in favour of longer high-revenue yielding reservations during periods/days of excess demand.
Market Penetration Index
Primarily sourced from a subscription to STR Global CoStar Group.
MPI is calculated by: Hotel Occupancy / (divided into) Comp Set Occupancy.
MPI compares your hotel’s occupancy to the average occupancy of your defined market competitors.
It is used to determine if a hotel is gaining a fair share of revenue compared to its competitor set of properties.
Any part of a reservation which falls (stays) on restriction dates must not be less than the set value (two or more), regardless of arrival date.
This is the concept of selling a product in many different channels. For hotels, it could mean via phone, mobile device, Internet, smart TV, webchat/online chatbot services, and even walk-in.
A term used in global distribution systems to describe rates negotiated by a hotel company with a specific client. Viewership of these rates in the GDS by a travel agent or other GDS user is restricted, and the rate may be booked only after entry of either the agent’s or client’s authorization code.
Occupancy-Based Pricing
A useful revenue management practice is called in hotel lingo “pricing by occupancy”. Pricing by occupancy is a revenue management technique used by accommodation providers to maximize room revenue in leisure destinations in particular.
On-Board Revenues
Cruise itineraries are structured to allow enough time at sea, so that the cruise line can maximise the on-board revenues from all ships’ facilities (e.g. bar, casino, duty-free shopping - shops can only be open when the ship is sailing)
Online Booking Tool
An OBT is the graphic user interface (GUI) which sits atop a GDS that travel consultants use for corporate/business travellers
The “fill” measure of an accommodation property. Occupancy = total number of rooms occupied / total number of rooms available x 100 (i.e. 75 occupied rooms in a 100 room hotel = 75% occupancy).
Occupancy, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.
The constrained operational occupancy that the property is expected to achieve for a specified period of time. This value may be expressed either as a specific number of rooms or as a percentage of available rooms. An occupancy forecast does not exceed 100%.
This refers to pricing that a retailer, or meta-search company don’t make available to the public to see. For example, hotel might offer their Loyalty/ Rewards Club members a special price which is not available on public websites or other marketing channels.
This refers to a business model where the consumer does not know what product/brand they are buying before they purchase it. They know the rate, but not the product.
Online Travel Agent
The artist formerly known as "TPIs" (Third Party Internet sites) in the olden days. These include Expedia, Booking.com, Agoda.com; OTAs are online companies which allow consumers to book various travel related services via the Web. They are 3rd party agents reselling trips, hotels, cars, flights, vacation packages etc. provided organised by others. The most prominent two in Australia are Booking.com & Expedia.com
Alternate definition of "OTA":
The OpenTravel Alliance (OTA) is a non-profit trade association that develops and promotes open standards for the electronic exchange of business information within the travel industry.Essentially, it provides a common language for different systems to communicate, enabling smoother transactions between travel suppliers and distributors.
Practice by a supplier of confirming reservations beyond capacity, either in expectation of cancellations or no-shows, or in error. Overbooking is also an effective yield management tool when utilized in measured forecasted capacity.
The speed at which bookings materialize over a period of time from the booking date to the arrival date. Booking pace is expressed as a fraction of bookings received on certain days in advance. Also referred to as Booking Pace. A pace calculation is a key component of a forecast.
Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.
This is a term used by travel agents using the GDS. Bookings made by travel agents for purposes of itinerary printing and invoicing when an agent has called the hotel supplier to make the booking. Passive segments do not send or receive messages to/from the supplier. Sometimes called a ghost segment.
“PAX” means people / persons / occupants.
Pax is the international shorthand version of Passengers, used almost exclusively by the travel industry.
Pseudo City Code
Used as a measure of security within GDS systems for travel bookers to access confidential rates.
Property Management System
RMS, GuestCentrix, NewBook, Opera, Opera Cloud
Passenger Name Record
Travel Agent’s ‘Passenger Name Record’ which stores all traveller details including hotel, airline, car hire
Pay Per Click Advertising
A rate that the guest must qualify for: such a corporate rate for the guest’s company, a rate available due to an affiliation or membership such as NRMA, AAA, Big4, or a promotional package rate with specific booking conditions.
RASM (Revenue per Available Seat Mile):
This metric is calculated by dividing an airline's total operating revenue by its available seat miles.
Formula:
RASM = Total Operating Revenue / Available Seat Miles
A higher RASM generally indicates that the airline is more efficient in generating revenue from its available capacity, though it's important to consider other factors such as costs.
The definition and practical application of a Rate Plan varies per PMS, CRS, and channel manager. The most common definition is simply a room rate that is offered with additional value items included in the price, such as breakfast or wine on arrival. A rate plan is typically defined by season, day-of-week, demand period, etc. A rate plan may also be a “room only” price that is configured/assigned to a particular room type.
Rate parity is the term related to a hotel's accommodation prices that are displayed and bookable exactly the same accross all public channels. Whether a consumer/guest bookes a room via a hotel's direct website, OTA, or other booking platform, "parity" is when the consumer sees the same price for the same dates of stay, same room type, and same booking conditions across all channels. Hotels that are deemed "out of parity" can be at risk of being penalised by travel booking partners.
An organization providing reservation services, including voice reservation processing and/or GDS connectivity for hotels or small hotel companies that prefer not to operate these services and systems themselves.
Pricing science that integrates a hotel’s online reputation, guest reviews and ratings into its revenue management strategy.
Also referred to as Business on Books, (BOB)
The number of confirmed bookings in a hotel for a given date or series of dates. An accurate forecast results from ROH/BOB plus unconstrained demand.
The retail model is similar to the traditional agency in terms of theory. The rates and inventory are “pulled” from one of the GDSs, or wholesalers, and displayed directly to the consumer to book.
The practice of airlines, hotels and car rental and travel companies (any industry with perishable inventory and fluctuating demand for their product) of controlling the supply and price of their inventory to achieve maximum revenue or profit.
A business discipline and culture that focuses on balancing supply and demand in a rational and systematic way to maximize revenue and profit while managing risk under current and anticipated market conditions.
Revenue Per Available Room
Expressed on a currency/dollar amount, calculated by either:
Average Rate x Occupancy %, or
Total Rooms Revenue / total rooms available.
Example: average rate of $325 at an occupancy of 80% = RevPAR of $260
Revenue Per Occupied Room
RevPOR is the measurement of total revenue generated by occupied rooms as a performance metric. It differs from ADR (average daily rate) because it includes ancillary revenue sourced from services such as dining, spa services, room service, and other charged experiences beyond the accommodation. It also differs from RevPAR (revenue per available room) which factors in all available rooms within the property, whereas RevPOR factors only occupied rooms for any given day, month, or year.
RevPOR = Total Revenue Generated In Occupied Rooms / (divided by) Number of Occupied Rooms for the same period.
Revenue Per Available Square Metre
This efficiency score is not unique to hotels; it is also used in retail shopping spaces and centers. It is particularly useful in hotels which utilize space for conferences, events, and when "selling spaces differently". It is calculated by: Total Revenue / Available square meter of (event, whole hotel, function, etc) space.
Total revenue / divided by total available square metres of the space (m2).
For example:
•$60,000 / 2000m2 = $30 per square metre.
•It is a KPI relevant for hotels with C&E (conference and events) potential. The utilisation efficiency sales is calculated on the revenue per available square metre of the available space.
Revenue Per Available Seat Hour
Particularly useful in hotel dining outlets. RevPASH = Sales per operating hour divided by the number of seats by the hours. Calculation:
Total outlet (restaurant for instance) revenue divided by the available seats, multiplied by opening hours. For example:
$15,000/(50 seats x 8 hours) = RevPASH of $37.50
Request for Proposal
The term applies to a process where a buyer’s requirements for products or services are presented to potential vendors as an invitation to provide the specified products or services together with the pricing for them.
Revenue Generation Index
RGI compares your hotel’s RevPAR to the average RevPAR in the market. It is used to determine if a hotel is gaining a fair share of revenue compared to its competitor set of properties.
RGI Formula: RGI= Your Hotel's RevPAR / Hotel Market RevPAR
When:
RGI = 1 The hotel RevPar is equal to the average RevPar of their comp set
RGI > 1 The hotel RevPar is higher than the average RevPar of their comp set
RGI < 1 The hotel RevPar is less than the average RevPar of their comp set
Revenue Growth Index
Primarily sourced from a subscription to STR Global CoStar Group.
RGI is calculated by: Hotel RevPAR / (divided into) Comp Set RevPAR
RGI compares your hotel’s RevPAR to the average RevPAR in the market. It is used to determine if a hotel is gaining a fair share of revenue compared to its competitor set of properties.
RGI Formula: RGI= Your Hotel's RevPAR / Hotel Market RevPAR
When:
RGI = 1 The hotel RevPar is equal to the average RevPar of their comp set
RGI > 1 The hotel RevPar is higher than the average RevPar of their comp set RGI < 1 The hotel RevPar is less than the average RevPar of their comp set
RMS
An RMS, or revenue management system, is a software solution that enables hoteliers to carry out forecasting, pricing, and revenue management tasks more efficiently and effectively that a person can ever do manually. It makes use of data from the hotel, from market intelligence, and integrated channels data. The most common RMS is IDeaS, a preferred vendor of SKNapp Consulting.
A series of alphanumeric characters used in a GDS to identify a particular room type in a hotel. (For example, an A1K is commonly defined as a deluxe room with 1 king bed).
One accommodation room occupied for one night.
General room description by classification (superior, standard, etc.) and bedding (single, king, queen, double). Often associated with a rate code.
Run of House (ROH) means that the specific room assigned to a guest reservation is determined by the hotel at check-in, based on availability, rather than being pre-selected by the guest. Essentially, accommodation is guaranteed, but not a specific type, view, or location.
ROH bookings are often offered at a lower price point than those with specific room requests that command a premium rate.
A hotel CRS (Computer Reservations Systems) room inventory control function. Indicates that arrivals or short multiple night reservations can not be confirmed for this date, but reservations with arrival on a previous date and a long length of stay can be confirmed.
Online marketing activity whereby using paid advertising gets your hotel to rank higher in search engine results. Considering that Google averages 85 billion visits per month (*as at January 2024) having your property rank/listed at the top of search results can enable significant visibility and traffic to your website.
Independent hoteliers in Australia and New Zealand can benefit from engaging experts such as RevenYou to get you started.
SEO is the process of continually improving the ranking of a hotel website on search engines (such as Google, Bing, and Yahoo) result pages. It expands online presence, boosts traffic to your website, and increases your hotel's reservations. Some elements of SEO can be considered free, apart from your time spent on doing the work that is! Activities such as posting articles on your website, posting about local events, attractions, and your restaurant and other nearby experiences. All of this will help increase traffic to your hotel web pages.
Independent hoteliers in Australia and New Zealand can benefit from engaging experts such as RevenYou to get you started.
Nights of less occupancy on either side of peak nights.
Any reservation, facility or service to be used by one person.
An organization which provides communication connections, data communication and data reformatting services to link global distribution systems and hotel central reservation systems. The two principal switch companies are Pegasus Electronic Distribution and WizCom International, owned by Cendant.
An organization which provides private label services – processing of voice reservation requests, GDS connectivity or data processing services for hotel companies which prefer not to operate these services and systems themselves.
See Pegasus Electronic Distribution
Third Party Intermediary
Another term used for OTAs (Online Travel Agents such as Expedia, LastMinute.com, CTrip etc)
Travel Management Company
Examples include Carlson Wagonlit, American Express, Flight Centre (FCM) which make reservations for business travellers through GDS, often on consortia programs.
Total Revenue Per Available Room
Performance metric in the accommodation industry. TRevPAR is calculated by dividing the total net revenues of a property by the total available rooms. Outlets such as restaurants, spa, and equipment hire also provide a source of revenue for these properties. TRevPAR is the preferred metric for accountants and hotel owners because it effectively determines the overall financial performance of a property, while RevPAR takes into account revenue from rooms. TRevPAR is useful for hotels where rooms are not necessarily the largest component of the business.
Hotel room suitable for occupancy by three persons.
Hotel room with two single beds.
Defined as the number of customers/guests a hotel could accommodate if its capacity were unlimited. It is the total demand for what the hotel has to offer in the absence of all constraints. It is the sum of customers booked and the potential customers denied.
Rates that are offered by the hotel to guests who do not have an agreed contract rate and that have no restrictions or booking conditions attached to them. Sometimes also referred to as Retail Rates.
Hotel industry term for placing an arriving guest at a substitute hotel due to lack of available rooms at the initially reserved property.
These sites contract directly with hotels, mark-up the rates, and sell the allotted inventory to the consumer at the new marked-up rate. Method of delivery is mostly via fax. It’s hard to find a pure wholesale model, as most of them are a combination with other models.
Yield can simply mean revenue made. Yield can also refer to the revenue generated from the sales of accommodation as well as from different outlets trading on the hotel's premises, and/or externally connected to the property. In some management infrastructures Yield also refers to the profitability of a hotel's departments, measured individually rather than only collectively.
