Today, our copy will not be the same usual piece – talking about how to adopt the right hospitality technology solutions, how they help you, and how to serve guests better. Instead, we will do something different for a change. We will spend some time looking at some of the hotel terminologies. Being a part of this industry, you may know some of them. However, there are chances that you may get to know some more today.
Most Useful Hotel Terminologies for Hotel Professionals
Here are some of the widely used terms and acronyms –
- Average Daily Rate (ADR): It is the measure of the average rate paid per room. You can find this by dividing the total room revenues per day by the number of rooms occupied for any given day.
- Adjusted Revenue Per Available Room (ARPAR): You can divide the variable net revenues of your hotel by the total available rooms to determine ARPAR.
- ADR Index: ADR of your hotel/ADR of the competitive set
- Average Room Rate (ARR): You can use this to calculate the average room rate from a weekly or monthly standpoint.
- Average Rate per Guest (AGR): This helps calculate the average revenue generated by each guest in your hotel. Just divide your total room revenue by the total number of guests to find out the AGR.
- AGR (Agreed): Guest rooms contracted to a group
- Average Length Of Stay (ALOS): This is the average number of days guests stay at your hotel during a particular period. You can divide the number of room nights by the number of bookings to calculate the ALOS.
- Average Published Rate (APR): You can establish this by averaging all types of rooms throughout the year, irrespective of high or low season.
- Best Available Rate (BAR): This is the lowest rate you can offer to your guests on a daily basis.
- BEO: A Banquet Event Order (BEO) is a detailed document used in the hospitality industry, particularly in hotels and event venues, to outline the specifics of an event or function. It serves as a comprehensive guide for both the client and the venue staff to ensure that all aspects of the event are organized and executed as planned.
- Back to Back: A series of repeated group departures/arrivals arranged by tour operators. This is done to ensure that your rooms never go unsold/vacant.
- Black-out Dates: Black-out Dates in a hotel context refer to specific dates or periods during which certain rates, promotions, or special offers are not available. These dates are usually set by the hotel to manage high demand periods, peak seasons, or special events.
- Booking Pace: The speed at which bookings/reservations materialize for a specific arrival date/particular future date. This can be helpful while forecasting.
- Booking Window: The Booking Window is the time between when a reservation is made and the arrival date. It influences pricing and availability, with rates often lower for early bookings and higher closer to the date. Hotels use it for dynamic pricing, inventory management, and to forecast demand.
- Booking Engine: A hotel booking engine allows guests to make room reservations directly through a hotel’s website or other online platforms. It provides real-time availability, pricing, and booking options, streamlining the reservation process for both the hotel and the guest. Key features include secure payment processing, integration with the hotel’s property management system, and the ability to offer special rates and promotions.
- Bucket Check: A bucket check is a process in which hotel staff reviews and verifies all reservations and booking details for a specific date or period. It involves checking availability, confirming bookings, and ensuring that all reservations are accurately entered into the property management system (PMS).
- Central Reservation System (CRS): Refers to a software application to update, maintain, and manage information about your property’s rate and inventory on distribution channels.
- Central Reservation Office (CRO): It allows a chain hotel’s reservation agents to receive reservation/booking requests coming via phone, mail, brand website, travel agents, corporate clients, and walk-ins, etc.
- Channel Manager: A channel manager synchronizes hotel room availability, rates, and bookings across multiple online travel agencies (OTAs) and distribution channels. It automates updates and manages inventory in real-time, reducing the risk of overbooking and ensuring consistent pricing. This helps hotels efficiently manage their online presence and increase bookings.
- Complimentary Ratio: The Complimentary Ratio in the hotel industry measures the proportion of free rooms given to guests compared to the total number of rooms sold.
- Cut-off Date: The cut-off date in the hotel industry is the deadline by which reservations must be confirmed or canceled to avoid penalties or changes in booking terms. It ensures timely management of bookings and availability, particularly for group bookings and special events.
- Cost Per Occupied Room (CPOR): Cost Per Occupied Room is a financial metric that calculates the average cost incurred by a hotel for each room occupied. It includes expenses like housekeeping, utilities, and maintenance, helping hotels analyze operational efficiency and control costs.
- Cost Of Walk (COW): This is the cost a hotel may incur when they have to ‘walk’ the customer to another property due to overbooking or double booking. It would include the cost of accommodation at another property (could be your member property or competition) + the cost of transportation + any other complimentary vouchers.
- Continental Plan (CP): The Continental Plan is a meal plan offered by hotels that includes breakfast for in-house guest.
- Distressed Inventory: Distressed inventory refers to unsold hotel rooms that are at risk of becoming obsolete or unsellable, often due to factors like low demand, or seasonal downturns. Hotels may discount these rooms heavily to sell them before they lose value or revenue potential.
- Double Booking: Double booking occurs when a hotel mistakenly accepts two reservations for the same room on the same date. This can result from system errors, manual entry mistakes, or overbooking strategies, leading to potential conflicts and the need to find alternative accommodations for one of the guests.
- Dynamic Pricing: Dynamic pricing also known as real-time pricing implies adjusting room rates based on demand and other market conditions.
- Displacement Analysis: Displacement analysis in the hotel industry is a financial evaluation method used to determine the potential revenue lost or gained by accepting one type of booking over another. It compares group bookings, discounted rates, or long-term stays against higher-paying transient guests.
- Derived Rates: It allows you to update hotel rates by adding/subtracting a certain amount or percentage from the base rate.
- European Plan (EP): The European Plan is a hotel pricing model where the room rate includes only the accommodation, with no meals provided.
- Early Bird Deal/Discount: An Early Bird Deal/Discount is a promotional offer where guests receive a reduced rate or special benefits for booking their hotel stay well in advance.
- Fenced Rate: Reservations made under fenced rates offer many benefits to guests. Types of fenced rates are non-refundable reservations, non-cancellable reservations, and advanced purchase reservations.
- Full Pattern Length of Stay (FPLOS): Full Pattern Length of Stay is a revenue management tool used by hotels to determine whether to accept a reservation based on the guest's intended length of stay. It evaluates how well a potential booking fits into the hotel's overall occupancy pattern, ensuring that rooms are booked in a way that maximizes revenue across all dates. It helps in deciding whether to accept, decline, or offer different rates for a reservation depending on how it aligns with the hotel's optimal booking strategy.
- Gross Operating Profit Per Available Room (GOPPAR): It indicates the total revenues minus operating and marketing expenses divided by the number of available rooms.
- Global Distribution System (GDS): It is a computerized network system that allows travel agents to book hotel rooms for their end-users/customers.
- Group Wash: It indicates the difference between a group’s contracted and blocked rooms.
- Last Room Value (LRV): This is the highest revenue a hotel can make by selling the last room.
- Length of Stay (LOS): Length of Stay (LOS) refers to the total number of nights a guest stays at a hotel during a single booking. It is a key metric used by hotels to analyze occupancy patterns, forecast demand, and optimize pricing strategies.
- Maximum Length Of Stay (Max LOS): It refers to the restriction policy that a hotel may apply to limit the availability of rooms by specifying a maximum number of nights a guest can book.
- Minimum Length Of Stay (Min LOS): It refers to the restriction policy that a hotel may apply to determine the minimum number of nights a guest must book.
- Minimum Acceptable Rate (MAR): This is the lowest rate a hotel can offer to a group.
- MICE: MICE stands for Meetings, Incentives, Conferences, and Exhibitions in the hotel industry. It refers to a segment of business tourism focused on hosting large groups for corporate events, such as business meetings, incentive trips, conferences, and trade shows. Hotels catering to the MICE market often offer specialized facilities, such as conference rooms, event spaces, and dedicated services to accommodate these events.
- Metasearch Engine: It is an aggregator that derives rates and availability from OTAs, hotel website, and other sales channels and presents the same to their end-users.
- Modified American Plan (MAP): The Modified American Plan (MAP) is a hotel pricing model where the room rate includes accommodation along with two meals per day, typically breakfast and either lunch or dinner.
- No-Show: A No-Show occurs when a guest with a confirmed reservation does not arrive at the hotel and fails to cancel the booking in advance. The hotel charges a penalty fee, such as the cost of one night's stay, to compensate for the lost revenue from the unused room.
- Night Audit: This is one of the most important front office activities. Also referred to as the end-of-day process, it collates revenue against various heads and ensures the rollover from one business day to the next day.
- Negotiated Rate: This is the minimum possible rate at which a hotel sells its room to its corporate guests. Through this, a hotel can ensure that its corporate guests stay at its property year after year.
- Net Rate/Wholesale Rate: A Net Rate, also known as a Wholesale Rate, is the discounted rate offered by a hotel to travel agents, tour operators, or other intermediaries. These rates are lower than the standard room rates, allowing the intermediary to mark up the price before selling it to the customer, earning a profit margin in the process.
- Occupancy Rate: Hotels can calculate occupancy rate by dividing the number of rooms sold by the number of rooms available and multiplying by 100.
- Occupancy Forecast: It is an estimate of the number of rooms that a hotel can expect to sell on a particular day or period of time.
- Overbooking: It happens when the total number of rooms reserved for a certain period exceeds the total number of rooms available for sale in the same period. This is a revenue management strategy to ensure full occupancy.
- Online Reputation Management: This is the activity of tracking, managing, and responding to the guest reviews published online – review/booking sites.
- OTA: An Online Travel Agency (OTA) is a digital platform that facilitates the booking of travel services such as hotels, flights, car rentals, and vacation packages. OTAs aggregate options from various providers, allowing users to compare prices, read reviews, and book travel arrangements from a single website or app. They act as intermediaries between travelers and service providers, typically earning a commission on each booking. Examples include Expedia, Booking.com, and Airbnb.
- PMS: Stands for Property Management System, it is software used by hotels and other lodging establishments to manage various operational aspects, including reservations, check-ins and check-outs, room assignments, billing, and guest profiles. It helps streamline operations, enhance guest service, and integrate with other systems like booking engines and revenue management tools.
- Pre-payment Guarantee: In this, a hotel would want its guests to make full payment against their reservations before the arrival date.
- Rack Rate/Published Rate: This is the rate a hotel charges for its rooms before applying any discounts.
- Rate Shopper: A tool that can automate the process of rate comparison by keeping an eye on competition pricing, room mapping, and demand forecast.
- Revenue Management: It refers to the strategic room distribution across sales channels and pricing to sell the right room at the right price to the right guest to earn more revenues. You can do this efficiently with a revenue management system.
- Revenue Per Available Room (RevPAR): A hotelier can determine this by multiplying his hotel’s ADR by the occupancy rate. Plus, they can also calculate this by dividing total room revenue by the total number of available rooms in a specific time period.
- Seasonal Rates: It defines an increase or decrease in the rack rate based on the dates, depending on low season, shoulder season, and peak season.
- Shoulder Season: This is the time leading up to and after a peak season.
- Shoulder Nights: It refers to room nights with less occupancy on/before peak room nights.
- Smith Travel Research (STR): STR report helps measure and benchmark a hotel performance against its competition across the market.
- Total Revenue Per Available Rooms (TrevPAR): A hotel can use this metric to determine its total revenue on a per room basis by dividing total revenue with total available room nights.
- Unconstrained Demand/True Demand: This is how a hotelier estimates the total demand for his hotel while not considering the rate, restriction, and capacity constraints.
- Underbooking: Underbooking occurs when a hotel has fewer reservations than the available room inventory, resulting in lower occupancy rates. This can lead to missed revenue opportunities and may prompt the hotel to offer discounts or promotions to fill rooms and optimize occupancy.
- Yield Management: You may call it a revenue management process wherein you do everything to maximize your hotel’s revenue and profitability.
- Zero Out: When a guest makes the full payment and the front desk staff closes the folio.
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