Basic Concepts

Question 1

ADR (Average Daily Rate)

Answer 1

It is a KPI to calculate the average price or rate for each hotel room sold for a specific day.

Question 2

BRG (Best Rate Guarantee)

Answer 2

The hotel makes a promise that the room prices found on their website are the best rates compared to other any other sites.

Question 3

Booking Curve

Answer 3

A Booking Curve is a tool that can visually show bookings over a certain period of time. It includes data like room pickup, bookings, and availability.

Question 4

Booking

Answer 4

Booking is an act of reserving an accommodation, a table, a seat, a flight, a trip etc. in advance.

Question 5

BAR (Best Available Rate)

Answer 5

BAR stands for Best Available Rate which is the lowest rate of the day that is available for guests to book. The BAR rates are available to the general public, does not require pre-payment and does not impose cancellation or change penalties and/or fees, other than those imposed as a result of a hotel property’s normal cancellation policy.

Question 6

CTD (Closed to Departure)

Answer 6

CTD stands for Closed to Departure. It is a specific set of days guests cannot make their reservation for with this date as check-out.

Question 7

CTA (Closed to Arrival)

Answer 7

CTA stands for Closed to Arrival. It is a yield tool used to close days our from reservations arriving on a particular day.

Question 8

CRS (Central Reservations System)

Answer 8

CRS stands for: Central Reservations System. It is a computerized reservation software used to maintain the hotel information, room inventory and rates, to manage the reservation and process. A CRS provides hotel room rates and availability for many different distribution channels such as the GDS, IBE, OTA, 3rd party websites etc.

Question 9

Comp Set - Competitive Set

Answer 9

A Competitive Set (or Compset) is a group of hotels that are seen as direct competitors to your own hotel.

Question 10

Channel Management

Answer 10

Channel Management (also Multi-Channel-Management) refers to the techniques and systems used by hotels in line with their distribution policy. This management method includes content management as well as data reconciliation in various distribution channels. It means the updating of the hotel information, of room rates and availabilities across all distribution channels, such as hotels website, third parties (OTAs, IDS, ADS) and the CRS/GDS.

Question 11

Forecast

Answer 11

Any hotel seeking to maximise profits, should look ahead and try to predict a future situation. One way to do this in an organised manner, is to create something called a Forecast. Forecasting can be done at any time of year, by any kind of establishment in the hospitality sector (not only large hotels but also small, independent hotels) across the world.

Question 12

GOPPAR

Answer 12

GOPPAR stands for: Gross Operating Profit Per Available Room

It is one of the most effective ways to look at your hotel´s performance and make adjustments that impact the best interests to achieve the hotel´s goals.

Question 13

KPI

Answer 13

KPI is an acronym for: Key Performance Indicator

KPI includes a set or ratios and formulas that help calculate and indicate the performance and progress of a hotel accordingly to their plans and actions.

Question 14

LOS

Answer 14

LOS stands for Length of Stay. Figure derived by dividing the number of room nights by the number of bookings.

When it comes to revenue management, LOS is an important criteria. It can help enormously with the organising and optimisation of occupancy within a hotel.

Question 15

MinLOS - Minimum Length of Stay

Answer 15

At hotels, the number of nights a guest can stay is not necessarily always up to the paying customer, even if they have lots of money to spend on both rooms and in-house serves, such as food, beverages and recreational activities! Often, a hotel will seek to control the number of nights an individual, couple, family or group book in for, for various reasons.

Question 16

MaxLos - Maximum Length of Stay

Answer 16

At a hotel, sometimes the number of nights an individual guest, couple or family can stay has to be limited, even if the hotel is intensely focused upon maximising revenue! This can apply to a group booking, too, particularly if arrival is planned for a certain date and where a group booking discount has been offered and availed of.

Question 17

NREVPAR

Answer 17

NREVPAR stands for: Net Revenue Per Available Room

NREVPAR metric is similar to RevPAR, except that it factors in the net revenues (meaning that it accounts for distribution costs, transaction fees and travel agency commissions).

Question 18

No Show

Answer 18

If a guest fails to arrive on a certain date to fulfil a booking (as all so often happens!) and does not cancel; that does not necessarily mean the hotel will lose money. No. Hotels can cover themselves for this eventuality by integrating into their pricing structure something called a No-Show fee. That’s right, in the Hospitality Industry, a person who does not arrive where and when they should at a hotel or motel, and makes no explanatory contact, is called a No-Show.

Question 19

Overbooking

Answer 19

Sometimes it can be necessary for a hotel to sell more rooms than it actually has available. To those unfamiliar with the internal workings of the Hospitality Industry, which is always influenced by and somewhat vulnerable to the vicissitudes of the global economic climate, that may sounds strange. But experienced hoteliers will tell you that selling rooms/spaces that you don’t have – Overbooking – can sometimes be the only way to protect a hotel from diminished revenue due to unexpected cancellations, no-shows or booking errors.

Question 20

OTA

Answer 20

OTA stands for: Online Travel Agency.

OTAs are online companies who’s websites allow consumers to book various travel related services directly via Internet.
They are 3rd party agents reselling trips, hotels, cars, flights, vacation packages etc. provided / organised by others.

Question 21

PROFPAR

Answer 21

PROFPAR stands for: Profit Per Available Room

PROFPAR is a KPI calculation of profit earnings for each room available in the hotel. PROFPAR is based on operating profit, which accounts for movements in both revenues and expenses.

Question 22

PMS

Answer 22

PMS stands for: Property Management System.

It is a local hotel administration system used for reservation, availability and occupancy management, check-in/out, images, guest profiles, report generation etc. This application is used in-house (in an individual hotel) to control the onsite property activities.

Question 23

REVPOR

Answer 23

RevPOR stands for: Revenue Per Occupied Room

RevPOR, unlike RevPAR, considers revenue per occupied room which gives you a better understanding of how much profit you make from the guests who actually stay at your property.

Question 24

REVPAR

Answer 24

REVPAR stands for: Revenue Per Available Room

RevPar is a very classic KPI and regarded as one of the most important financial calculations for any hotel to see how much revenue they have made within a certain period of time.

Question 25

Revenue management

Answer 25

Revenue management is selling “the right product to the right customer at the right time to the right price”.

Question 26

Pick-up

Answer 26

The last class of demand forecasting methods are advanced bookings called additive and multiplicative pick-up models. The basic concept behind those methods is identifying increase of booking in different periods and then accumulating it into total demand that is expected in the future.

Question 27

Rate Parity

Answer 27

All individual hotels and hotel chains should seek to engender a positive affective commitment towards their brand. But loyalty felt by guests can, of course, take time to build up. One great way to foster allegiance over time is to build Rate Parity into a pricing structure.

Question 28

Shoulder Date

Answer 28

Sometimes a hotel can generate extra revenue by selling rooms on Shoulder Dates; these are basically dates that fall very close to other high demand dates.

Question 29

Sell Through

Answer 29

A Sell Through will allow a hotel anywhere in the world to implement a control that will enable a request for an extended stay reservation to be booked through sold-outs nights

Question 30

Turnaway

Answer 30

Sometimes, a hotel simply cannot accommodate a guest who has already made a reservation. Having to treat such a guest as a Turnaway can happen at any time of year, but this usually occurs during a certain period and for a compelling reason or reasons.

Question 31

TREVPEC

Answer 31

TREVPEC stands for: Total Revenue Per Client

It is is a very favourable KPI metric to calculate the total revenue generated per customer. It is also taking into account double and family occupancy factors.

Question 32

TREVPAR

Answer 32

TREVPAR stands for: Total Revenue Per Available Room

It is a hotel KPI that gives a preview of the total revenue from all departments which the room can generate. While RevPar only takes account of the revenue generated by the rooms.

Question 33

Target Market

Answer 33

Adopting a laser-focused approach to selling hotel rooms can be pivotal in achieving excellent occupancy levels, and therefore outstanding profits year-on- year. Marketing towards a specific audience, rather trying to sell to everyone (and being, as we say in the Hospitality Industry, ‘all over the map’!) can help enormously when it comes to maximising revenue.

Question 34

Unconstrained Demand

Answer 34

Unconstrained demand refers to the quantity of rooms in a hotel that could be sold if there were no constraints, no limits.

Question 35

Yield Management

Answer 35

Simply put, the purpose of Yield Management (aka Revenue Management) is to achieve maximum revenue/profit. To do this, a yield management strategy needs to be both reflective and forward-looking. That is, yield managers should attain a clear yet detailed understanding of what has happened before, and what is happening now. The most efficient way to do this is to draw from historical data to predict what may then happen in the future. So, the process of effective yield management involves understanding, anticipating and reacting to consumer behaviour (to ultimately maximise revenue!).