Essential Glossary

Jargons bogging you down? An extensive glossary to help you stay updated with the latest hotel terminology.

Last Room Availability (LRA) Last Room Availability is a clause introduced into contracts that means that if a hotel has even a single room to sell, then the room will have to be awarded to the party with the clause at the contracted terms and room rates as prescribed by the contract.
Average Daily Rate (ADR) ADR represents the average rental income earned by a hotel for every occupied room in a given time period. It is used as an economic measure by most of the hotels and can be calculated by dividing the total room revenue for a given time period by the number of occupied rooms for that particular time period.
ADR = Total Room Revenue For Particular Period/No. of occupied room for that period
Average Length of Stay (ALOS) Figure derived by dividing the number of room nights by the number of bookings.
Average Published Rate (APR) The rate derived by averaging a range of published hotel rates for various room sizes during different times of the year in order to get one average rate for that hotel.
Average Room Rate (ARR) ARR is the average revenue received by hotel for every occupied room. It is calculated by dividing the total revenue earned by the number of room occupied. Since it does not consider time factor, it is a less accurate metric than ADR. ARR = Total Revenue/No. of Room Occupied
BAR Rate (Addition) There are several interpretations and executions of BAR in the hotel industry. Sheryl E. Kimes defines BAR pricing is an "attempt to reduce confusion and to guarantee that the guest is quoted the lowest available rate for each night of a multiple-night stay. A rate available to the general public that 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.
Best Available Rate (BAR) It is a rate available to any guest at any time period. Hotels may offer different rates for the same room for different nights by forecasting demand. Such rates do not generally require a pre-payment or impose cancellation charges or other penalties.
Best Rate Guarantee ( BRG) The promise that hotels or OTAs will the best rates on their own site as compared to any other side for the same product.
Booking Engine (BE) An application powering the hotels’ own brand site for reservation related information. The online reservations system that enables guests to check room availability and rates, and book rooms. It enables you to handle reservations arriving directly on your hotel website from various sources such as Corporate Sales, Travel Agents, Direct Sales and Electronic Channels etc.
Central Reservation System (CRS) A tool used by hotels enabling them to upload their room rates as well as room inventory to be seen by the sales channels such as OTAs and traditional travel agencies that are using CRS.
Channel Management Controlling the allocation of hotel inventory and rates across all distribution channels including website, third parties, and the GDS. Effective channel management solutions should reduce labor costs and improve efficiency by providing a centralized way to control multiple channels.
Close To Arrival (CTA) CTA is an inventory control mechanism that sets restrictions on new guests arrivals for certain dates. However, if their stay includes this date, but does not begin on it - then it would be bookable. This helps in better stay pattern management.
Close To Departure (CTD) When "closed to departure" is set for a particular date, a guest would not be able to book this date if their stay ends on this date. If their stay includes this date, but does not end on it - then it would be bookable. This, along with CTA works as an inventory control mechanism.
CRS (Addition) The application used to manage a hotel’s distribution and hotel room bookings. Typically will be used to reach guests via multiple distribution channels such as travel agencies (via GDS), online travel agencies (such as examples), direct to the hotel website and telephone. 2. The ability of guests to make a reservation for one out of a number of hotels by contacting one agency, contracted by the hotels acting as a group, to operate this "central" reservation service.
Distribution Strategy Determining when and through what channels to sell rooms based upon the cost of acquisition of the individual channel. By driving business to lower cost acquisition channels during high demand periods, hotels can maximize their profitability.
Double Occupancy Rate Double Occupancy Rate is the discounted rate when two individuals occupy a room meant for one.
Electronic Distribution (ED) Encompasses all the electronic channels of distribution, which includes GDS, Online Travel Agencies and Web Booking Engines. These distribution channels can be accessed through the Internet, an intranet or through an interfaced connection.
Fallback Rate This is the lowest rate that hotels would accept due to fear of losing a booking has now been mostly abandoned. This mostly took place through phone bookings and has been mostly abandoned.
Global Distribution Systems It is a network of electronic reservations systems by which travel agents all over the world make bookings with airlines and hotels. It is a network operated by a company that enables automated transactions between third parties and booking agents in order to provide travel-related services to the end consumers. Global distribution systems (GDSs) are computerized, centralized services that provide travel-related transactions. They cover everything from airline tickets to car rentals to hotel rooms and more.
Gross Operating Profit Per Available Room (GOPPAR) Being the key performance indicator for the hotel industry, it is calculated by dividing the Gross Operating Profit (GOP) by the number of available rooms. It not only considers revenue generated but also takes into account operational expenses and demonstrates profitability as a whole. GOPPAR = Gross Operating Profit/No. of available rooms
Half Board It is the hotel rate which includes bed, breakfast and either lunch or dinner.
Head in Beds A term used by the hotel industry to refer to the occupied hotel rooms with the primary objective of increasing overnight stays.
High (Peak) Season / Shoulder Season The period of consecutive months during which optimum revenues, room/suite occupancy and average room rates are generated.
Hotel Channel Manager Allows hoteliers to drive direct bookings to their websites by offering promotions management, smarter reservation dashboard and an easier inventory management in one channel management system. From managing multiple channels for room-distribution to maintaining Rate Parity across all channels, it helps hoteliers perform tedious tasks easily and efficiently.
Hotel Management Software Integrated software solution that caters to the needs of most functions of a hotel. Data flows across departments electronically and accurately. The entire software and database resides on a single server. This reduces investment and makes system administration easier. It takes away the pain of multi-vendor integration. Instead it offers the convenience of a single helpdesk that responds to all your technical support needs.
Hotel Market Intelligence Hotel Market Intelligence is the gathering, analysis and dissemination of information relevant to hotel markets. This information's purpose is to help you make effective decisions concerning the distribution of your hotel's room nights.
Hotel Yield Management Hotel Yield Management is the process of understanding, anticipating and reacting to consumer behavior to maximize revenue. Yield Management is also referred to as Revenue Management. Consumers purchase hotel room nights via numerous channels.
Intelligent Hotels Hotels that are identified because they have state of the art technology systems for their operations. These hotels have replaced the traditional systems to reduce their energy cost and usually have integrated systems which join analog and digital systems to achieve an effective communication in their hotels. The return on investment is reflected in the energy-cost savings and the comfort they provide to their guests.
Lose-it rate It is the rate at which it would be better off for the hotels to leave a room vacant then to sell it.
Minimum Length Of Stay It is an inventory control mechanism used to optimize stay patterns. It is primarily used to ensure that a peak demand night does not get filled with one night stays thus blocking the days around it for longer lengths of stay.
Occupancy Rate It is the ratio between the number of occupied rooms and the number of rooms available. It is calculated by dividing the number of rooms occupied at a given time by the number of rooms available for the same period. Occupancy Rate (%) = No. of rooms occupied at a given time/No. of rooms available for the same time That integrates into your hotel's website with plug-and-play ease and enables you to confirm reservations online in real time. It includes a real-time. Collection facility, which helps you to close sales on your hotel website itself. It also enables you to manage inventory allocation and sales across multiple sales channels
Positive Space In hotel industry, it stands for a confirmed reservation.
Price Match Guarantee (PMG) The promise that hotels or OTAs will offer the lowest rates or match the lowest rate available across any channel for the same product.
Rack Rate It is the rate that a walk-in customer has to pay. It is an undiscounted published room rate.
Rate Parity The strategy that all distribution channels of a hotel should reflect the same rate for the same conditions for a particular room type. Rate parity strengthens customer loyalty and encourages guests to book directly with the hotel where terms/policies may be more flexible, given the same pricing as in other channels.
Reservation Systems (Automation Vendors) Computerized systems leased to travel agencies offering airline, hotel, car rental and selected tour availability and bookings
Revenue Management System (RMS) The software application hotels to control the supply and price of their inventory in order to achieve maximum revenue or profit, by managing availability, room types, stay patterns (future and historical), etc.
Revenue Per Available Room (RevPAR) It is the room revenue per available room. RevPAR is calculated by multiplying the ADR (Average Daily Rate) with the percentage of occupied rooms. RevPAR is the key measure in the performance of the core business of hotels-selling rooms. Trends in revPAR are very important. RevPAR can be used to compare companies but only if they have broadly similar hotels - i.e. similarly priced in similar locations. This is less unlikely than it may seem as most hotels companies give regional breakdowns of revPAR and this can be compared. RevPAR = occupancy percentage × average room rate per night
RevPAR index It is the measure of how an individual hotel is performing against the competitor set in context to RevPAR. It is calculated by dividing hotel RevPAR by RevPAR of the competitor set. An index below 100 implies that the market is outperforming the hotel; while over 100 mean that the hotel is outperforming the competitive set.
Stay Pattern Management It is a revenue management process with an aim to optimize the hotel’s capacity in a way that does not result in un-sellable stay patterns. This is done by studying the stay patterns over a period of time and offering rate differentials, keeping restrictions on entry and exit at a particular time, etc.
Total Revenue Per Available Room (TrevPAR) Calculated by taking the total revenue (not just room revenue) and dividing by the total number of rooms available.
Undistributed Operating Expenses These are expenses that are attributable to the whole hotel and not just a specific department.
Walked Guests When a hotel is overbooked and a guest room is not available for a confirmed guest, the hotel has to “walk the guest” to a nearby hotel. This usually includes paying for transportation to the hotel and covering any difference in the room rate at the hotel the guest was “walked” to.