A Handy Glossary of Terms for Small Accommodation Providers

It’s easy for first-time innkeepers to be overwhelmed by the amount of business jargon there is in the hospitality industry.

Here’s a handy glossary that you can print out and laminate, so that the most relevant revenue terms become part of you and your staff’s vocabulary.

A

Availability

The number of vacancies possible for a specific type of accommodation for a specific set of dates.

Average Daily Rate (ADR)

Your average daily rate is the figure derived by dividing actual daily revenue by the total number of rooms sold.

Average Length of stay (ALOS)

The total room nights in a hotel divided by the number of reservations in the hotel. It is used to keep track of hotel performance in attracting and keeping guests in house. Formula: Total occupied room nights / Total bookings.

B

Best Available Rate (BAR)

The lowest non-restricted rate bookable by all guests. This rate can change several times a week up to several times a day. Also called Best Flexible Rate (BFR).

Best Rate Guarantee (BRG)

The promise that hotels or online travel agencies (OTAs) will display the best rates on their own site as compared to any other side for the same product.

Booking Engine

A hotel website’s booking engine is the software application being used to secure online reservations. Your booking engine will allow you to sell your rooms through your own website and third party sites like Facebook that your hotel is listed on.

C

Central Reservation System (CRS)

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 Expedia, Orbitz, Travelocity, Priceline and others), direct to the hotel website, and telephone (either via call center, direct to property or both).

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 labour costs and improve efficiency by providing a centralised way to control multiple channels.

Channel Manager

As the name suggests, channel managers are pieces of technology that allow properties to efficiently manage the different online distribution channels that their property sells through.

Closed to arrival (CTA)

It means that no new reservations can be taken for guests arriving on this date. Reservations can stay through the date. It is used to control inventory.

Closed to Departure (CTD)

A restriction by which the hotel can restrict any check outs on a specific day.

Commission

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

D

Device Asset

A Device Asset is an electronic item owned or leased by the hotel.

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.

Dynamic Packaging

The ability to create packages based upon the components the customer selects.

E

Early Bird

A promotion only available for advanced bookings where a minimum number of days are left between the reservation and the date of check in, often a discounted rate with fencing.

F

Flash Sales

A promotional sale by a hotel that is available for purchase by the customers for a limited time only.

Folio

A Folio is a collection of Charges and Payments incurred or made by a Guest or corporate account, or in-house account, etc.

Front Desk System

Your small property’s front desk system (also known as a property management system), is the software used to automate the operations of a hotel. It will allow you to manage the day-to-day operations of a property.

Function Room Occupancy

The measure of how efficiently hotels are utilising their function room space. It is recorded as an occupancy percentage. Formula: Total occupied Function Room space/ Total square footage of function room space available.

G

Global Distribution System (GDS)

A reservation platform started by code sharing airline partners to enable reservations for Airlines. Later on hotels, cars and cruise companies came on board. There are 4 major GDS companies. Sabre, Galileo, Amadeus and WorldSpan (Galileo and WorldSpan are owned by Travelport) offer a comprehensive travel shopping and reservation platform to travel agents worldwide. Agents use one of these systems to book airline, car, hotel and other travel arrangements for their customers. OTAs also use one or more GDS to power some or all of their content on their site.

Gross Margins

The figure you arrive at after dividing your gross profits by net sales.

Gross Operating Profit Per Available Room (GOPPAR)

Calculated as room revenue minus expenses divided by total rooms available. It is the new RevPAR for owners.

H

Hosted Payment System

The system that presents a web page where payment information is securely collected

Housekeeping Asset

A Housekeeping Asset is a consumable item used to maintain a Room-Type such as toilet paper, cleaners, soaps, shampoo, etc. All items are not accounted for.

I

Inventory

The rooms available that the hotel has to distribute/sell across all channels.

Invoice

An Invoice is a request for payment made by the hotel to a company with which is does business.

L

Linen Asset

A Linen Asset is an item used to maintain a Room-Type that is re-used after laundering such as sheets, blankets, towels, etc. These items quantities are tracked, but not the individual assets.

“Lookers to Bookers”(L2B)

Refers to the conversion of online shoppers to actual buyers; often communicated in a ratio.

Lose-it rate

This term refers to a rate where the hotel would be better off leaving the room unsold than sell at this rate. This could be because the hotel expects to find a better group at a rate high enough to take the chance of waiting for it to come along. It is often true if the dates requested are in a peak group season, and if there is significant time left in the group booking window for those dates.

Loyalty Program

A Loyalty Program is a marketing program that offers rewards to guests for regular or frequent business. A loyalty program may also be a partnership with loyalty programs of other businesses (airlines for example). Loyalty may be tracked by points or other means.

M

Maintenance Asset

A Maintenance Asset is an item used by the facilities maintenance staff such as a light bulb, caulk, bolts, screws, brooms, carts, mops, etc. Some of these items are traceable/accountable and some are not.

Maximum Length of Stay

A room inventory control function that limits the number of nights a reservation can stay when arriving on a certain date.

Minimum length of stay (MinLOS)

An inventory control function 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. It requires a reservation to meet or exceed a certain length of stay (2 or more) in order to complete the reservation.

N

Net sales

The figure you arrive at after subtracting your costs from your total sales.

Night Audit

A Night Audit is a reconciliation of the previous 24 hours of transactions.

O

Occupancy rate

“Fill” measure of a hotel calculated by dividing the total number of rooms occupied by the total number of rooms available times 100, e.g. 75% occupancy.

Online Travel Agencies (OTA)

Websites offering comprehensive travel shopping and Reservations Solutions to consumers. Examples include Expedia, Orbitz, Travelocity, Priceline, and many local and regional sites.

Overbooking

The practice of booking rooms beyond the capacity of the hotel in anticipation that some guests will not show up.

P

Package

A collection of components being sold at a single price, where the component prices may or may not be known to the consumer.

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.

R

Rate Fences

Rate rules that may include restrictions such as advance booking cutoffs or non-refundable payments. In general, no discount rate should ever be offered without fences, like advance purchase required, minimum stay length, non-refundable, etc. An example of how to use them: If all your business travelers are paying $100 per night, and book within 5 days of arrival and you need to encourage some extra, non business revenue, you may want to offer a $79 rate for guests booking two weeks in advance. This advance purchase requirement is a “fence” that keeps the guests already willing to pay $100 from buying your rooms for $79.

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

The record of a request to set aside a room or other resource for use in the future.

Revenue Management

The process of understanding, anticipating and reacting to consumer behavior to maximise revenue. Yield Management is also referred to as Revenue Management.

Revenue Per Available Room (RevPAR)

Calculated by taking the daily room revenue of a hotel and dividing it by the total rooms available at that hotel.

Revenue Per Occupied Room (RevPOR)

Also known as revenue per booking. Calculated by taking the total daily revenue (including ancillary revenues) and dividing it by the total number of occupied rooms at the hotel.

Room Block

A Room Block is a group of rooms. Room Blocks may be created to organize rooms in various configurations to aid in planning and sales or other management tasks. Examples of Room Blocks might include: associating rooms with a single fixed price, a single Guest, a Channel, or a single team of Staff Members that manage or maintain the rooms in the block.

Room Inventory

The set of rooms available for stays for a particular date or range of dates.

Room Type

A Room Type represents some form of categorisation, set, or collection of rooms with some common element at the hotel that must be managed for marketing purposes within the hotel. For example, a Room-Type might be a Suite or a Single Room with a double bed, Poolside or Ocean-side. A Room may belong to multiple Room Types.

S

Service Contract

A Service Contract is a legally binding exchange of services promised and agreements between the hotel and service provider that the law will enforce.

Examples of services are:

• Telephone service.
• Cable TV and movie service.
• Temporary or other non-employee personnel.
• Alarm and control systems.

System of Record

A System of Record is the system that has the core responsibility for collecting and maintaining a specific type of data or information.

T

Total Revenue Per Available Room (TrevPAR)

Calculated by taking the total revenue of a hotel and dividing by the total inventory of rooms.

V

Vacancy

One or more rooms available to accommodate guests.

There you have it! Still, there are plenty more terms to learn about when it comes to increasing revenue at your bed and breakfast!

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