Hotels Industry Terminology

ADR (Average Daily Rate)

Average room revenue per occupied room, before taxes/fees. Formula: Room revenue ÷ rooms sold.

ALOS (Average Length of Stay)

Average number of nights guests stay. Formula: Room nights sold ÷ reservations.

ARI (Average Rate Index)

Index comparing a hotel’s ADR to its competitive set (Comp Set). Formula: (Hotel ADR ÷ Comp Set ADR) × 100.

BAR (Best Available Rate)

Public, unrestricted rate available across direct and third-party channels, often the pricing anchor.

Booking Engine

The software on a hotel’s website that processes real-time reservations and payments.

CapEx (Capital Expenditure)

Long-term investments in the property (e.g., renovations, systems) capitalized on the balance sheet.

Channel Management

Coordinating rates, inventory, and restrictions across distribution channels (OTAs, GDS, brand.com).

Comp Set (Competitive Set)

The group of competitor hotels used for benchmarking performance.

CRS (Central Reservation System)

System that houses room inventory, rates, and availability and distributes them to channels.

Direct Booking

Reservations made through a hotel’s own channels (website, app, voice), avoiding third-party commissions.

Distribution Mix

Proportional split of bookings by channel (direct, OTA, GDS, wholesale) and segment (transient, group).

Dynamic Pricing

Adjusting rates in real time based on demand, comp set, events, and inventory.

EBITDA

Earnings before interest, taxes, depreciation, and amortization; a proxy for cash operating performance.

F&B (Food & Beverage)

Hotel restaurants, bars, banquets, in-room dining, and other culinary outlets.

FF&E (Furniture, Fixtures & Equipment)

Movable items and decor (beds, lamps, TVs) separate from building structure; often funded via an FF&E reserve.

Forecasting

Projecting demand, occupancy, ADR, and revenue by day/segment to guide pricing and staffing.

GDS (Global Distribution System)

Network (e.g., Amadeus, Sabre) used by travel advisors and TMCs to book corporate and agency travel.

GOP (Gross Operating Profit)

Revenue minus departmental and undistributed operating expenses; excludes fixed charges.

GOPPAR (Gross Operating Profit Per Available Room)

GOP divided by total available room nights; measures profitability normalized by inventory.

Group Business

Bookings for blocks, meetings, and events, typically 10+ rooms on peak or contracted space.

HMA (Hotel Management Agreement)

Contract defining operator-owner responsibilities, fees, performance tests, and term.

Inventory (Rooms Inventory)

Total rooms available to sell and their status (available, OOO, hold, blocked).

LRA (Last Room Availability)

Contract clause granting a corporate account access to contracted rates even when only last rooms remain.

LOS (Length of Stay)

Number of nights on a reservation; also used for stay restrictions.

Loyalty Program

Member-based scheme offering points, perks, and rates to drive direct bookings and repeat stays.

Market Segmentation

Categorizing demand (transient retail, member, corporate negotiated, wholesale, OTA, group, crew).

Metasearch

Price-comparison platforms that link to booking sites (e.g., Google Hotel Ads, Kayak, Trivago).

MICE (Meetings, Incentives, Conferences, Exhibitions)

Group events segment utilizing guestrooms and meeting space with F&B and AV revenue.

MPI (Market Penetration Index)

Index comparing a hotel’s occupancy to its Comp Set. Formula: (Hotel Occ ÷ Comp Set Occ) × 100.

NetRevPAR (Net Revenue per Available Room)

Room revenue per available room after subtracting distribution and transaction costs.

Night Audit

End-of-day process that reconciles postings, closes the business day, and rolls the PMS.

No-Show

A guest who does not arrive without canceling; often incurs a fee per policy.

Occupancy

Percentage of available rooms sold. Formula: Rooms sold ÷ rooms available.

OTA (Online Travel Agency)

Third-party booking intermediaries that charge commissions (e.g., Booking.com, Expedia).

Overbooking

Accepting more reservations than rooms to offset cancellations/no-shows; requires careful controls.

Pace Report

Compares on-the-books rooms/revenue versus prior years and budget by arrival date.

PIP (Property Improvement Plan)

Brand-mandated upgrades to meet standards, often timed with ownership changes.

PMS (Property Management System)

Core system for reservations, check-in/out, folios, room status, and reporting.

Rack Rate

Published full, non-discounted room rate; a reference point for pricing.

Rate Parity

Maintaining consistent public rates across channels to avoid undercutting and penalties.

RevPAR (Revenue per Available Room)

Room revenue per available room. Formula: ADR × Occupancy or Room revenue ÷ rooms available.

RGI (Revenue Generation Index)

Index comparing a hotel’s RevPAR to its Comp Set. Formula: (Hotel RevPAR ÷ Comp Set RevPAR) × 100.

Shoulder Night

Lower-demand nights adjacent to peak nights; opportunities for length-of-stay and pricing tactics.

SOP (Standard Operating Procedure)

Documented steps for consistent task execution across departments.

STR Report

Benchmarking report (CoStar/STR) showing a hotel’s performance versus its Comp Set and market.

Transient Business

Individual, non-group room demand (retail, member, corporate negotiated, OTA, wholesale).

TRevPAR (Total Revenue per Available Room)

Total hotel revenue (rooms, F&B, fees, ancillary) per available room.

Upselling

Encouraging guests to purchase a higher-priced room, package, or add-on.

USALI (Uniform System of Accounts for the Lodging Industry)

Standardized hotel accounting and reporting framework used for P&Ls and benchmarking.

Walk (Walking a Guest)

Relocating a confirmed guest to another hotel due to overbooking; typically with compensation.