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Magyar Hotel Revenue Management Glossary
The adoption of technology in the hospitality industry remains very low, largely due to the sector's fragmentation and the resulting chaos in the market. We believe that educating stakeholders is key to overcoming these challenges, which is why we created this glossary to support the understanding of modern technologies and revenue management concepts.
Whether you're a beginner exploring occupancy metrics and pricing strategies or an experienced professional looking to refresh your knowledge, you'll find all the essential terms here.
A – B
ADR (Average Daily Rate)
The average daily room revenue: Shows the average revenue per occupied room.
Formula:
ADR = Room Revenue / Number of Rooms Sold ALOS (Average Length of Stay)
The average number of nights a guest stays.
Formula:
ALOS = Number of Guest Nights / Number of Bookings Ancillary Revenue
Revenue generated from non-room sources (e.g., dining, parking, spa services).
Automation
The use of technology to perform tasks or processes with minimal human intervention.
Available Rooms
The total number of rooms available during a given period.
Average Rate Index (ARI)
Compares ADR performance to competitors.
Formula:
ARI = ADR (own) / ADR (competitors) Best Available Rate (BAR)
The most favorable publicly available room rate defined by the hotel.
C – D
Cancellation Rate
The proportion of bookings that were canceled by guests.
Formula:
(Number of Canceled Bookings / Total Bookings) × 100 Central Reservation System (CRS)
A system that enables hotels to manage and distribute their room inventory across various sales channels.
Channel Management
The effective management of sales channels (e.g., OTAs, direct bookings).
Channel Manager
Software that synchronizes room inventory and prices across different sales channels, such as OTAs and hotel websites.
Competitive Set (Comp Set)
A group of hotels considered direct competitors.
Cost Per Acquisition (CPA)
The average cost of acquiring a booking (e.g., marketing expenses).
Formula:
CPA = Total Cost / Number of Bookings Data Analysis
The process of analyzing large data sets to uncover patterns and relationships.
Data Synchronization
Ensures data consistency and updates across different systems or platforms.
Demand Forecast
Predicting future demand for hotel rooms based on historical data, market trends, and other factors.
Dynamic Pricing
Real-time price adjustments based on demand and supply.
E – F
Early Bird Discount
A discount offered to guests who book their stay well in advance of their arrival date.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Earnings before interest, taxes, depreciation, and amortization.
Fenced Rates
Pricing strategies that come with conditions or restrictions (e.g., advance purchase discounts).
Forecast Accuracy
The degree to which demand forecasts match actual results, typically measured as a percentage.
Forecasting
Predicting future demand and revenue based on historical data.
Free Sale
An agreement that allows a distribution channel to sell rooms without needing real-time inventory confirmation.
G – H
GOP (Gross Operating Profit)
Revenue after deducting operating expenses.
GOPPAR (Gross Operating Profit Per Available Room)
A performance metric that measures gross operating profit per available room.
Formula:
GOPPAR = Gross Operating Profit / Available Rooms Group Booking
A reservation for multiple rooms, typically 10 or more, often with special rates and terms.
House Count
The total number of rooms occupied in a hotel on a specific night, including all guest types.
Hurdle Rate
The minimum price that a hotel will accept for a given period.
I – J
Incremental Revenue
Additional revenue generated beyond core operations (e.g., premium services).
Integration
The process of connecting different systems, software, or components to work seamlessly together and communicate with each other.
Inventory Management
The process of controlling and optimizing room availability across all distribution channels.
Jump Rate
The significant increase in room rates when demand approaches full occupancy.
K – L
Key Performance Indicator (KPI)
Measurable metrics used to evaluate the success of revenue management strategies (e.g., ADR, RevPAR, occupancy).
Last Room Availability
A distribution agreement ensuring that the last available room can be sold at the agreed rate.
Length of Stay Controls
Restrictions on minimum or maximum stay requirements to optimize revenue and occupancy patterns.
M – N
Market Penetration Index (MPI)
Compares a hotel's occupancy performance to its competitive set.
Formula:
MPI = Hotel Occupancy / Comp Set Occupancy Minimum Stay Restriction
A requirement that guests book for a minimum number of nights, often used during high-demand periods.
No Show
A guest who has a confirmed reservation but fails to check in without prior notice.
O – P
Occupancy Rate
The percentage of available rooms that are occupied during a specific period.
Formula:
Occupancy = (Rooms Sold / Available Rooms) × 100 Online Travel Agent (OTA)
Digital platforms that allow travelers to book hotel rooms online (e.g., Booking.com, Expedia).
Overbooking
Accepting more reservations than available rooms to compensate for expected no-shows and cancellations.
Pace Report
A comparison of current booking levels versus historical data or budget targets.
Rate Parity
Maintaining consistent room rates across all distribution channels to ensure fairness and compliance.
Pick Up
The rate at which bookings are being made for future dates, often tracked daily or weekly.
Q – R
Qualified Rates
Special rates that are offered to specific groups (e.g., corporate partners, loyalty members).
Return on Investment (ROI)
A measure of the profitability or value of an investment relative to its cost.
Revenue Management
The strategic process of optimizing pricing and inventory to maximize revenue and profit.
Revenue Management System (RMS)
A technological solution that automates and improves revenue management processes, including pricing optimization, demand forecasting, and inventory management. RoomRaiser is also a Revenue Management System.
RevPAR (Revenue Per Available Room)
A key performance metric in the hotel industry that divides total room revenue by the number of available rooms.
Formula:
RevPAR = ADR × Occupancy RoomRaiser RMS
RoomRaiser is a revenue management solution developed for accommodation providers, offering automated, data-driven dynamic pricing. Its goal is to increase revenues for properties while reducing the manual effort associated with pricing tasks. The system determines prices based on real-time market data, considering competitors' pricing, occupancy rates, and other relevant factors. RoomRaiser is one of the first revenue management systems of the CEE region that enables fully automated price updates through integrations, ensuring room rates are updated across various sales channels without user intervention.
S – T
Sell-Through Rate
The percentage of total capacity sold for a given period.
Shoulder Period
The period before or after the peak season.
Shoulder Season
The period between peak and low seasons, typically with moderate demand and pricing.
Stay Restrictions
Rules governing minimum or maximum length of stay, arrival/departure days, or advance booking requirements.
TRevPAR (Total Revenue Per Available Room)
A comprehensive metric that includes all hotel revenue sources, not just rooms.
Formula:
TRevPAR = Total Hotel Revenue / Available Rooms Turnaway
Potential guests who could not be accommodated due to lack of availability.
U – Z
Upselling
The practice of selling a superior, more expensive version of a product (e.g., room upgrade) to increase revenue.
Walk-in
A guest who arrives at the hotel without a prior reservation and requests accommodation.
Wash Factor
The expected cancellation percentage for group bookings.
Yield Management
The practice of maximizing revenue through strategic pricing and inventory control, often used interchangeably with revenue management.