Glossary of Terms

Revenue Metrics

ADR (Average Daily Rate) Room revenue divided by rooms sold. Measures pricing power.

RevPAR (Revenue Per Available Room) Room revenue divided by available rooms. Or ADR × Occupancy. The primary performance metric.

TRevPAR (Total Revenue Per Available Room) Total revenue (all departments) divided by available rooms.

Occupancy Rooms sold divided by rooms available. Expressed as percentage.

RGI (RevPAR Index) Your RevPAR divided by competitive set RevPAR × 100. Shows competitive position.

ADR Index Your ADR divided by competitive set ADR × 100.

Occupancy Index Your occupancy divided by competitive set occupancy × 100.

Profitability Metrics

GOP (Gross Operating Profit) Revenue minus operated department expenses and undistributed expenses. Before fees and fixed charges.

GOPPAR (Gross Operating Profit Per Available Room) GOP divided by available rooms. Measures operating efficiency.

NOI (Net Operating Income) GOP minus management fees and fixed charges. Key for valuation.

Flow-Through Percentage of incremental revenue that reaches GOP. Measures cost control.

Prime Cost In F&B: Cost of goods sold plus labor. Core controllable costs.

Financial Statement Terms

USALI Uniform System of Accounts for the Lodging Industry. Standard hotel accounting format.

Operated Departments Revenue-generating departments (Rooms, F&B, Spa, etc.).

Undistributed Expenses Support costs not attributed to specific departments (A&G, Sales, POM, Utilities).

A&G (Administrative and General) Corporate overhead and administrative costs.

POM (Property Operations and Maintenance) Building maintenance and engineering costs.

Fixed Charges Costs that don't vary with operations (rent, property taxes, insurance).

Revenue Management

BAR (Best Available Rate) The standard rate offered to all guests, adjusted dynamically.

Rate Parity Requirement to maintain consistent rates across channels.

Rate Fence Restrictions that differentiate rate products (advance purchase, cancellation policy).

Demand Forecasting Predicting future booking levels to optimize pricing.

Booking Pace Rate at which reservations are accumulating compared to history.

Overbooking Accepting more reservations than rooms to hedge against cancellations.

Walk Relocating a guest to another hotel due to overbooking.

Length of Stay (LOS) Number of nights a guest stays. Often used for restrictions.

Yield Management Optimizing revenue through pricing and inventory control.

Distribution

OTA (Online Travel Agency) Third-party booking sites like Booking.com and Expedia.

GDS (Global Distribution System) Networks connecting travel agents to hotel inventory (Sabre, Amadeus, Travelport).

Metasearch Sites that aggregate rates from multiple sources (Google Hotels, TripAdvisor, Trivago).

Channel Manager Software connecting hotel inventory to multiple distribution channels.

CRS (Central Reservation System) Centralized system managing inventory across properties.

CPC (Cost Per Click) Advertising model where you pay for each click.

CPA (Cost Per Acquisition) Cost for each completed booking.

Billboard Effect Theory that OTA visibility drives direct bookings.

Net Rate Rate after commissions are deducted.

Property Operations

FF&E (Furniture, Fixtures and Equipment) Movable property (beds, chairs, TVs, etc.).

OS&E (Operating Supplies and Equipment) Consumables and small equipment.

PIP (Property Improvement Plan) Brand-required renovation standards.

PMS (Property Management System) Core hotel operations software.

RMS (Revenue Management System) Pricing optimization software.

CPOR (Cost Per Occupied Room) Operating cost divided by rooms sold.

MPOR (Minutes Per Occupied Room) Labor time per room. Efficiency metric.

Capital and Investment

Cap Rate (Capitalization Rate) Yield used to value properties. NOI ÷ Property Value.

NOI Net Operating Income. Used for valuation.

NPV (Net Present Value) Present value of future cash flows minus investment.

IRR (Internal Rate of Return) Discount rate at which NPV equals zero.

LTV (Loan to Value) Loan amount as percentage of property value.

DSCR (Debt Service Coverage Ratio) NOI divided by annual debt service. Measures loan cushion.

CapEx (Capital Expenditure) Major investments in property and equipment.

FF&E Reserve Funds set aside for furniture and equipment replacement.

Segmentation

Transient Individual travelers (not groups).

Group Blocks of rooms for conferences, tours, weddings.

Corporate Business travelers on negotiated rates.

Leisure Vacation and personal travel.

Contract Long-term agreements (airline crews, extended stay).

Wholesale Deeply discounted rates for tour operators.

Benchmarking

STR (Smith Travel Research) Industry standard for hotel performance benchmarking.

Comp Set (Competitive Set) Hotels used for performance comparison.

Fair Share Expected share of market demand.

Penetration Actual share vs. fair share.

Hotel Types

Full-Service Hotels with restaurants, meeting space, extensive amenities.

Select-Service Limited F&B but quality rooms and some amenities.

Limited-Service Basic rooms with minimal amenities.

Extended-Stay Properties designed for longer stays with kitchens.

Boutique Smaller, design-focused independent or soft-branded hotels.

Ownership and Management

Management Contract Agreement where an operator manages for a fee.

Base Fee Management fee as percentage of revenue.

Incentive Fee Performance-based management fee.

Franchise Agreement License to use a brand's name and systems.

Owner Entity that owns the real estate.

Operator Company that manages day-to-day operations.

Asset Manager Owner's representative overseeing the operator.