Hotel revenue management glossary
The terms a hotelier meets when setting prices, defined in one or two sentences, with their formula when there is one.
Terms
- Average daily rate (ADR)
- Room revenue divided by the number of rooms sold over a period.
- BAR
- Best available rate: the best public price for a night, with no special conditions. Other rates are often derived from it.
- Booking pace
- How fast a date fills up, compared with the same date in previous years at the same lead time.
- Channel manager
- Software that distributes the hotel’s prices and availability to booking sites.
- Compset
- Competitive set: the comparable hotels whose prices you track.
- D-x
- Notation for the time before arrival: D-7 means seven days before the night, D0 the day itself. The French interface writes J-7 and J0.
- Demand forecast
- Estimate of how many rooms will be sold for a date, based on bookings on the books, their pace, the calendar and events.
- Dynamic pricing
- A price that varies with forecast demand, night by night, instead of a fixed seasonal grid.
- Lead time
- Number of days between the booking and the arrival date.
- Occupancy rate
- Share of available rooms that were sold over a period, as a percentage.
- On the books
- Rooms already booked for a future date, at a given moment.
- Pick-up
- Number of rooms booked during a given interval for an arrival date, for example over the last 7 days.
- PMS
- Property management system: the hotel’s management software (bookings, rooms, billing).
- Rate parity
- Showing the same price for the same room on every sales channel. In France, hoteliers remain free to set their prices: parity clauses imposed by booking platforms are restricted by law.
- Revenue management
- A method that aims to sell each room at the right price, to the right customer, at the right time, based on demand forecasting.
- RevPAR
- Revenue per available room: room revenue divided by the number of rooms available. It is also ADR multiplied by the occupancy rate.
- RMS
- Revenue management system: software that helps set the price of each night.
- Segment
- A group of customers with similar behaviour: leisure, business, groups, meetings.
- Stay restriction
- A condition on the sale of a night, for example a minimum length of stay.
- Yield management
- Adjusting price according to demand and the time left before the date. It is the origin of revenue management.
Frequently asked questions
What is the difference between ADR and RevPAR?
ADR divides room revenue by rooms sold; RevPAR divides it by all available rooms. RevPAR therefore accounts for rooms left empty.
How do you calculate a hotel’s occupancy rate?
Divide the number of rooms sold by the number of rooms available over the same period, then multiply by 100.