Need to know what a hotel revenue management term means? Below is a list of key Hotel Revenue Management Terms you may encounter when it comes to hotel revenue management. We explain definitions of terminology industry jargon from hotel revenue management. You will learn all this and more on our hotel revenue management course.
Terms being with the letter A below, rest to follow on further Blogs
- Availability – What is the meaning/definition of Availability in the hospitality industry?
Availability is the number of vacant rooms a hotel has to sell. The term typically relates to a specific set of dates or a certain type of accommodation.
- ATR (Average Treatment Rate) – What is the meaning/definition of ATR in the hospitality industry?
ATR stands for: Average Treatment Rate. This ATR formula is mainly used for Spa Operation (either independently or within a hotel). It calculates the average rate and it is varied on different treatment packages as well as on the demand/occupancy of the spa booking rate.
- ARR (Average Room Rate) – What is the meaning/definition of ARR in the hospitality industry?
ARR stands for: Average Room Rate. It is a hotel KPI which measures the average rate per available room – similarly to ADR.
Both can be used for the same purpose which is to calculate the average rate of the room. However, ARR can also be used to measure the average rate for a longer period (weekly, monthly) while ADR may only be used to measure the average rate of one day.
- How to calculate ARR? ARR Formula= Total Room Revenue / Total Rooms Occupied
- ARI (Average Rate Index) – What is the meaning/definition of ARI in the hospitality industry?
ARI stands for Average Rate Index. It is a Hotel KPI that measures the performance of their ADR compared to their comp set during the same period (competitive set: a group of other hotel brands and competitor that have a similar target market and concept). ADR compared to a specific group of hotels (i.e. a competitive set). It is calculated by taking the ADR of the property and dividing it by the ADR of the competitive set (competitive set data collected through a third-party provider such as STR). An ADR of above 1.00 indicates that the property is achieving more than its fair share, while below 1.00 suggests that the hotels in the competitive set are ‘eating’ into the properties’ ‘pie’. Note: Traditionally, hotel revenue managers prefer to multiply the number by 100 (or convert into a percentage)
How do you calculate ARI?
- ARI Formula: ARI= Hotel ADR / Aggregated group of hotel’s ADR
Depends on the occupancy rate, the hotel can choose to lower, equal or higher their ADR compared to the ADR or their comp set in order to gain more revenue and make themselves more competitive to their competitors.
- Apollo – What is the meaning/definition of Apollo in the hospitality industry?
Apollo is (similar to Amadeus) a Global Distribution System (GDS) operated by Galileo International (owned by Travelport). The GDS is operating as Apollo in the United States, Canada, Mexico, and Japan. In Europe, South America, Asia, and Africa under the name Galileo.
- Amadeus – What is the meaning/definition of Amadeus in the hospitality industry?
Amadeus is a Computer Reservation System (CRS) or better a Global Distribution System (GDS). It refers to the reservation tool travel agents use when making an air, hotel, car or other travel service booking. Amadeus is the leading GDS for the travel industry.
The benefits of GDS for the hotels are:
- Worldwide exposure to the hotel.
- B2B and B2C distribution.
- GDS distribution is the entry door to corporate bookers.
- Targeting all Travel Agencies independently of the GDS (distribution platform they may use).
- 24/7 travel agent access to your inventory.
- 24/7 travel agent access to your full descriptive and multimedia content.
- Amadeus serves not only travel agents but also many different companies including airlines, ground handlers, hotels, railways, car rental companies, airports, cruise lines and ferry operators. The company behind it is Amadeus IT Group with headquarters in Madrid, Spain.
- ALOS (Average Length of Stay) – What is the meaning/definition of Average Length of Stay in the hospitality industry?
ALOS stands for Average Length of Stay. It is the average amount of days guests stay at the hotel during a particular period.
Average Length of Stay (ALOS) = Number of room nights / Number of bookings. ALOS can vary considerably. A typical hotel in London of 1.5 while a Resort located in Thailand has an ALOS of 8.
- Allotment – What is the meaning/definition of Allotment in the hospitality industry?
The term Allotment is used in the Hotel industry to designate a certain block of pre-negotiated rooms which have been bought out and held by a third party (such as a travel organizer, wholesaler, tour operator, hotel consolidator, travel agent, OTA).
Allotments can be contracted with a tour operator or an OTA for a specific period of time such as a whole season, part of a season or for any single dates and then resold to travel partners and final customers around the globe. A couple of days prior to guest arrival any unsold rooms may be released back to the supplier if such an agreement exists between the two parties. An allotment release back period is also negotiated as part of the allotment contract (e.g. four days prior to arrival). This frame of time is called release period or cut-off date.
- Allocation – What is the meaning/definition of Allocation in the hospitality industry?
Allocation is the number of rooms a hotel has available for sales. This term is often used in reference to Allotment (Allocation or Allotment contract)
- ADR (Average Day Rate) – What is the meaning/definition of ADR in the hospitality industry?
ADR stands for: Average Daily Rate. It is a KPI to calculate the average price or rate for each hotel room sold for a specific day. It is one of the most common financial indicators to measure how successful the performance of the hotel is against other hotels that have similar characteristics such as size, clientele, and location and/or its own previous figures.
How do you calculate ADR? ADR Formula: ADR = Room Revenue / Rooms Sold
Calculation: £100.000 revenue / 500 rooms = £200,00 ADR
House use and complimentary rooms are excluded from the denominators. ‘House Use’ rooms or those occupied by hotel employees or management are excluded as they are not available for sale and not generating income. Complimentary rooms are excluded since they don’t have a concrete value to calculate sale.
The Training Terminal offers an introductory course in Hotel Revenue Management. Check out our Hotel Revenue Management Course
More Hospitality Glossary Terms
Hotel Management Courses