Hotel Revenue Management terms you need to know
1. RevPAR
Your Revenue Per Available Room or RevPAR is your total room revenue divided by the number of available rooms. Understanding RevPAR helps you gauge how well you're utilising your inventory and indicates whether you may need to adjust pricing or promotional strategies.
2. NRevPAR
NRevPAR stands for Net Revenue Per Available Room. As opposed to RevPAR, NRevPAR accounts for operational and distribution costs, providing a clearer understanding of your actual room revenue. This metric helps you evaluate cost efficiency in your operations.
3. Rack Rate
The Rack Rate is the original price of a hotel room before any discounts or promotional rates are applied. Understanding your rack rate is vital for determining promotional prices and discounts while ensuring profitability.
4. BAR
The Best Available Rate or BAR is the lowest, unrestricted rate for a room type. BAR reflects your pricing in relation to demand. Keeping track of this rate enables you to manage and adjust pricing in response to market conditions and competitors.
5. NonRef
A Non-Refundable Rate or NonRef (NRF) is a rate that can't be refunded if a guest decides to cancel or doesn't show up. This is usually your lowest price. Implementing NonRef rates can provide more certainty over revenue. They can impact booking behaviour, however, so finding the right balance is key.
6. OBP
OBP or Occupancy-Based Pricing is a strategy where you don’t set a fixed price per room, but a varying price based on the number of people staying in the room (e.g. a lower single-use price).
7. Rate Parity
Under certain conditions, a travel supplier such as a hotel maintains the same prices across all different distribution channels. This is called Rate Parity. It can be useful for maintaining brand integrity, preventing customer confusion and avoiding undercutting your own pricing strategies. The Cubilis Channel Manager is the perfect tool to ensure rate parity.
8. ADR
ADR stands for Average Daily Rate. It measures the average rate at which a hotel room is booked. Tracking ADR allows you to benchmark performance over specific periods and identify trends in order to finetune your pricing strategy.
9. OCC
OCC is a common abbreviation for Occupancy Rate in the hotel industry. It’s the ratio of occupied rooms to total available rooms and provides insight into how well you're filling your rooms. If your OCC is lower than average, you may need to review your marketing or pricing approach.
10. CPOR
The term CPOR stands for Cost Per Occupied Room. This is the total cost associated with each occupied room and measures the financial efficiency of your property. Reducing CPOR can significantly improve profitability.
11. GOPPAR
The abbreviation GOPPAR stands for Gross Operating Profit Per Available Room. This metric is important in hotel revenue management, as it provides insight into your hotel's bottom-line profits.
12. LOS
Length of Stay or LOS refers to the number of nights a guest stays in a hotel. It’s an important metric to tailor offers in order to encourage longer stays and maximise revenue.
13. MPI
MPI is your Market Penetration Index or your hotel’s occupancy compared to the average market occupancy. It's an indicator of your competitive position.
Most-used systems in the hotel industry
1. GDS
A GDS or Global Distribution System is a network that enables transactions between travel service providers like hotels and travel agents. A strong GDS presence can expand your reach to global markets.
2. IBE/OBE
IBE or OBE (Internet Booking Engine / Online Booking Engine) refers to a booking module on your hotel website that guests can use for booking directly. Having a Booking Engine on your website is a must if you want to avoid losing clients to the competition.
3. KEY system
With an electronic KEY system provider, hoteliers can give guests fast and easy room access by means of a key card, entry code or smartphone. It leads to increased security, convenience and guest satisfaction.
4. Metasearch platforms
Metasearch platforms (e.g. Google Hotel Search or Trivago) allow travellers to quickly compare hotel prices on different booking sites. These platforms are essential to your online distribution and can even stimulate direct bookings when your Booking Engine is linked.
5. OTA
An OTA or Online Travel Agency like Booking.com or Expedia is a company that sells travel-related services. By listing your accommodation on a good mix of OTAs, you can maximise online visibility and bookings.
6. PMS
A PMS or Property Management System is indispensable for every hotel, B&B or vacation rental with multiple rooms. It allows you to manage your reservations efficiently in one place and streamline your daily operations.
7. POS system
A hotel POS (Point of Sales) system centralises additional purchases by guests. By connecting it to your PMS, all purchases are automatically added to the room bill and your guest can pay for everything at once. This saves both staff and clients a lot of time, significantly enhancing the guest experience.
8. PSP
With a Payment Service Provider (PSP) connected to your Booking Engine and PMS, you can accept online payments or pre-authorisations during the booking process, request deposits and send payment links to clients. This prevents no-shows, late cancellations and credit card fraud. Discover more on hotel payments.
9. Reputation Management System
A Reputation Management System is a tool that helps hoteliers monitor and respond to guest reviews across various channels. Addressing guest concerns and showcasing positive reviews can improve your reputation and increase the chance of bookings.
10. RMS
A Revenue Management System (RMS) uses market data from similar accommodations in your city or region to optimise room prices for maximum revenue. Connecting an RMS to your Cubilis Channel Manager improves and automates your pricing strategy.
Boost your accommodation’s potential with Cubilis
Cubilis software offers the tools you need to take your strategy, operations and profitability to the next level. Manage your rates like a pro and evaluate your performance with auto-generated reports. Would you like to know more about our solutions? Contact us below!
