
Hospitality Industry Terminology, Definitions & Jargon
If you were to sit in on a hotel’s revenue management meeting, it might sound like the meeting participants are speaking another language. Acronyms, abbreviations, metrics and jargon.
Occupancy: The percentage of rooms occupied during a given period of time. For example, if your hotel has 80 rooms, and 71 of them were occupied last night, then last night’s occupancy was 88.75%.
Occupancy = Rooms Sold / Total Number of Rooms
ADR: ADR, or average daily rate, is simply the average rate sold during a given period of time. For example, if a hotel booked 71 rooms last night, and the total room revenue was $6745, then last night’s ADR was $95.
ADR = Total Room Revenue / Room Nights Sold
RevPAR: An abbreviation for Revenue Per Available Room, this metric is calculated by multiplying the occupancy percentage by the average daily rate (ADR). For example, if your occupancy was 88.75% and your ADR was $95, then your RevPAR would be $85.31.
RevPAR = ADR x Occupancy %
RevPAR Index: RevPAR is a great metric to determine how a hotel is doing today versus yesterday or compared to last year, but what about the hotel’s performance against the market? RevPAR index compares a hotel’s RevPAR to the RevPAR of a set of other hotels.
RevPAR Index = Hotel’s RevPAR / Total Sample Set RevPAR
CPOR: This metric stands for Cost Per Occupied Room, and it’s calculated by adding up all of the expenses associated with a booked room, including housekeeping, utilities, laundry.
Compset: Compset is short for Competitive Set, which is a group of approximately 4-8 hotels that your hotel views as close competitors. Typically, compset hotels are located in the same area, offer similar amenities, and sell similar rates.
Chainscale: With so many hotel brands on the market today, Smith Travel Research’s chain scales organize them into quality classifications which represent roughly the same level of service and amenities. The chain scales are Luxury, Upper Upscale, Upscale, Upper Midscale, and Economy. For example, Four Seasons falls in the Luxury category, Residence Inn is Upscale, and Econo Lodge is Economy.
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