List of terms you should know in Hotel Industry

This blog contains an A to Z list of terms related to the Hotel Industry.

Knowing these terms will help you to go with the language of the hotel industry.

So is the list in alphabetical order:

ADR: Average Daily Rate is one of the key performance indexes in the hospitality index (KPI). It is the average income per paid occupied room in a given period of time. Dividing the total room revenue by the total number of room sold will give the ADR.

ADS: ADS stands for Alternative Distribution System. It is described as the third-party distribution of the hotel inventories via Online Travel Agents (OTAs), travel portals, and travel operators. It is basically a marketplace where travel inventory sellers sell their clients (Hotel) inventories.

Advance Rates: Advance Rates are the discounted rates given to encourage guests to make advance bookings

AGOP: Adjusted Gross Operating Profit is the gross operating profit of a hotel minus the expenses of the hotel.

Allocation: In a Hotel when a room is assigned to a guest it is called room allocation.

Alternative Availability: When a requested property is not available for sale or allocation then the displaying of other available property is called Alternative Property

ARI: Average Rate Index is a KPI which shows the performance of your Hotel with respect to your competitors. It is the ratio of your Hotel’s ADR to that of your competitor set in the same time frame.

Agency Model: It is a payment model adopted by many of the Online Travel Agencies. In agency model payment is on per room basis. The hotel owner decides the price of the room and shares the commission with the OTA when the guest has checked out.

Amortization period: It is the time taken by a company to pay off the loan. Generally, hotels take 20 to 25 years during the amortization period.

À la carte: In restaurants, the practice of ordering something separately from the menu is called À la carte.

B&B: B&B stands for Bed and Breakfast. It is a small lodging establishment that offers overnight stay and breakfast. It can also describe the type of property a hotel give in a particular room price.

Back of House: It is the are of a hotel which is not accessible for the guests.  It can include the kitchen, storerooms and other hotel facilities.

BAR: Best Available Rate is the lowest price of the day for the given hotel room available for the guests to book. It does not include any further cancellation prices except the general cancellation policies of the hotel.

Benchmarking: It is the process of comparing one’s hotel business to that of others. Basically, the comparison is made with the best performing organizations in the business. Benchmarking can be done for services, room rates, quality, etc.

BEO: A Banquet Event Order is the document which includes the outline of your event. It contains the details of the event so that the different departments of the hotel can get the guideline to operate. The on-site manager makes the BEO.

Bed Tax: Bed Tax is the city or state tax added to the price of the room. At some places, it is also known as the occupancy tax, lodging tax, a room tax, a sales tax, a tourist tax, or a hotel tax.

C&B: Conference and banqueting are normally about putting together an event and it usually has as a scope different forms of get-together like a ceremony, or a celebration, small gatherings, seminars, family events, birthday party or weddings.

Chef de Partie: A Chef de Partie is the head chef of a particular area in a restaurant. He can also have several chefs working under him.

Chain  Code: Chain Code is the two-letter code of a hotel chain which is used to identify it on a GDS. The chain code may vary with GDS.

Channel Manager: It is a system which allows you to manage your rates and inventory on different hotel inventory distribution channels. When you market your hotel rooms on different distribution channels like OTAs, it becomes very hectic to manage the room rates and inventories manually. Hence, this task is done by a channel manager. 

Corkage: It is the charge imposed by hotels and restaurants and hotels on drinks like wine which is bought from somewhere else.

CRS: It stands for computer reservations system. It is a system which is used to store and retrieve information related to air travel, hotel booking, car rentals, etc.

Day Guest: Day guest is the guest how arrives and departs on the same day.

DDR: Daily Delegate Rate is the price per delegate per day charged by the venue of a full day meeting. It includes the venue, refreshment breaks, lunch, and equipment.

Direct Connect:  It is an interface which connects the hotel’s system and distribution system without a third party connection system.

Domestic Tourism: When a resident of a country travel in the same country it is called domestic tourism.

Direct Booking: When a guest books a hotel room directly from the hotel via any platform like a website, mobile phone or any other method and no other third party distributor is in between. Then it is called a direct booking.

Distribution Channel: A distribution channel is a chain of supplying the hotel room to the end customer. The OTAs, GDS, Travel Operators and Hotel Websites all our distribution channels.

Dual Brand Hotel: Dual Brand Hotels are the two hotels operating in the same building sharing the resources together. Usually, in dual-brand hotels, two different brands of the same hotel chain co-exist. But, in very rare instances different hotel chains have also formed dual-brand hotels.

Eco-Tourism: Eco-tourism is the form of tourism in which a remote and untouched natural location is visited. The intent of Eco-tourism is to travel to conserve the environment and for the well-being of the locals.

Extranet: It is a private network used to provide limited access to partners, vendors, and suppliers to access a subset of information on the organization’s intranet.

ETA: Estimated Time of Arrival is the expected time when a train, plane, vehicle, or something else arrives at a certain place.

ETD: Estimated Time of Departure is just the opposite of ETA. It is the expected time when a train, plane, vehicle or something else departs from a certain place.

Extended Stay Hotels: Extended stay hotels are basically the serviced apartments that have a hotel like booking systems.

When a traveler needs to stay at a location for a long period of time, conventional hotels becomes very costly and renting an apartment is also not an economical solution because of recurrent lease fee.

Hence, an extended stay hotel becomes handy in such situations. They offer prices on a weakly basis and also offers kitchens making them an economical solution for long-term stays.

F&B: It stands for Food And Beverages. In a hotel or a restaurant, all kinds of food and beverages are F&B

Fam Tour: Fam Tour basically stands for Familiarization Tour. These kinds of tours intend to familiarize the attendees with the host location.

Many times, it is offered free or at discounted prices to anyone who is involved in promoting or selling a property.

FOH: Front of House is the area accessible to the guests. It includes areas like reception and waiting room etc.

Full Board: Full Board is the rate that includes all the provisions of accommodation and meals in a hotel.

FIT: Free and Independent Traveler is a term associated with a traveler who travels without any assistance from a travel agency or operator.

GDS: Global Distribution System is a worldwide computer network that manages the reservations of airlines, hotels, car rentals, and other travel-related services. A GDS links rates and services, rates and bookings consolidating products and services across all three travel sectors: i.e., airline reservations, hotel reservations, and car rentals.

Geo-Coding: It is a process of assigning an address or a place geographical coordinates. It helps in getting the exact location of an address in the basis of its longitude and latitude values.

GOP: Gross Operating Profit is the total revenue of the hotel minus the operating expenses. It is a KPI that refers to the Hotels profits after subtracting all of their operating expenses. It illustrates the level of the operational profitability of a hotel.

GOR: Gross Operating Revenue is the total revenue generated from the primary business operations.

GOPPAR: GOPPAR is an abbreviation for gross operating profit per available room. It is also a KPI for the hotel industry. GOPPAR is the total revenue of the hotel minus expenses incurred earning that revenue, divided by the available rooms

General Property: The property will not be in any breach of this agreement or in any way liable, if it is prevented from complying with the supply accommodation and other related services by reason of Act of God, Act of Public Enemy, War, Earthquake, Riot, Fire, Storm, Flood, Explosion, Compliance with any Law of Government Restraint Order, Rule Regulations, Strikes, Lock Outs or any other cause not reasonably within the control of the hotel.

Half Board: Prices that include bed and breakfast and either lunch or dinner.

HCD: Hotel Content Database is a content-based database used to distribute a hotel’s information to GDS, OTAs, IDS, and others. It contains text, images, and geocoding information about the hotel in multiple languages.

HEDNA: Hotel Electronic Distribution Networking Association is a conference formed in 1991 with the aim of being the leading global forum for hospitality distribution through collaboration and knowledge sharing.

House Count: It is the number of people staying at a hotel for a given period of time.

IBE: Internet Booking Engine is a website that allows a consumer to book flights, hotels, and other travel-related services.

An IBE is installed on the home page of an airline to enable easy access for customers. When shoppers enter their travel preferences the IBE contacts the GDS or CRS/HRS (computer reservations system) to receive the relevant information which is then shown to the user in an appropriate interface.

IDS: The Internet Distribution System is a collection of internet reservation systems, travel websites and portals which specialize in internet marketing of travel and related services directly to consumers.

These online systems have features that can be used to drive potential travelers to a given destination and travel company.

Independent Hotel:  Any Hotel which is not a part of any hotel brand or hotel chain then it is called an Independent Hotel.

KPI: Key Performance Index is the measurable value that demonstrates how well a hotel is doing.

L2B: Look to Book is a ratio of customers coming on a booking site to the number of reservations actually made.

Late Arrival: When a guest comes late than the agreed time then it is called a late arrival

Late Charge: Some charges take time to be determined. So they are passed to the guests after they have departed from the hotel. Such charges are called late charge.

Late Check-out: When a guest leaves the hotel after the agreed time of departure by paying a late check-out fee.

Late Show:  When a guest arrives after the agreed time of arrival

Lead Time: It is the time between the check-in date and the date on which the booking was made.

Leisure Time: The travel done for pleasure is leisure travel. The main purpose of leisure travel is to break the daily routine and get some fun.

LOS: It is the span of time for which a guest stays at a hotel. For example 5 days and 4 nights.

Loyalty Programmes: Hotels and other travel services like to reward their regular customers through Loyalty Programmes. These rewards can include points that can be converted into cash or discounts.

MICE: It stands for Meeting, Incentive, Conference, and Exhibition. It is a kind of travel in which large, planned, and advanced groups are brought together for a specific purpose.

Merchant Model: It is a business model adopted by many of the OTAs. In this model, merchants purchase the inventory form the hotel and then after marking up the price they sell it to the customers.

Meta-Search Engine: A search tool which uses the data from other search engines to show the results. In the hotel industry, the websites which show and compare the booking services results on various websites are the metasearch engine.

MLOS: Minimum Length of Stay is the minimum span of time for which a booking has to be made to be validated.

MPI: Market Penetration Index is a KPI which measures your performance with respect to your competitors on the basis of occupancy. It is your occupancy results versus the average occupancy of your competitors.

MTD: Month to date is a period starting to the beginning of the current month and ending at the current date.

Mystery Guest: When an employee of an external organization visits a hotel as an undercover guest to check the quality of the services offered by the hotel, he is known as the mystery guest.

Net Rate: It is the wholesale rate given to third parties to add their markup on it and finally deliver it to customers

No Show: When a customer does not arrive at the hotel even after the booking is made.

Occupancy: It is the rate describing what percentage of available rooms are occupied by guests.

OOO: Out of Order

Opaque Model: In this business model the customer does not know the brand of the product before they purchase it. Or in a bundled package, they do not know the price of the components.

OTA: Online travel agents are the third party distributors of the hotel room inventories. Hotels list their rooms on the websites of the OTA and the OTAs charge commission on referrals.

Parity: It is the policy for maintaining the price consistent between all the sales channel

PAX: PAX simply means the number of person/passengers/guests in the hospitality industry. For example 100pax wedding.

PMS: Property Management System is the software which enables the hotelier or group of hotels to manage his front-office, booking reservations, guest check-in/check-out, room assignment, managing room rates, and billing, etc.

POS: Point of Sale is the combination of software and hardware on the front desk of the store or a hotel. It allows the businesses to sell the product and take payment and record the whole transaction on the system.

Rack Rate: Rack rate is the basic rate of the room without applying any discount. It can be the rate of the room when a customer demands an immediate booking. This price is higher than the price offered by the OTAs or travel operators of that same room if the customer had made the prior booking.

RDR: Residential Delegate Rate is the price per person in a conference including the charges for the conference room, snacks, catering and overnight stay.

RevPAR: Revenue per Occupied Available Room is a performance matrix for the hotel industry. It is calculated by multiplying ADR and Occupancy of a hotel.

RFP: Request for Proposal is a formal request by a company interested in getting a commodity, service, or valuable asset, to potential suppliers to submit business proposals.

Short Lead: When a booking is made on a short notice i.e. one or two days prior to the arrival

Snag List: It is a list of problems and issues which needs to be addressed before the opening of a hotel. The snag list in a project is made by the client on contains the points which are not up to the expectations of the client.

Soft Lunch: The Soft launch of a hotel is opening the hotel with limited services, it is done to test the services and working of the hotel before the final launch.

Sous Chef: A sous chef is second in command after the executive chef in a commercial grade kitchen like a restaurant, hotel or cruise ship.

Squatters: They are the guests who stay in a hotel for a longer time than the agreed period without paying for it.

Sustainable Tourism: It is a kind of tourism in which travelers visit a place to make a positive impact on the environment. They may stay in a hotel which is made on the basis of sustainable practices.

TAC: Travel Agent Commission is the percentage share in the prices of the Hotel Inventories, Air Tickets and other travel related services which are paid to Travel Agents on the bookings referred by them.

UGC: User Generated Content is the i.e. blogs, reviews, audio, images, video, and any kind of the content that was created by the end-users on an internet website, which is available for other users.

Upsell: Upselling is to motivate or persuade a customer who is buying something to buy more or something more expensive.

Walk-in: When a guest directly arrives at the hotel without any pre-booking and reserves a room at high rates, then it is called walk-in.

WBE: A web booking engine is the same as an Internet Booking Engine. It is a website that allows a consumer to book flights, hotels, and other travel-related services.

Wholesale: It is a business that sells large quantities of goods at low prices. Usually, the goods are sold to retailers who further sell them to consumers.

WTM: World Travel Market is an event in the UK for the global travel industry launched in London Olympics 1980.

WTO: World Travel Organization is the United Nation Agency responsible for the promotion of responsible, sustainable and universally accessible tourism.

WTTC: World Travel and Tourism Council is the body representing the private tour and travel industry on a global platform.

Yield: It is the profit of the hotel when a room is sold.

YTD: Year to date is the period between the first day of a year to the current date. The year can be the calendar year or the fiscal year.

YOY: Year over year is a way of financial comparison on the same day of two consecutive years. With this method, you can compare two measurable events on an annual basis. It is mainly used to compare the financial progress of the hotel.

Zero-Hour Contract: It is a working contract between an employer and employee in which the employer is not bound to provide any minimum working hour while the employee is not bound to accept any work offered.

So this was my list of some of the terms related to the Hotel Industry. I may have left some terms, you can suggest new entries in the comment box below.

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