HOTEL REVENUE MANAGEMENT GLOSSARY
Hotel revenue terms you need to know
Dive into our handy glossary and decode the world of hotel revenue optimization. These terms will help you master pricing strategies, distribution channels, and performance metrics like a pro.
ADR (Average Daily Rate)
The average amount you earn for a sold room in a specific time period.
Formula: Room Revenue ÷ Rooms Sold
It tells you how much guests are paying, on average.
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Allotment
Allotments guarantee room availability for partners during a set period, whether they sell them or not.
Any unsold rooms are usually released back to the hotel by a deadline (known as a release period).
Room Allotment is a valuable PMS feature to help hotels manage groups and travel partnerships.
BAR (Best Available Rate)
The lowest rate available to the public for a specific date, without restrictions.
Often used as a benchmark for dynamic pricing.
Breakage
Breakage helps identify discrepancies between your intended pricing and what guests actually paid.
Formula:
Sell Rate − Actualized ADR = Breakage
Example:
If the sell rate is $100 and the actualized ADR is $80, the breakage is $20.
A higher breakage percentage can signal rate overrides, discounting, or other factors affecting your pricing strategy, and may require a closer look.
Cancelation Policy
The rules define if and when a guest can cancel their reservation and whether they’ll be charged.
Common types include:
- Flexible – Full refund if canceled within a certain time frame
- Non-refundable – No refund, even if canceled
- Semi-flexible – Partial refund or credit depending on timing
Cancellation policies help you protect your revenue, manage occupancy, and set clear expectations for guests.
Channel Management
Managing your hotel’s room rates and availability across multiple sales channels- OTAs, your website, metasearch platforms, and GDS—from a single dashboard.
Learn more about a hotel channel manager and the benefits of automating your distribution.
Channel Mix
The blend of booking sources your hotel uses to generate reservations like OTAs, direct bookings, metasearch, tour operators, and corporate accounts.
Understanding your channel mix helps you:
- See where your bookings are coming from
- Balance high-cost vs. high-profit channels
- Shape your distribution strategy for better margins
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CompSet (Competitive Set)
The group of hotels you compare your performance against.
Your CompSet usually includes hotels in your area with similar offerings, such as room types, star ratings, or target guests.
Direct booking
When a guest books directly with your hotel, usually through your website, by phone, or by email—no third parties involved.
Direct bookings mean higher profits, full control over the guest experience, and often better loyalty.
More direct bookings = more revenue straight to you, not shared with middlemen.
Dynamic Pricing
A strategy where room prices automatically change based on demand, season, competitor pricing, or booking pace.
Forecasting
Predicting future demand based on historical data, events, and trends.
Vital for setting the right rates at the right time.
GDS
A worldwide reservation network used by travel agents and corporate bookers to access hotel inventory, flights, and car rentals in one place.
Popular GDS platforms include Amadeus, Sabre, and Travelport.
Connecting your hotel to a GDS helps you tap into corporate travel markets and increase global visibility.
Google Hotels
Google Hotels is the largest metasearch platform where travelers compare prices, check availability, and book rooms directly from Google Search or Maps.
Hotels can promote direct rates with Google Hotel Ads, competing with OTAs and paying only per stay.
Learn more about boosting direct bookings with Google Hotel Ads.
Lead time
The number of days between when a guest makes a booking and their arrival date.
Example:
If someone books on April 1st for a stay on April 15th, the lead time is 14 days.
Short lead time? Think last-minute deals. Long lead time? Focus on early bird offers.
Length of Stay (LOS)
The number of nights a guest stays.
Useful for spotting booking trends and setting minimum stay rules during peak periods.
Loyalty Program
A system that rewards repeat guests with perks like discounts, upgrades, freebies, or points toward future stays.
Loyalty programs help build guest retention, brand preference, and direct bookings, especially when the rewards are exclusive to your hotel or booking engine.
Metasearch
Websites that compare hotel prices across different booking channels, including your direct website and OTAs, and show them side by side.
Examples:
Google Hotels, Trivago, Kayak, TripAdvisor.
Metasearch isn’t a booking site itself. It redirects guests to where they can complete their reservation (your site or an OTA).
You can also pay to advertise your direct rates and grab more direct bookings.
Non-refundable rates
A booking option where guests pay upfront and can't get a refund if they cancel or change their plans.
In return, they usually get a lower price than flexible booking options.
No-show
When a guest doesn’t show up and hasn’t cancelled.
Often charged the first night to reduce revenue loss.
Occupancy Rate
The percentage of rooms sold compared to the total number available.
Formula: Rooms Sold ÷ Rooms Available × 100
It’s not just about selling out; selling smart matters too.
OTA (Online Travel Agency)
Third-party platforms like Booking.com, Expedia, or Hotels.com that sell your rooms to travelers online.
OTAs help you reach a bigger audience, but they take a commission on every booking—sometimes 15–25%.
Great for visibility, but the goal is to turn OTA guests into future direct bookers.
Overbooking
Selling more rooms than you have, anticipating some cancellations or no-shows.
Risky if not managed well, but it can boost occupancy.
Pickup
The number of new reservations made over a certain period.
Helps track booking trends and adjust pricing accordingly.
Price Checker
A price comparison widget in your booking engine that shows how your direct booking rate stacks up against OTAs.
It highlights your lower direct rate in real time, giving guests a clear reason to book directly with you instead of through third parties.
Rate Shopper
A tool that lets you monitor competitor pricing across OTAs and booking channels in real time.
Rate shoppers help you stay competitive, spot pricing trends, and adjust your rates based on what similar hotels are charging.
RevPAG (Revenue per Available Guest)
RevPAG focuses on the value of each guest—including what they spend on extras.
Formula:
Total Revenue ÷ Number of Guests
It helps you understand the impact of upselling, cross-selling, and guest spend behavior beyond just booking the room.
Learn more about increasing RevPAG with upsells and cross-sells.
RevPAR (Revenue Per Available Room)
Your revenue performance in a nutshell. It combines occupancy and ADR to show how much you’re earning per available room—sold or not.
Formula: ADR × Occupancy Rate
Higher RevPAR means better use of your inventory.
RevPAM (Revenue per Available Meter)
A fresh way to measure hotel performance based on space, not just rooms.
Formula:
Total Revenue ÷ Total Available Square Meters
Explore the benefits of maximizing alternative hotel spaces.
Segmentation
Breaking down your guests by purpose of travel, booking channel, or length of stay.
Examples: Corporate, leisure, group bookings.
Helps tailor your pricing and marketing strategies.
STO or tour operator rates
Special discounted rates offered to tour operators or travel agents who resell your rooms as part of a package (like hotel + flights + activities).
These rates are net rates, meaning the tour operator adds their own markup before selling to travelers.
You still get paid your agreed amount—no matter what price the guest sees.
Think of it as wholesale pricing for your rooms, helping you fill beds through partners.
TrevPAR (Total Revenue per Available Room)
TRevPAR measures total hotel revenue—not just from room sales, but from everything: food and beverage, spa services, parking, upsells, you name it.
Formula:
Total Revenue ÷ Total Available Rooms
If you want to boost your TRevPAR, focus on upselling and cross-selling too, not just occupancy.
Upselling & cross-selling
Offering room upgrades, add-ons, or additional services alongside a guest’s stay during booking or check-in.
A great way to increase revenue per guest.Â
Static rates slowing you down?
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