Hotel industry jargon Part 3

There are a lot of hotel industry jargon used during conversation and discussion amongst hotel industry peers, with non-hotelier colleagues, with business partners as well as with friends and relatives.

Myself, as a hotel practitioner sometimes assumes that people will simply understand several terms used in the hotel industry without the need to provide a clear explanation. 

This will surely lead to misinterpretation and misunderstanding which can cause complaint and dissatisfaction.

I have written some articles related to hotel industry jargon to explore several commonly words using on conversation.  But I notice that there are still many more jargons to be explained which encourage me to write some more related to this topic.

Here is the part 3 of Hotel Industry Jargon article elaborating another 20 words most commonly used in the conversation in the hotel industry.

1. Back to back

The term back to back in hotel is mostly used in room accommodation or in a meeting, where one thing happens after another consecutively.  For example, on Sunday, most hotel guests will check out after spending their weekend whereby on the same day, there will a group business check in occupying significant number of rooms.  Hence, the hotel will experience back to back check out and check in on Sunday.

Another example is one company occupies a ballroom with round table set up for an awarding evening last until midnight.  The hotel team needs to ensure that the ballroom layout can be re-set up as soon the first event end to classroom style ready to be occupied by another company in the next morning.  Hence, the hotel will experience back to back event and will continue to provide its professionalism to deliver good services to both clients.

2. Breakout room

The term breakout room refers to a smaller room prepared to accommodate a smaller group which is split from a large group meeting. This normally occurs during big conferences or large meeting.  After a plenary meeting, there will usually be several sessions and discussions conducted in smaller group which will occupy several smaller meeting rooms.

3. Average Room Rate (ARR) or Average Daily Rate (ADR)

Average Room Rate (ARR) or Average Daily Rate (ADR) has the same meaning which measures the average price paid for the room sold in a hotel or a serviced residence.

How to calculate ARR or ADR,

Total Room Revenue divided by No. of room sold

From my experience, Average Room Rate term is mostly used by a hotel, while Average Daily Rate is usually used by a serviced residence.

4. Revenue Per Available Room (RevPar) or Revenue Per Available Unit (RevPau)

RevPar or RevPau measures the total room revenue generated per available room or per available unit in a hotel or a serviced residence.  Per available room or per available unit will refer to the number of room or unit inventory.

RevPar or RevPau is used to assess the hotel performance to fill the available room at an average rate.

There are two ways on how to calculate RevPar or RevPau,

1. Total room revenue divided by numbers of room or unit inventory
2. Average Room Rate multiplied by Room Occupancy

Based on my experience, RevPar term is usually used by a hotel, while RevPau is generally used by a serviced residence.

5. Average Rate Index (ARI)

Average Rate Index, also known as ARI in short term is one of the measurement tools to review the performance of one hotel average room rate compared to its hotel competitors’ average room rate.

How to calculate ARI?

(A hotel Average Room Rate divided by Aggregated group of another hotels average room rate), and multiple by 100

6. Revenue Generation Index (RGI)

RGI stands for Revenue Generation Index is a very important indicator to identify a fair share of revenue of a hotel compared to its hotel competitors.

How to calculate RGI?

(A hotel RevPar divided by Aggregated group of another hotel RevPar) and multiple by 100

7. Market Penetration Index (MPI)

Market Penetration Index or MPI is used to analyze a hotel position and performance in terms of occupancy as compared to its hotel competitors.

How to calculate MPI?

(A hotel occupancy divided by aggregated group of another hotels occupancy) and multiple by 100

8. Attrition

The term attrition in hotel industry is usually applied when creating an agreement for group room business.  Attrition means the process of gradually reducing something, and so in a group agreement, it will refer to reducing gradually the number of rooms booked or the number of persons confirmed to attend a meeting.

By applying attrition process, this will give a win-win situation both for a hotel and a client.   The hotel has the ability to sell the available rooms to other client, while the client will only settle the payment for room and meeting room that has been finally guaranteed and booked.

9. Advance Purchase

Advance Purchase phrase is usually used for room promotion in the hotel industry.  Advance Purchase of hotel room means a guest will book and pay for a hotel room earlier before arrival date at a discounted rate.  Depending on the hotel, Advance Purchase can be applicable within 21 days, 14 days or 7 days before check in date.

10. Advance Deposit

Advance deposit in a hotel means a sum amount of money received by the hotel from the client to reserve and guarantee the booking which can be in the form of room booking, meeting room booking or restaurant booking.

11. Competitive Set

A competitive set or also known as Compset in a short name in a hotel industry will refer to a group of hotels selected as the direct competitors to your own hotel. The selection of direct hotel competitors will be based on relevant and selection criteria compared to your hotel.

12. Allocation

The term allocation in a hotel will usually applied to room accommodation whereby a number of rooms are assigned for a specific period, a specific market segment or a specific group.

For example, when a hotel creates a special leisure promotion targeted to attract weekenders with specific booking periods and lead time booking, then a hotel will assign for example, 10% of its room inventory for this promotion.  Once the booking periods and lead time booking has ended, the hotel can then release the room allocation.

13. Loyalty program

Loyalty program in a hotel industry is a special program created to attract and retain customers. Loyalty program will offer selection of rewards, such as, free nights, upgrade room, early check in, early check out, special discount and many others.

14. MICE

MICE stand for Meetings, Incentives, Conferences, Exhibitions which will refer to a type of business involving large groups to attend well planned large events and require room accommodation.

15. Rack rate

Rack rate means a room price that is offered by a hotel before any discount applied.  Rack rate is also known as published rate set at the highest price in the rate structure.  Nowadays, it is common to use the dynamic rate strategy compared to static rate strategy aiming to be flexible in accommodating client’s requirements as well as to gain more market share.

16. Weekend offer

Weekend offer will refer to a special room promotion created by a hotel to attract weekenders and increase the hotel room occupancy on weekend.  Depending on a hotel location, weekend can start from Friday to Sunday arrival or Saturday and Sunday arrival.

Weekend offer is not necessarily promoted at cheaper rate.  For example, in a city hotel where weekdays are busier than weekend, then generally, weekend rate is cheaper than weekdays.  On the other hand, in a resort destination where weekend is on peak periods, then weekend rate will be higher than weekdays.

17. Weekdays offer

Weekdays offer is the opposite of Weekend offer, means a special room promotion created by a hotel to capture business market and to boost the hotel room occupancy on weekdays.  Weekdays will refer to Monday to Thursday and in some hotels, Friday will be considered as weekday too.

Weekdays offer will be varied from lower to higher rate depending on the hotel location.  Weekdays offer is usually created to increase the hotel occupancy on certain day, for example, if Monday is typically slow booking then a hotel will create weekday promotion offering a special attractive rate valid for Monday check in only.

18. Connecting room

A simple definition of connecting room is two rooms next to each other being connected by a locked door between them. Connecting rooms usually become the preferred type of rooms for family market especially those who travel with children.

19. Aparthotel

Aparthotel or Apartment hotel is also known as serviced apartment or serviced residence whereby the layout unit concept is designed as an apartment range from one-bedroom, two-bedroom, three-bedroom type providing with services like hotel, such as, housekeeping services, room services.  Some Aparthotel will also have such as swimming pool, fitness center, meeting room as part of their facilities.

20. Freebies

Freebies will refer to something provided at free of charge.  In a hotel, freebies can also be called gimmick, such as, free upgrade services, free breakfast, free parking.  If a hotel creates a kind of event or competition to highlight a special occasion, a hotel can also give several free room vouchers, free restaurant vouchers as freebies.

Happy reading.