Core Revenue Metrics
7 termsADRAverage Daily Rate
The average revenue earned per sold room in a given period. Calculated by dividing total room revenue by the number of rooms sold. ADR is one of the three fundamental KPIs in hotel revenue management, alongside occupancy and RevPAR, and directly reflects your pricing strategy's effectiveness.
ARIAverage Rate Index
A competitive benchmarking metric that compares your hotel's ADR to the average ADR of your competitive set. An ARI above 100 means you're achieving higher rates than competitors; below 100 indicates you're pricing below market. Use ARI alongside MPI and RGI for a complete competitive picture.
GOPPARGross Operating Profit Per Available Room
The most comprehensive profitability metric in hospitality, measuring actual profit generated per available room after all operating expenses. Unlike RevPAR which only considers revenue, GOPPAR accounts for costs—making it the truest measure of operational efficiency. A hotel can have high RevPAR but low GOPPAR if costs are poorly managed.
MPIMarket Penetration Index
A competitive metric comparing your hotel's occupancy to your compset's average occupancy. MPI above 100 means you're capturing more than your fair share of demand; below 100 indicates competitors are winning more bookings. MPI reveals whether your distribution, visibility, or value proposition needs attention—even if absolute occupancy looks healthy.
Occupancy Rate
The percentage of available rooms that are occupied, calculated as rooms sold ÷ rooms available (× 100). While high occupancy is positive, it's not the ultimate goal—selling 100% of rooms at low rates may generate less profit than 80% occupancy at premium rates. Always evaluate occupancy alongside ADR and RevPAR for the complete picture.
RevPARRevenue Per Available Room
The single most important metric in hotel revenue management, measuring revenue generated per available room (not just sold rooms). Calculated as ADR × Occupancy Rate, or Total Room Revenue ÷ Available Rooms. RevPAR balances the trade-off between rate and occupancy—a €100 ADR at 80% occupancy (€80 RevPAR) outperforms €120 ADR at 60% occupancy (€72 RevPAR).
RGIRevenue Generation Index
The ultimate competitive benchmark, comparing your RevPAR to your compset's average RevPAR. RGI combines the effects of both occupancy (MPI) and rate (ARI) into one number. An RGI of 105 means you're generating 5% more revenue per available room than competitors. RGI above 100 indicates you're winning the market; below 100 means competitors are outperforming you.
Pricing Strategies
5 termsBARBest Available Rate
The best publicly available, generally unrestricted rate for a given date (often the flexible/refundable rate). BAR acts as the reference point for other rate types (non-refundable, advance purchase, member rates), which may be priced below BAR in exchange for restrictions. BAR changes daily based on demand, competition, and market conditions.
Dynamic Pricing
A revenue management strategy where room rates change continuously based on real-time supply and demand factors—current occupancy, booking pace, competitor rates, day of week, seasonality, and local events. Unlike static pricing with fixed seasonal rates, dynamic pricing captures maximum value when demand is high and stimulates bookings when demand is low.
Open PricingOpen Pricing Strategy
A modern pricing approach where each room type and rate plan can move independently based on its specific demand, rather than maintaining fixed price differences. Traditional pricing often keeps a suite at a fixed premium (e.g., "BAR + €50"); open pricing lets that premium expand to €100 when suite demand is high or compress to €30 when it's low, maximizing revenue across all room types.
Rate Fences
Logical rules and restrictions that justify different prices for the same room—creating distinct rate products for different customer segments. Examples include non-refundable rates (lower price for commitment), advance purchase (discount for booking early), member rates (reward for loyalty), and length-of-stay discounts. Well-designed fences capture maximum revenue from each segment without cannibalizing higher-paying guests.
Yield Management
The strategic practice of selling the right room to the right guest at the right time for the right price through the right channel. Originating in the airline industry, yield management applies demand-based pricing to maximize total revenue from a fixed, perishable inventory. In hotels, this means continuously adjusting rates and availability based on demand forecasts, competitive positioning, and guest segmentation.
Forecasting & Demand
8 termsBooking Pace
The speed at which reservations accumulate for a specific future date compared to the same point in time for similar historical dates. Tracking pace helps identify whether demand is building faster or slower than expected, enabling proactive rate adjustments. A date pacing ahead of last year may warrant a rate increase; pacing behind suggests promotional action.
Booking WindowBooking Window / Lead Time
The number of days between when a reservation is made and the guest's arrival date. Understanding booking windows by segment is crucial—business travelers typically book 7-14 days out, while leisure guests may book 30-90 days ahead. This knowledge helps optimise when to release inventory and adjust pricing as the arrival date approaches.
Constrained Demand
The actual number of rooms you can sell given real-world limitations—your physical inventory, existing bookings, and any restrictions you've applied (closed dates, minimum stays). Constrained demand represents what will actually happen, as opposed to unconstrained demand which shows total market interest. The gap between them reveals missed revenue opportunities.
Forecast Accuracy
A measure of how closely your demand predictions match actual results, typically reported as a percentage error (e.g., an average error of 5%) or as an accuracy percentage. High forecast accuracy enables better pricing decisions, optimal staffing, and reduced operational waste. Track accuracy at multiple lead times (7, 14, 30 days out) to identify where predictions need improvement.
OTBOn-the-Books
All confirmed reservations and their associated revenue for future dates—your guaranteed baseline before any new bookings come in. OTB is the starting point for all forecasting: you add expected future pickup to OTB to predict final occupancy. Monitoring OTB daily reveals whether you're building toward budget or falling behind.
PickupPickup / Booking Pickup
The number of new room nights booked for a specific future date during a defined period (daily, weekly). Pickup is the key indicator of booking momentum—strong pickup suggests rates could increase; weak pickup may require promotional action. Comparing current pickup to historical patterns reveals whether demand is trending above or below expectations.
Seasonality
Predictable, recurring patterns of demand fluctuation that repeat annually, weekly, or around specific events. Understanding your property's seasonality—high/low seasons, strong/weak days of week, local events impact—is fundamental to effective pricing. Seasonality forms the baseline demand pattern that booking pace and pickup data are compared against.
Unconstrained Demand
A theoretical forecast of total demand if your hotel had unlimited inventory and no restrictions—how many rooms you could sell if capacity weren't a factor. Understanding unconstrained demand reveals the true size of your market opportunity. When unconstrained demand significantly exceeds available rooms, it signals opportunity to increase rates; when it's below capacity, promotional strategies may be needed.
Market & Competition
2 termsCompsetCompetitive Set
A carefully selected group of 4-6 competitor hotels that guests would realistically consider as alternatives to your property. Selection criteria include similar location, star rating, room count, amenities, and target market. Your compset forms the basis for all competitive benchmarking (MPI, ARI, RGI) and rate shopping activities.
Rate ShoppingRate Shopping / Competitive Rate Intelligence
The systematic monitoring of competitor rates across booking channels to inform your pricing decisions. Modern rate shopping tools automatically track compset prices daily, alerting you to competitive changes and identifying opportunities to adjust your positioning. Effective rate shopping reveals not just current prices but also availability, restrictions, and booking conditions.
Technology & Systems
2 termsBIBusiness Intelligence
Technology that transforms raw hotel data into actionable insights through dashboards, reports, and visualizations. BI tools consolidate information from multiple sources (PMS, RMS, finance) to reveal performance trends, identify revenue opportunities, and support data-driven decision making across all departments.
RMSRevenue Management System
Specialized software that uses algorithms, historical data, and market intelligence to optimise pricing and inventory decisions automatically. A modern RMS analyses demand patterns, competitor rates, and booking pace to recommend or automatically set optimal prices for each room type and date. RMS transforms revenue management from intuition-based to data-driven decision making.
Guest & Booking Terms
4 termsCTAClosed to Arrival
A stay control that blocks new check-ins on a specific date while allowing guests already in-house to continue their stay. Hotels use CTA during high-demand periods to prioritize longer stays and maximize revenue—for example, closing arrivals on Saturday to capture more valuable Friday-Saturday bookings rather than Saturday-only stays.
CTDClosed to Departure
A stay control that prevents guests from checking out on a specific date, requiring them to extend their stay through that date. CTD is used to fill gaps in occupancy—for example, if Tuesday shows low demand, closing departures ensures guests checking in Monday must stay through Tuesday, improving overall occupancy patterns.
LOSLength of Stay
The total number of nights a guest stays during a single visit. Average LOS varies significantly by segment and destination—resort guests may average 5-7 nights while city business hotels see 1.5-2 nights. Understanding your LOS patterns helps optimise pricing strategies and apply appropriate stay controls during high-demand periods.
MLOSMinimum Length of Stay
A stay control requiring guests to book at least a specified number of nights. MLOS protects high-demand dates from being blocked by short stays—for example, requiring 2-night minimum over a weekend ensures you don't sell Saturday-only and leave Friday unsold. Apply MLOS strategically based on demand patterns and booking pace.
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