Abbreviations and terms cheat sheet

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Revenue Management Terms
Key performance indicators
Revenue KPIs and comparison strategies
Restrictions
Benchmarking indices
Further terms & abbreviations

Revenue Management Terms

Benchmarking	Comparing your own key figures (e.g. rate, occupancy, revenue) with the market to assess your own performance and identify potential for optimisation. The aim is to assess your own performance, analyse differences and identify opportunities for improvement.

Dynamic Pricing	A pricing strategy in which hotel room rates are not fixed but continuously adapt to current market conditions. Unlike static rates (e.g. summer rate vs. winter rate), dynamic pricing is based on algorithms and data. The rate is influenced by a variety of internal and external factors, such as occupancy, historical data, booking velocity (pick-up), competitor prices, weather, etc.

Forecasting	An AI forecast can provide you with indications of the expected trend. The forecast of future demand is based on historical data, market trends and other factors. In RateBoard, the intelligent model evaluates the quality of the underlying data and the forecast based on defined criteria. If our standards for a reliable forecast are not met, no forecast is displayed. As the RMS market leader with 10 years’ experience and part of the Zucchetti Group, we draw on a huge data pool, giving you a decisive advantage in your forecasts. A forecast for the real world can never be 100% accurate, as the future is inherently uncertain. Hoteliers should therefore always supplement these forecasts with their valuable expertise, experience and realistic perspective.
Segments/ Segmentation	the strategic division of guests into specific groups (e.g. business, leisure, groups, etc.). Each segment has different booking behaviour and price sensitivity. Through segmentation, you can refine your offering, tailor marketing campaigns, and apply revenue management. This is because certain segments contribute more, and others less, to maximising revenue. For example, groups receive discounts but guarantee a high base occupancy rate. Last-minute business guests often book at short notice but are willing to pay significantly more. Additionally, there may be special segments that do not generate revenue, such as complimentary nights for staff.

Yielding/ Yield Management	focuses primarily on operational price control with the aim of maximising revenue (yield) from available capacity. Rates can be dynamically adjusted based on current demand and other factors, and restrictions can also be applied strategically (see, for example, Minimum Length of Stay)

Room rates	Room rates are far more than just a price tag for an overnight stay. They are a key management tool for balancing supply and demand through dynamic pricing. The goal in revenue management is to optimise RevPAR. The room rate acts as the control mechanism for ADR. Using its powerful algorithm, RateBoard calculates the optimal room rates for each room type and for up to 540 days in the future, based on data. These are provided to you daily as up-to-date rate recommendations. In the RateBoard settings, the following terms are used in conjunction with the calculation of room rates: Base price (BAR – Best Available Rate) This is your strategic starting price for a date with average demand and normal occupancy. It lies between the minimum and maximum prices and is based on your target positioning, your desired annual average rate (ADR) and your planned occupancy – the RateBoard algorithm adjusts upwards or downwards from this value. Minimum price This is the lower price limit and should cover at least all variable costs so that you do not lose money per room sold. You should also ensure that you do not sell your rooms ‘below value’ so as not to damage your brand and market position. Maximum price This is the highest market-driven rate you can achieve during periods of high demand without jeopardising bookings or your price image. Here, too, you should take care not to overcharge, to avoid dissatisfied guests due to unrealistic expectations based on the rate.

Key performance indicators

ADR	Average Daily Rate Average rate of all rooms sold Calculation = (Total room revenue) / (Number of reserved rooms) ADR is important in revenue management because it shows how much guests are willing to pay: a high ADR, for example, indicates that guests are willing to pay high rates.

Occupancy	Percentage of occupied rooms compared to available rooms. Calculation = Total number of occupied rooms / Total number of available rooms x 100

PickUp	An important revenue management metric that shows how many room nights or revenue have already been booked for a specific day or period in the future. It also takes cancellations into account, so the value may be negative. A strong PickUp indicates many new bookings; a weak PickUp indicates few. The metric is used for both revenue and rooms sold.

RevPAR	Revenue Per Available Room Revenue per available room Calculation = Total room revenue divided by the total number of available rooms. or: ADR multiplied by the occupancy rate RevPAR is one of the most popular metrics in the hotel industry, as it links ADR to occupancy and helps hotels measure their overall success.

Revenue metrics and comparison strategies

OTB	on the books Refers to all reservations already confirmed for a specific day or period. OTB therefore shows the current status of booked rooms or revenue, regardless of whether further bookings or cancellations follow. In short: OTB = everything that is currently booked and confirmed in the system.

CY	current year

LY	last year

MTD	Month to Date The total of the relevant monthly figures up to today. In other words, the performance so far this month. Σ(Daily Revenue) over the period from the 1st of the current month to today

Final LY	final last year Refers to the final, finalised figures for the previous year (e.g. turnover, occupancy, room nights) – i.e. the actual realised values.

YTD	Year to Date YTD is often used to compare the current value of a KPI with its value on the same time or day in the past (e.g. the previous year or two years ago). The figure shown is the value of the KPI for the selected date, as it stood on the same day in the past.

YTD LY (= YTD 1J)	Year to date last year Refers to the value of the relevant KPI on exactly the same time of the previous year. (i.e. the cumulative figures from the start of the previous year up to the selected date.)

YTD 2Y	Year to date 2 years ago Refers to the value of the relevant key figure two years prior to the selected date.

Restriktionen

LOS	Length of Stay The number of nights guests spend in a hotel.
Min LOS	Minimum Length of Stay A rule stating that guests must book a certain minimum number of nights on specific dates.
CTA	Closed to arrival Closed for arrivals
CTD	Closed to departure Closed for departures

Benchmarking Indizes

ARI

Average Rate Index:

Compares your average rate (ADR) and shows the deviation of your hotel’s ADR compared to the market average.
ARI = Hotel ADR / Average market ADR.
Example: Is your ARI 0.9? On average, your rooms are cheaper than those of the competition.

MPI

Market Penetration Index:

Compares your occupancy.
MPI = Hotel occupancy rate / Average market occupancy rate * 100
Example: Is your MPI 110? You have a higher occupancy rate than the average of your competitors.

RGI

Revenue Generation Index:

Compares your RevPAR. This is the most important metric, as it combines occupancy and rate.
RGI = Hotel RevPAR / Average market RevPAR.

Further terms & abbreviations

ALOS	The average number of nights guests spend in a hotel.

CM	Software that updates rates and availability across all booking portals simultaneously.

DBA	Number of days before the arrival date.

OTA	Major booking platforms such as Booking.com or Expedia, which are used by hotels as key distribution partners to market their rooms online.

OTB	on the books Refers to all reservations already confirmed for a specific day or period. OTB therefore shows the current status of booked rooms or revenue, regardless of whether further bookings or cancellations follow. In short: OTB = everything that is currently booked and confirmed in the system.

PMS	A PMS supports hoteliers in managing bookings and rates. Modern systems can be connected to OTAs (see above), allowing hoteliers to manage all rates and availability centrally. Common PMS systems include ASA, MEWS, Fidelio Suite 8, Protel, Casablanca and many more.