How to Use This Glossary
This glossary covers every significant term in hotel revenue management, OTA distribution, and hotel performance measurement. Terms are grouped by category for easier navigation. Each definition is written for hotel owners and operators, not analysts — the goal is practical clarity, not technical precision for its own sake.
Core Revenue Management Terms
ADR — Average Daily Rate
Total room revenue divided by the number of rooms sold in a given period. ADR measures the average rate at which rooms are actually selling, not the rate at which they are listed. A hotel selling 40 rooms at Rs. 3,000 and 10 rooms at Rs. 5,000 in a day has an ADR of Rs. 3,500 for that day.
RevPAR — Revenue per Available Room
ADR multiplied by occupancy rate, or total room revenue divided by total available rooms. RevPAR is the primary measure of room revenue performance because it captures both pricing quality and demand capture simultaneously. A hotel at 90% occupancy charging Rs. 2,000 has a RevPAR of Rs. 1,800. A hotel at 70% occupancy charging Rs. 3,200 has a RevPAR of Rs. 2,240. RevPAR shows that the second hotel is performing better on revenue despite lower occupancy.
TRevPAR — Total Revenue per Available Room
Total revenue from all sources — rooms, food and beverage, spa, meetings, parking, and any other revenue line — divided by total available rooms. TRevPAR is a more complete measure of hotel performance than RevPAR for properties where non-room revenue is significant.
Occupancy Rate
The percentage of available rooms that are sold in a given period. Rooms sold divided by rooms available, expressed as a percentage. Occupancy alone is not a sufficient performance measure — a hotel can have high occupancy at very low rates, which is not good revenue management.
BAR — Best Available Rate
The lowest publicly available rate for a room on a given date, without any advance purchase or membership requirements. BAR is typically the baseline rate from which other rate plans are derived: advance purchase rates are below BAR, corporate rates may be above or below, and peak demand rates are above.
RevPOR — Revenue per Occupied Room
Total revenue divided by rooms sold, rather than rooms available. RevPOR measures how much each guest who actually stays generates across all revenue streams, making it useful for evaluating ancillary revenue performance.
Yield Management
The practice of adjusting room rates and inventory allocation to maximise room revenue based on anticipated demand. Yield management is the narrower, older term for what is now broadly called revenue management. It focuses specifically on rooms rather than total hotel revenue.
Booking Window / Booking Lead Time
The time between when a reservation is made and the date of arrival. A booking window of 30 days means the guest booked 30 days before check-in. Booking lead time varies significantly by market segment: corporate travellers typically book further in advance than leisure guests, and last-minute bookers have different price sensitivity from early planners.
Pickup
The number of new reservations arriving for a specific future date over a given period — typically daily or weekly. Tracking pickup against historical patterns is the foundation of demand forecasting: if a date is picking up reservations faster than the same date last year at the same point in advance, it signals stronger demand and a rate increase opportunity.
Wash
The difference between the number of reservations on the books and the number that actually arrive, after cancellations and no-shows. Wash rate is important for overbooking strategy: a hotel with a predictable 15% wash rate can accept reservations above 100% occupancy by approximately that amount while still expecting to arrive at full house.
Displacement Analysis
The evaluation of whether accepting a group booking at a given rate is more or less profitable than holding the inventory for transient bookings. A group that wants 20 rooms at Rs. 2,500 per night for a high-demand weekend displaces transient bookings that might have achieved Rs. 3,500. Displacement analysis quantifies this trade-off before the decision is made.Here are some e-books and webinars that can better guide your hotel.
Pricing Terms
Dynamic Pricing
Adjusting room rates in real time or near-real time based on demand signals, competitor rates, booking pace, and other market factors. The opposite of static pricing, where a fixed rate applies regardless of demand conditions.
Rate Parity
The requirement that a hotel offers the same rate on its direct channel as on OTA platforms. Most OTA contracts include a rate parity clause. Violating rate parity — offering a lower rate on one channel than another — can result in penalties including reduced OTA search visibility.
Minimum Length of Stay (MinLOS)
A restriction that requires guests to book for at least a specified number of nights. A two-night MinLOS on a Friday prevents one-night Friday-to-Saturday bookings from consuming inventory that could go to a longer, higher-value two-night stay. MinLOS is a key revenue management tool on peak nights surrounded by lower-demand periods.
Closed to Arrival (CTA)
A restriction that prevents new bookings with an arrival on a specific date, while still allowing guests who arrive on earlier dates to stay through. Used to prevent short stays from arriving on a high-demand night that would block room availability for longer stays.
Stop Sell
Closing a room type or all room types on one or more channels to prevent further bookings. Stop sell is used when occupancy is high and remaining inventory should be reserved for higher-rated late bookings, or when a channel is producing low-quality bookings relative to others.
Overbooking
Accepting more reservations than rooms available, based on an expected wash rate. Strategic overbooking is a revenue management tool: if a property expects a 10% cancellation and no-show rate, accepting reservations for 110% of capacity is intended to arrive at 100% occupancy. Unstrategic overbooking — accepting too many reservations without accounting for wash — results in walked guests, which carries reputational and financial costs.
Distribution and Channel Terms
OTA — Online Travel Agency
A third-party platform that sells hotel rooms to consumers and charges the hotel a commission on each booking. Major OTAs in India include MakeMyTrip, Goibibo, Booking.com, Expedia, and Agoda. OTAs typically charge between 15% and 25% commission.
GDS — Global Distribution System
A network used by travel agents and corporate travel management companies to book hotels, flights, and car hire. The three major GDS networks are Amadeus, Sabre, and Travelport. GDS is the primary booking channel for corporate travel.
Channel Manager
Software that distributes a hotel's room inventory, rates, and availability to all connected OTA and GDS channels simultaneously, and receives bookings from all channels back into the hotel's PMS in real time.
PMS — Property Management System
The operational core of a hotel's technology stack. A PMS manages check-in, check-out, room assignments, housekeeping, billing, guest profiles, and front desk workflows. It holds the authoritative record of what is occupied, which guests are in house, and what each guest owes.
Software that handles demand forecasting, competitive rate monitoring, and pricing optimisation. An RMS pulls data from the PMS and channel manager to generate rate recommendations or automated rate changes based on market signals.
Booking Engine
A reservation system embedded on a hotel's website that allows guests to check availability, browse room types, and complete a commission-free direct booking.
Net ADR
ADR after commission deduction. A room selling at Rs. 5,000 on an OTA charging 20% commission produces a net ADR of Rs. 4,000. A room selling at Rs. 4,500 on direct with a 2% payment gateway fee produces a net ADR of Rs. 4,410. Net ADR is the correct metric for comparing channel profitability.
Channel Mix
The proportion of bookings arriving through each distribution channel — OTAs, direct, GDS, corporate direct, walk-in. Managing channel mix means deciding which channels receive inventory priority and which face restrictions based on their net ADR, booking lead time, and cancellation behaviour.
Billboard Effect
The tendency for OTA listings to drive traffic to a hotel's direct channel. Guests who find a property on Booking.com or MakeMyTrip sometimes visit the hotel's own website directly before completing the booking. A hotel with a strong OTA presence but no direct booking channel loses the direct booking opportunity from this traffic.
Performance and Benchmarking Terms
CompSet — Competitive Set
The group of hotels against which a property measures its performance. A competitive set typically includes four to six properties with similar star rating, location, room count, and target market. RevPAR performance is most meaningful when compared against the competitive set rather than against an absolute target.
MPI — Market Penetration Index
A hotel's occupancy relative to its competitive set. An MPI above 100 means the hotel is capturing more than its fair share of market demand. An MPI below 100 means it is capturing less. Calculated as: (hotel occupancy / competitive set occupancy) x 100.
ARI — Average Rate Index
A hotel's ADR relative to its competitive set, calculated the same way as MPI but using ADR. An ARI above 100 means the hotel achieves a premium rate over the market average. Below 100 means it is pricing at a discount.
RGI — Revenue Generation Index
A hotel's RevPAR relative to its competitive set. RGI above 100 means the hotel generates more revenue per available room than the market average. RGI is the most comprehensive competitive performance measure because it incorporates both occupancy and rate.
MAPE — Mean Absolute Percentage Error
A statistical measure of forecast accuracy: the average percentage difference between forecast demand and actual demand. An RMS with a MAPE of 5% at 30 days means its demand forecasts are, on average, 5% away from what actually happens. Lower MAPE indicates higher forecasting accuracy.
Indian Market-Specific Terms
GST on Hotel Rooms
In India, hotel room bookings attract GST at rates depending on the room tariff: rooms priced below Rs. 1,000 per night are exempt, rooms between Rs. 1,000 and Rs. 7,500 attract 12% GST, and rooms above Rs. 7,500 attract 18% GST. Booking engines must calculate and display the correct GST at checkout and generate GST-compliant tax invoices.
UPI — Unified Payments Interface
India's real-time payment system that enables instant bank transfers using a mobile app. UPI is the dominant digital payment method in India and the most common payment method for online hotel bookings among Indian guests. Hotel booking engines targeting Indian guests require UPI support.
Festival Demand Calendar
The schedule of Indian festivals, regional holidays, and seasonal events that create demand peaks for hotel properties. Unlike Western markets with a small number of predictable peak periods, Indian hospitality manages a large number of festival-driven demand triggers that vary by region, community, and calendar year. Diwali, Navratri, Ganesh Chaturthi, Eid, Christmas, Pongal, Onam, and regional events all affect demand patterns differently across markets.