AHLEI CHRM cheat sheet

Revenue management (RM) sells the right room to the right guest at the right price at the right time by managing rate and availability against forecast demand.

RevPAR = ADR × Occupancy, equivalently total room revenue ÷ available rooms; it captures both price and volume in one metric.

TRevPAR = total revenue (rooms + F&B + other) ÷ available rooms; it reflects total spend per available room rather than room rate alone.

GOPPAR = gross operating profit ÷ available rooms; unlike RevPAR it is net of departmental and undistributed operating expenses.

Occupancy = rooms sold ÷ rooms available; ADR = room revenue ÷ rooms sold. Rooms available excludes out-of-order rooms but includes out-of-service rooms.

Perishability: an unsold room night has zero residual value, so RM focuses on selling the fixed capacity before it expires.

High fixed-cost, low variable-cost cost structure means incremental room sales contribute strongly to profit; marginal cost per occupied room is small.

Market segmentation (transient, group, contract, discount) lets RM price each segment separately based on price sensitivity and booking behavior.

RM applies where capacity is fixed, demand fluctuates and can be segmented, inventory is perishable, and product can be sold in advance.

Forecast demand by segment and date, then apply hurdle rates: accept a booking only if its rate meets or exceeds the displacement value of that inventory.

Displacement analysis compares the revenue of a prospective group against the transient revenue the same room nights would otherwise generate.

RevPAR Index (RGI) = hotel RevPAR ÷ competitive set RevPAR × 100; above 100 means outperforming the comp set.

ARI (ADR Index) = hotel ADR ÷ comp-set ADR × 100; MPI (occupancy index) = hotel occupancy ÷ comp-set occupancy × 100. RGI ≈ ARI × MPI ÷ 100.

Length-of-stay controls (minimum stay, closed-to-arrival) protect high-demand dates from single-night bookings that block multi-night revenue.

Overbooking protects against no-shows and cancellations; set the overbooking level from historical no-show and cancellation rates, not guesswork.

Rate fencing (advance purchase, nonrefundable, membership, restrictions) separates segments so higher-rate guests cannot buy lower-rate products.

Demand-based pricing moves rates with forecast occupancy; occupancy-based pricing sets thresholds at which rate tiers change.

Segment mix analysis tracks the share and yield of each segment; a shift toward low-rate segments can raise occupancy while lowering RevPAR.

Forecast accuracy metrics: forecast error = (actual − forecast) ÷ actual; MAPE averages absolute percentage errors across periods.

Rolling forecasts are updated each period (e.g., 3-day, 7-day, 90-day) and replace stale annual projections for operational decisions.

A budget is a fixed annual financial plan; a forecast is a revised expectation updated as actuals arrive. Variance = actual − budget (favorable if revenue is above or cost is below).

Rooms revenue budget = forecast rooms sold × forecast ADR; build from occupancy and ADR assumptions by month and segment.

House count and occupancy forecasts drive labor scheduling; a 1-point occupancy change on a 200-room hotel equals 2 room nights per day.

Pickup report shows net new bookings by arrival date since a prior date; it is the core input to short-term reforecasting.

Reports should be segmented (transient vs. group, channel, rate code) and compared against STLY (same time last year) and budget.

Flow-through measures how much of incremental revenue converts to profit: flow-through % = change in GOP ÷ change in revenue.

Flexible budget adjusts the budget to actual volume so cost variances reflect spending control rather than volume differences.

Rate parity requires consistent public rates across channels; violations create guest distrust and trigger OTA penalties.

Best Rate Guarantee (BRG) promises the lowest public rate on the hotel's own channels; it supports direct-booking share.

Net vs. gross rate: net = gross × (1 − commission); compare channels on net revenue, not gross rate.

Cost per acquisition (CPA) = distribution cost ÷ bookings; direct bookings avoid OTA commission but carry marketing and technology cost.

Channel mix should be managed by net RevPAR and profitability, not by volume alone; high-commission channels dilute margin.

RMS/revenue management systems optimize rate and inventory by segment and date using demand forecasts and price elasticity.

Dynamic pricing adjusts rates by demand, lead time, and competitive position; static rate tiers change only at set thresholds.

Distribution channels include brand.com, GDS, OTAs, metasearch, voice/CRS, and property direct; each has distinct cost and reach.

Rate integrity means the same rate and restrictions apply wherever the product is sold, protecting the price positioning across channels.

Revenue management decisions should be transparent and documented: rate fences, overbooking levels, and displacement calls need a stated rationale.

Ethical pricing avoids collusion; sharing future rates or occupancy with competitors to set prices is anticompetitive and illegal.

Rate parity commitments and contract terms with OTAs and corporate accounts are binding; breaching them creates legal and relationship risk.

Data privacy rules (e.g., guest data use, GDPR-style consent) govern how RM uses booking and profile data for pricing and marketing.

Cross-functional alignment: RM must communicate forecast and pricing rationale to sales, front office, and finance so execution matches strategy.

Displacement and overbooking decisions must protect guest safety and service standards; revenue gain never justifies unsafe occupancy.

Performance metrics should be shared openly with the team (RevPAR index, channel cost, forecast accuracy) to build accountability.

Conflict of interest: employees with pricing authority must not steer business to channels or vendors in which they have a personal interest.

RevPAR = ADR × Occupancy; it combines rate and volume into one yield measure.

Occupancy = rooms sold ÷ rooms available; ADR = room revenue ÷ rooms sold.

Perishability means an unsold room night has zero residual value.

High fixed and low variable costs make incremental room sales highly profitable.

TRevPAR = total revenue ÷ available rooms; GOPPAR = gross operating profit ÷ available rooms.

Segmentation separates price-sensitive and price-insensitive demand to price each separately.

RM conditions: fixed capacity, fluctuating demand, perishable inventory, advance selling, segmentable market.

Hurdle rate: accept a booking only if its rate meets or exceeds displacement value.

Displacement analysis compares group revenue against displaced transient revenue.

RevPAR Index (RGI) = hotel RevPAR ÷ comp-set RevPAR × 100; above 100 outperforms.

ARI = ADR ÷ comp-set ADR × 100; MPI = occupancy ÷ comp-set occupancy × 100.

Length-of-stay controls (minimum stay, closed-to-arrival) protect high-demand dates.

Overbooking levels are set from historical no-show and cancellation rates.

Rate fencing uses restrictions (advance purchase, nonrefundable) to separate segments.

Forecast error = (actual − forecast) ÷ actual; MAPE averages absolute percentage errors.

Budget is a fixed annual plan; forecast is a revised expectation updated with actuals.

Rooms revenue budget = forecast rooms sold × forecast ADR, by month and segment.

Pickup report shows net new bookings by arrival date since a prior date.

Flow-through % = change in GOP ÷ change in revenue.

Flexible budget restates costs at actual volume to isolate spending control.

Compare results to budget and same time last year (STLY) by segment and channel.

Net rate = gross rate × (1 − commission); compare channels on net revenue.

Rate parity requires consistent public rates across all channels.

Best Rate Guarantee promises the lowest public rate on the hotel's own channels.

CPA = distribution cost ÷ bookings; use it to compare channel efficiency.

Dynamic pricing adjusts rates by demand, lead time, and competitive position.

Manage channel mix by net RevPAR and profitability, not by booking volume.

Rate integrity means identical rate and restrictions wherever the product is sold.

Document the rationale for rate fences, overbooking levels, and displacement decisions.

Sharing future rates or occupancy with competitors to set prices is illegal collusion.

OTA and corporate rate parity commitments are binding contract terms.

Guest data use requires consent and compliance with privacy regulation.

Communicate forecast and pricing rationale to sales, front office, and finance.

Revenue gain never justifies unsafe occupancy or degraded service standards.

Employees with pricing authority must avoid conflicts of interest in channel or vendor selection.

RevPAR = ADR × Occupancy; it combines rate and volume into one yield measure.

Occupancy = rooms sold ÷ rooms available; ADR = room revenue ÷ rooms sold.

Perishability means an unsold room night has zero residual value.

High fixed and low variable costs make incremental room sales highly profitable.

TRevPAR = total revenue ÷ available rooms; GOPPAR = gross operating profit ÷ available rooms.

Segmentation separates price-sensitive and price-insensitive demand to price each separately.

RM conditions: fixed capacity, fluctuating demand, perishable inventory, advance selling, segmentable market.

Hurdle rate: accept a booking only if its rate meets or exceeds displacement value.

Displacement analysis compares group revenue against displaced transient revenue.

RevPAR Index (RGI) = hotel RevPAR ÷ comp-set RevPAR × 100; above 100 outperforms.

ARI = ADR ÷ comp-set ADR × 100; MPI = occupancy ÷ comp-set occupancy × 100.

Length-of-stay controls (minimum stay, closed-to-arrival) protect high-demand dates.

Overbooking levels are set from historical no-show and cancellation rates.

Rate fencing uses restrictions (advance purchase, nonrefundable) to separate segments.

Forecast error = (actual − forecast) ÷ actual; MAPE averages absolute percentage errors.

Budget is a fixed annual plan; forecast is a revised expectation updated with actuals.

Rooms revenue budget = forecast rooms sold × forecast ADR, by month and segment.

Pickup report shows net new bookings by arrival date since a prior date.

Flow-through % = change in GOP ÷ change in revenue.

Flexible budget restates costs at actual volume to isolate spending control.

Compare results to budget and same time last year (STLY) by segment and channel.

Net rate = gross rate × (1 − commission); compare channels on net revenue.

Rate parity requires consistent public rates across all channels.

Best Rate Guarantee promises the lowest public rate on the hotel's own channels.

CPA = distribution cost ÷ bookings; use it to compare channel efficiency.

Dynamic pricing adjusts rates by demand, lead time, and competitive position.

Manage channel mix by net RevPAR and profitability, not by booking volume.

Rate integrity means identical rate and restrictions wherever the product is sold.

Document the rationale for rate fences, overbooking levels, and displacement decisions.

Sharing future rates or occupancy with competitors to set prices is illegal collusion.

OTA and corporate rate parity commitments are binding contract terms.

Guest data use requires consent and compliance with privacy regulation.

Communicate forecast and pricing rationale to sales, front office, and finance.

Revenue gain never justifies unsafe occupancy or degraded service standards.

Employees with pricing authority must avoid conflicts of interest in channel or vendor selection.