AHLEI CHRM flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

RevPAR

Revenue per available room, calculated as ADR multiplied by occupancy or as total room revenue divided by rooms available. It combines rate and volume into a single yield measure.

ADR

Average daily rate, equal to total room revenue divided by rooms sold. It measures the average price achieved per occupied room for a period.

Occupancy percentage

Rooms sold divided by rooms available, expressed as a percentage. Rooms available excludes out-of-order rooms but includes out-of-service rooms still counted in inventory.

Perishability

The property that an unsold room night cannot be inventoried and has zero residual value after the date passes. It is a core condition making revenue management applicable to hotels.

TRevPAR

Total revenue per available room, calculated as total revenue from rooms, food and beverage, and other sources divided by rooms available. It captures total guest spend.

GOPPAR

Gross operating profit per available room, equal to gross operating profit divided by rooms available. Unlike RevPAR, it is stated after departmental and undistributed operating expenses.

Market segmentation

Dividing demand into groups such as transient, group, contract, and discount based on booking behavior and price sensitivity, so each segment can be priced and managed separately.

Displacement analysis

Comparing the total revenue of a prospective group against the transient revenue the same room nights would otherwise generate, to decide whether accepting the group increases net revenue.

Hurdle rate

The minimum rate a booking must achieve for its date to be accepted, set from the displacement value of the inventory. Bookings below the hurdle are declined or restricted.

RevPAR Index (RGI)

Hotel RevPAR divided by competitive-set RevPAR, multiplied by 100. A value above 100 indicates the hotel is outperforming its comp set on revenue per available room.

ARI and MPI

ADR Index equals hotel ADR divided by comp-set ADR times 100; occupancy index (MPI) does the same for occupancy. RGI approximates ARI times MPI divided by 100.

Length-of-stay controls

Restrictions such as minimum-stay requirements and closed-to-arrival dates that protect high-demand dates from short bookings which would block longer, higher-revenue stays.

Overbooking level

The number of rooms sold beyond physical capacity to offset expected no-shows and cancellations. It is set from historical no-show and cancellation rates, not guesswork.

Rate fencing

Using restrictions such as advance purchase, nonrefundability, membership, or stay requirements to separate segments so higher-rate guests cannot buy lower-rate products.

Segment mix analysis

Tracking the share and yield of each market segment. A shift toward low-rate segments can raise occupancy while actually lowering RevPAR and profitability.

Forecast error

Calculated as actual minus forecast, divided by actual. Averaging absolute percentage errors across periods gives MAPE, a standard measure of forecast accuracy.

Rolling forecast

A forecast updated each period, such as a 3-day, 7-day, or 90-day horizon, replacing stale annual projections for short-term staffing, pricing, and inventory decisions.

Budget versus forecast

A budget is a fixed annual financial plan; a forecast is a revised expectation updated as actual results arrive. Variance equals actual minus budget, favorable when revenue exceeds plan.

Rooms revenue budget

Built as forecast rooms sold multiplied by forecast ADR, developed by month and by segment from occupancy and rate assumptions rather than a single annual figure.

Pickup report

A report showing net new bookings by arrival date since a prior date. It is the core input for short-term reforecasting and for adjusting rate and inventory controls.

Flow-through percentage

The change in gross operating profit divided by the change in revenue. It measures how much of each incremental revenue dollar converts into profit.

Flexible budget

A budget restated at actual volume, so cost variances reflect spending control rather than differences in occupancy or business volume. It isolates controllable performance.

Rate parity

The requirement that public rates and restrictions be consistent across all distribution channels. Violations create guest distrust and can trigger OTA penalties or contract breaches.

Best Rate Guarantee

A hotel promise that its own channels offer the lowest publicly available rate, used to build direct-booking share and reduce reliance on commission-paying intermediaries.

Net versus gross rate

Net rate equals gross rate multiplied by one minus commission. Channels should be compared on net revenue and profitability rather than on the gross rate quoted to the guest.

Cost per acquisition

Distribution cost divided by bookings generated. It lets a hotel compare the efficiency of channels such as brand.com, OTAs, GDS, and voice on a consistent basis.

Channel mix management

Selecting and steering distribution channels by net RevPAR and profitability rather than by booking volume, since high-commission channels dilute margin even when they fill rooms.

Dynamic pricing

Adjusting rates continuously in response to demand, lead time, and competitive position, as opposed to static rate tiers that change only at set occupancy thresholds.

Rate integrity

Ensuring the same rate and restrictions apply wherever the product is sold, protecting price positioning and preventing undercutting across channels and segments.

Price collusion

Competitors sharing future rates or occupancy to coordinate pricing. It is anticompetitive and illegal, and revenue managers must avoid any such exchange of competitive information.

Decision documentation

Recording the rationale for rate fences, overbooking levels, and displacement decisions so revenue management choices are transparent, defensible, and reviewable by leadership and auditors.

Cross-functional alignment

Communicating forecast and pricing rationale to sales, front office, and finance so that execution on the floor matches the revenue strategy set by the revenue manager.

Guest data privacy

Rules governing how booking and profile data may be used for pricing and marketing, typically requiring consent and compliance with privacy regulation before data is shared or reused.