CRME key terms

Revenue per available room, calculated by dividing total room revenue by the number of available rooms or by multiplying occupancy by average daily rate. It combines price and volume into one occupancy-normalized productivity measure.

Average daily rate, the total room revenue divided by the number of rooms actually sold in a period. It reflects achieved price only for occupied rooms and ignores unsold inventory.

The percentage of available rooms sold during a period, calculated as rooms sold divided by rooms available. It signals demand capture and capacity utilization but says nothing about the price achieved.

Total revenue per available room, dividing all revenue from rooms, food and beverage, spa, and other sources by available rooms. It rewards cross-department spending rather than room rate alone.

Gross operating profit per available room, dividing gross operating profit by available rooms. It captures cost efficiency and flow-through, showing whether revenue growth actually reaches the bottom line.

The share of incremental revenue that converts into incremental profit between two periods. Strong flow-through means added revenue is not consumed by variable costs, commissions, or service delivery expenses.

Rules such as advance purchase, length of stay, cancellation penalties, and non-refundability that separate customer segments so lower prices reach price-sensitive buyers without cannibalizing higher-paying demand.

The lowest unrestricted, publicly available rate for a given room type and date, bookable without special qualifications. It anchors the rate ladder and is the reference point for many parity and discount rules.

A contractual or commercial arrangement requiring a hotel to offer the same publicly available rates and conditions across specified distribution channels. Parity clauses are regulated differently by jurisdiction and are increasingly narrowed by law.

Setting room rates continuously in response to forecast demand, booking pace, competitor rates, and remaining inventory. It replaces fixed seasonal rate grids with date-specific, demand-driven price decisions.

Predicting future room night demand by date, segment, and length of stay using historical data, booking pace, events, and market signals. Forecast accuracy drives pricing, staffing, and inventory allocation decisions.

The rate at which reservations accumulate for future dates compared with the same point in prior periods. It reveals whether a date is running ahead or behind and informs when to open, close, or reprice inventory.

Net new room nights booked for a future date during a defined recent window. Positive pickup signals strengthening demand and may justify raising rates or closing discounts.

The demand that would have materialized if no inventory limits, closures, or rate restrictions had blocked it. It estimates true market appetite and prevents forecasts from being capped by past sell-outs.

Evaluating whether accepting a group or block displaces more valuable transient business on the same dates. It compares total contribution of the proposed business against expected displaced revenue and profit.

Restrictions such as minimum stay, maximum stay, or closed-to-arrival dates that shape the mix of bookings on high-demand nights. They protect shoulder nights and prevent one-night bookings from fragmenting peak periods.

The rules governing how rooms are allocated, opened, closed, or held across dates, room types, and segments. They translate demand forecasts into sellable availability and protect inventory for higher-value demand.

Deliberately accepting reservations beyond physical capacity to offset expected no-shows and cancellations. The level must be set from historical wash rates and managed against walk costs and guest harm.

A guest with a confirmed reservation who neither arrives nor cancels before the cutoff. No-shows release inventory late and create revenue risk unless guaranteed by deposit or card authorization.

Relocating a guest with a confirmed reservation to another property when the hotel cannot honor the booking. Walking carries direct cost, compensation obligations, reputational damage, and possible regulatory exposure.

Dividing demand into groups with distinct needs, booking behavior, and willingness to pay, such as corporate negotiated, group, leisure, and opaque channels. Segments underpin pricing, fencing, and marketing allocation.

The net contribution a guest or account generates after room cost, distribution cost, discounts, servicing, and loyalty expense. It separates high-revenue accounts from those that erode margin through costly behavior.

Revenue remaining after variable costs such as commissions, cleaning, amenities, and payment fees. It is the correct basis for comparing bookings when fixed costs do not change with the decision.

Online travel agency, a third-party platform that markets and sells hotel inventory for a commission or margin. OTAs deliver reach and demand capture but raise distribution cost and can dilute direct relationships.

The proportion of room nights and revenue arriving through each distribution channel, such as direct, OTA, GDS, wholesaler, and metasearch. Mix shifts change net revenue even when gross rates are unchanged.

The total distribution and marketing cost incurred to generate one booking, including commission, media spend, and loyalty redemption cost. Comparing it across channels reveals which demand is genuinely profitable.

RevPAR calculated after distribution costs, commissions, and channel expenses are deducted from room revenue. It measures what the hotel actually keeps per available room rather than gross top-line productivity.

A contracted allocation of rooms and often function space for a group, with negotiated rate, cutoff date, and attrition terms. Blocks must be evaluated for displacement, ancillary spend, and cancellation risk.

A contract provision requiring the group to pay for a specified percentage of unused blocked rooms or function space. It protects the hotel when actual pickup falls below the agreed commitment.

A contract clause excusing performance when unforeseen events beyond control, such as natural disaster, epidemic, or government order, prevent it. Wording determines whether deposits are refunded or retained.

The terms specifying deadlines, penalties, and refundability for canceling a reservation. Policy design balances revenue protection against conversion loss and must comply with consumer protection rules.

A contractual term requiring one party to receive terms no worse than those given to others. In distribution, parity and MFN clauses have drawn competition scrutiny in several jurisdictions.

Optimizing revenue across all profit centers and guest touchpoints rather than rooms alone. It considers restaurant, spa, meetings, and ancillary spend when deciding which business to accept and at what price.

The coordinated plan aligning pricing, sales, marketing, distribution, and revenue management around shared commercial goals. It replaces siloed departmental targets with one view of demand, margin, and guest value.

Ensuring revenue management, sales, marketing, finance, and operations share data, incentives, and decision rights. Misalignment shows up as conflicting rate decisions, unprofitable group acceptances, and forecast distrust.

A situation where individual or departmental targets reward behavior that harms overall commercial results, such as sales bonuses on room revenue that ignore distribution cost or displacement.

The deliberate plan for which customer segments to grow, hold, or discourage, and the price, channel, and service terms applied to each. It links market positioning to measurable commercial targets.

Reservation requests refused because of rate restrictions, closures, or sold-out status. Tracking denials helps reveal whether controls are turning away profitable demand and distort demand forecasts.

The legal and service obligation to house a guest elsewhere at the hotel's expense when a confirmed reservation cannot be honored. Failure can trigger consumer law claims and regulatory complaints.