Basic Hospitality Terms and Formulae
Basic Terms & Terminology
1. Achievement Factor - The percentage of the rack rate that a hotel actually receives: in hotels not using RM software, this factor is generally approximated by dividing the actual average room rate by the potential average rate
2. ADR – An occupancy ratio derived by dividing net room’s revenue by the number of rooms sold
3. Average rate per guest – An occupancy ratio derived by dividing net rooms revenue by the number of guests
4. Competitive Set - The competitive group of hotels in a market that provides the most important competition for a hotel
5. Daily Operations Report - A report that summarizes the hotel’s financial activities during a 24 hour period and provides insight into revenue, receivables, operating statistics, and cash transactions related to the front office also known as “Manager’s Report”
6. Forecasting - The process of predicting events and trends in business: typical forecasting for the rooms division includes room availability and occupancy.
7. House Count - The forecasted or expected number of guests for a particular period, sometimes group or non group business.
8. Hubbart Formula - A bottom up approach to pricing rooms; in determining the average price per room, this approach considers costs, desired profits and expected rooms sold
9. Income Statement - A financial statement that provides important information about the results of hotel operations for a given period of time.
10. Market Condition Approach - An approach to pricing that bases prices on what comparable hotels in the competitive set are charging for a similar product
11. Multiple Occupancy % - The number of rooms occupied by more than one guest divided by the number of rooms occupied by guests (total rooms).
12. Multiple Occupancy Ratio - A measurement used to forecast food and beverage revenue, indicate clean linen requirements, and analyze daily revenue rate derived from multiple occupancy% or by determining the average
1. Achievement Factor - The percentage of the rack rate that a hotel actually receives: in hotels not using RM software, this factor is generally approximated by dividing the actual average room rate by the potential average rate
2. ADR – An occupancy ratio derived by dividing net room’s revenue by the number of rooms sold
3. Average rate per guest – An occupancy ratio derived by dividing net rooms revenue by the number of guests
4. Competitive Set - The competitive group of hotels in a market that provides the most important competition for a hotel
5. Daily Operations Report - A report that summarizes the hotel’s financial activities during a 24 hour period and provides insight into revenue, receivables, operating statistics, and cash transactions related to the front office also known as “Manager’s Report”
6. Forecasting - The process of predicting events and trends in business: typical forecasting for the rooms division includes room availability and occupancy.
7. House Count - The forecasted or expected number of guests for a particular period, sometimes group or non group business.
8. Hubbart Formula - A bottom up approach to pricing rooms; in determining the average price per room, this approach considers costs, desired profits and expected rooms sold
9. Income Statement - A financial statement that provides important information about the results of hotel operations for a given period of time.
10. Market Condition Approach - An approach to pricing that bases prices on what comparable hotels in the competitive set are charging for a similar product
11. Multiple Occupancy % - The number of rooms occupied by more than one guest divided by the number of rooms occupied by guests (total rooms).
12. Multiple Occupancy Ratio - A measurement used to forecast food and beverage revenue, indicate clean linen requirements, and analyze daily revenue rate derived from multiple occupancy% or by determining the average