A tool to make your hotel more profitable! Hotel revenue management is all about selling the right room at the right price to the right guest. There are many factors that make hotel revenue management different than other traditional industries such as perishable inventory, fixed capacity, ability to segment the market, and the possibility to forecast demand.

Yes, while the concept of revenue management applies to many industries, it is essential for most hotels. Owner-operators often attempt to do it themselves, but as a hotel grows more dynamic, it becomes more important for one team to focus on delivering an exceptional guest service experience and another to handle the pricing and distribution of the hotel inventory (whether that be rooms, banquet space or restaurant seats). All teams must still work together to drive results.

A comp set or competitive set is the group of hotels with which a property measures its relative success and competes for demand. Typically it includes 4-6 properties that are in close proximity to the hotel in question that provide a similar offering to the subject property in terms of price, amenities, room count, room size, etc.

BAR stands for Best Available Rate, and is the standard, visible nightly rate available to all travelers. BAR is sometimes referred to as rack or retail rate and is the master rate from which all other rate plans are derived, whether they are brand discounts, negotiated rates or package rates.

LNR stands for local negotiated rate. These are contracting rates either fixed or at a % off that are established with local businesses to ensure repeat business for the hotel.

When a hotel is in parity, it means that the hotel’s available rates across all channels (Expedia, Booking.com, Hotwire, TripAdvisor, brand.com, etc.) are the same. When a hotel is out of parity, it means its rates are different across different channels. For example, if brand.com says the rate is at $89 while Expedia says $79, the property is out of parity. To maintain rate parity is to offer the same rates and inventory across all platforms – if you offer a discount on one channel, you must mirror it on all channels.

ADR is your average daily rate. This is the average of how much a room actually sells for on any given day, and includes any promotional discounts or commissions that were applied when the room was sold. ADR = Total Rooms Revenue/Total Rooms Occupied

ADR breakage is the disparity between what the BAR is for any given day and the ADR that is coming in for that day. This is often expressed in a percentage as ADR/BAR. A breakage % nearing 1 is desirable because this means you are capturing an ADR close to what you are selling (i.e. less discounting), however, when someone refers to a “high breakage” that generally mean that your hotel has a large disparity between ADR and BAR.

OTA stands for online travel agent, i.e. Expedia.com, Booking.com, etc. This is an additional platform from which to sell rooms, typically at a higher cost to the property than booking direct. While the property must pay a commission to sell through the OTAs, there is a cost to not being listed on an OTA through decreased exposure to potential guests.