Hotel Revenue Management Glossary

Need to know what a hotel term means? Look it up in the Xotels Glossary. We explain definitions of terminology industry lingo from hotel revenue management, ecommerce, marketing and distribution.

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Term Definition
Camping

What is the meaning / definition of Camping in the hospitality industry?

Camping is a term originally used to describe the activity of staying overnight in a tent. Generally camping takes place in the outdoors in remote locations away from general civilisation. Since its humble beginning in the 19th century camping has evolved to also incorporate other forms of overnight stays, besides nights spent in a tent

Today camping can describe the activity of staying in a tent, bungalow, camper vans, glamping tents and camping pods etc. on a campsite.

It can thereby vary greatly in preparation. Some survival campers set out with the least possible equipment to challenge themselves to survive in "the wild". While other campers come prepared with gas, electricity, heating, warm showers television and internet.

Cancellation Clause

What is the meaning / definition of Cancellation Clause in the hospitality industry?

The term cancellation clause refers to the terms mentioned in the hotel booking contract, in which the hotel states under which terms a cancellation can occur. The kind of cancellation clause differs depending on if 1.) only one/multiple room(s) are booked - or 2.) the customer is booking whole blocks of rooms (for Events/Conferences etc.). Make sure to align your Cancellation Clause with your Revenue Management Strategy

In cases of cancellations, hotels, which are normally aiming to satisfy their guests are in a situation of inner conflict. Event planners often have different objective than hotels, when it comes to assessing a fair cancellation clause. The aim is for both parties to be treated fair and reasonably in the case of cancellation. Trust in these moments can help achieve repeat business and therefore overall higher occupancy - while bad/ unfair cancellation clauses might have a strong negative impact on business.

Capex - Capital Expenditure

What is the meaning / definition of Capital Expenditure in the hospitality industry?

Capital Expenditure, also known as Capex, refers to all capital improvement costs of owning hotels over an asset's life span, including such capital costs that prolong the economic life of the asset.

Synonyms: Capital Expenditure, Capex
Capital Reserve

What is the meaning / definition of Capital Reserve in the hospitality industry?

The term Capital Reserve refers to an account on a balance sheet containing capital reserved for specific circumstances. Any profit that arises in a company in special circumstances is called Capital Reserve. The capital in the Capital Reserve is meant for capital expenditures. It should thereby help prepare the company for any unforeseen events like inflation, instability, need to expand the business or to get into a new and urgent project.

Cash Management

What is the meaning / definition of Cash Management in the hospitality industry?

The term Cash Management describes the field of management that concerns itself with the collecting, managing and investing of cash. Cash Management is highly important in hospitality due to its ability to improve cash flow and shortening the cash cycle. Thereby allowing operations departments to act and purchase more flexibly.

Chain Code

What is the meaning / definition of Chain Code in the hospitality industry?

Chain Code is a two-character code used to identify hotel chains within a GDS. Chain codes may vary by GDS.

Chain-Hotel

What is the meaning / definition of Chain Hotel in the hospitality industry?

A Chain Hotel is a hotel that is part of a series or of a group of hotels operated by the same company or owner. Opposite of an independent hotel it is a ‘chain-affiliated’ hotel.

Synonyms: Chain Hotel
Channel Management

What is the meaning / definition of Channel Management in the hospitality industry?

Channel Management (also Multi-Channel-Management) refers to the techniques and systems used by hotels in line with their distribution policy. This management method includes content management as well as data reconciliation in various distribution channels. It means the updating of the hotel information, of room rates and availabilities across all distribution channels, such as hotels website, third parties (OTAs, IDS, ADS) and the CRS/GDS.

Synonyms: channel management, channel manager
Channels

What is the meaning / definition of Channels in the hospitality industry?

A term that refers to Distribution Channels and that describes the different methods / platforms buy which / in which bookings for a hotel are made. A Channel can be a hotel’s booking engine, a direct phone reservation or a specific stream of revenue such as a 3rd party website, an OTA, etc.

Synonyms: Channels
Children Policy

What is the meaning / definition of Children Policy in the hospitality industry?

The term children's policy, refers to the terms that exist for children on the hotels premises. Every hotel or hotel chain generally has their own policy, depending on the facilities it offers and who its target market is, and it may vary greatly by continent and country.

Concerning the rooms, the children policy generally offers lower rates for children up to a certain age as they do not require their own rooms and are happily hosted in a cot, or extra bed in the parents room. Concerning the premises, in the case of family hotels or family resorts, policies might be very lenient - allowing children to roam free throughout the premises and play everywhere in the building, without the oversight of their parents. Though some areas might be excluded, but must be stated clearly in the children's policy in order to avoid liabilities. The pool area for example and gymnasium are often out of bounds for children without supervision, due the dangers that they pose for a child are so serious.

Close Out

What is the meaning / definition of Close Out in the hospitality industry?

Hotel rooms made unavailable from sales. Such a closed out could be for a variety of reasons and applied to individual market segments.

Synonyms: Close Out Date, Close Out Dates, close out
Comfort Letter

What is the meaning / definition of Comfort Letter in the hospitality industry?

A Comfort Letter is a document prepared by a bank, an accounting firm or an audit firm confirming the legitimacy and soundness of a company's finances.

Commission

What is the meaning / definition of Commission in the hospitality industry?

Commission is a charge that a hotel pays to third parties (travel agents, OTAs) for selling their hotel rooms. It is usually a fix percentage of the room rate.
The commission ranges from 10% to 30% depending of the OTA (how influential it is), on the size of the hotel and also on the popularity of the destination.
Large hotel chains usually have more negotiation power.

Comp Set - Competitive Set

What is the meaning / definition of Comp Set in the hospitality industry?

A Competitive Set (or Compset) is a group of hotels that are seen as direct competitors to your own hotel.

Synonyms: Competitive Set, compset
Competition Based Pricing

What is the meaning / definition of Competition Based Pricing in the hospitality industry?

The term competition based pricing, also known as competitive pricing refers to the process of a company pricing its product/ service (in hotels rooms, food & beverages) according to the competitors. Competition Based pricing should be part of your Revenue Management Strategy

In industries which have preceded in the industry life cycle competition based pricing often forces smaller uncompetitive companies into bankruptcy. In general, competitive pricing often occurs when many companies are offering similar products or services to their market. When this happens and companies aren't able to differentiate themselves from their competitors the last factor they can adjust to win customers is price. Therefore, this type of pricing is rather a last resort - especially for hotels - as they should aim to differentiate themselves by their offerings, whereby they can charge a premium for their service.

Therefore, this rather happens with commodities or products that have less "status" differentiation. In the luxury hotel market for example, competition based pricing may actually hurt the hotel in the long-term as their clientele actually chooses for them due to their price being related to their exceptional offerings.

On the other hand, Budget hotels & hostels deal with price sensitive clientele whereby the price stands in the foreground. These establishments are able to increase demand easily by lowering their price as customers are "hunting" for bargains. Therefore, within highly competitive cities budget hotels are constantly orienting themselves on their competitors. This drives down prices, in favour of the consumer.

Competition based pricing comes with advantages and disadvantages for companies, following this pricing strategy.

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