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
Fair Market Share

What is the meaning/definition of Fair Market Share in the hospitality industry?

Fair Market Share is an indication that a hotel’s overall performance stacks up against its immediate competitors.

A hotel within a competitive set can work out if it’s getting its Fair Market Share through a simple calculation:

  • Fair Market Share = Total number of rooms at the hotel / Total number of rooms in the comp set
Fam Trip

What is the meaning / definition of FAM Trip in the hospitality industry?

The term FAM stands for Familiarisation. The Tours - commonly known as FAM Trips - are trips organised by travel providers (can be a Tour Operator, an Airline, a Hotel Chain, a Tourism Board or other DMOs representing a Destination, etc.) with the purpose of educating about their products & services and promoting them.

Synonyms: Fam Tour, farm trip
FC - Fixed Costs

What is the meaning / definition of Fixed Costs in the hospitality industry?

Fixed Costs, abbreviated as FC, are costs which are invariable, meaning they stay relatively constant in value despite changes in production or sales rates. Fixed Costs, mixed costs and variable costs make up the total costs at any business. In the hospitality industry Fixed Costs make up a large percentage of total costs incurring, as hotels require many expensive assets such as buildings, technology, furniture and equipment. Successful Hotel Operators are able to reduce Fixed Costs, thereby increasing profitability for hospitality businesses

Synonyms: Invariable Costs, FC, Fixed Costs
Feeder City

What is the meaning / definition of Feeder City in the hospitality industry?

The term Feeder City refers to cities of origin which feed travelers to hubs or gateway cities. Basically it is to determine where does the tourism come from.

Fenced Rate

What is the meaning / definition of Fenced Rate in the hospitality industry?

The term Fenced Rate refers to reservations that offer certain benefits for bookers: under some conditions and requirements.

FFE - Furniture, Fixtures and Equipment

What is the meaning / definition of Furniture, Fixtures, and Equipment in the hospitality industry?

FFE stands for Furniture, Fixtures, or other Equipment that has no permanent connection to the structure of the building. It is an accounting term used in valuing, selling, or liquidating a company or building. When valuing a company it is important to consider FFE as they may depreciate substantially.

Synonyms: FFE, Furniture Fixtures Equipment, Furniture Fixtures and Equipment
Fit-Out

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

The term ‘Fit out’ is used in the hospitality industry to refer to the process of preparing an interior space for the guests and customers. This includes the planning, choosing and fitting of the interior. Everything down from the wall paper to the fork used by the customer is appropriately matched to create an overall concept. This service is often done by Hospitality Design and Concept Development Companies.

The interior of a cafe, bar, restaurant and hotel all greatly influences the guest experience. But not only that, successful businesses also recognise the value of creating a space in which employees are encouraged to commit themselves towards providing extraordinary service. It's of highest importance that an environment brings the best out of the employees. Making sure that every detail is carefully curated and chosen allows a business to run more efficiently and effectively. This takes a lot of consideration of details, as choice of material will eventually influence the longevity of an environment.

An inspiring interior is therefore instrumental in building brand loyalty and striking the right note with staff and clients.

Flash Sales

What is the meaning / definition of Flash Sales in the hospitality industry?

Flash Sales are highly discounted and time-limited sale promotions. Hotels usually use this way of discounted sales to sell an unsold inventory. Selling those ‘hot deals’ is an opportunity for underperforming hotels to generate growth.
Flash sales can be initiated by email campaigns, which reach consumers who are usually not contacted through existing distribution channels.

Flexible Price Policy

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

Flexible pricing is the practice of pricing a product or service by negotiations between buyers and sellers, within a certain range. It is one of many different pricing strategies used by management to stimulate demand. When done correctly - companies are able to sell their products with a higher price than originally. A flexible price policy is a standard practice within most Revenue Management strategies.

This strategy is more common in services which are customised as per the customer’s requests.

For example a customer requests a service from a hotel, that is normally not supplied - therefore no price is set making it open for negotiations. In this case hotels can operate with a flexible price policy allowing customers to purchase off the menu items for an additional charge. The customer will hereby evaluate the price according to him known other prices for such products or services.

FOC - Free of charge

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

FOC stands for: Free of charge.

Synonyms: Free of charge, FOC
Forecast

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

Any hotel seeking to maximise profits, should look ahead and try to predict a future situation. One way to do this in an organised manner, is to create something called a Forecast. Forecasting can be done at any time of year, by any kind of establishment in the hospitality sector (not only large hotels but also small, independent hotels) across the world.

The best way to Forecast future bookings and demand is to use a calculation – to ask a relatively simple question: 'At our hotel, what is the likely expected revenue in 2016, based on our revenue management team's analysis of figures from 2015 (occupancy and average rate)?'

Franchise Agreement

What is the meaning / definition of Franchise Agreement in the hospitality industry?

The franchise agreement is the legal contract that binds a franchisor and franchisee in business.

The franchise agreement is a contract that generally consists of terms and clauses that specify as to how a business (franchisor) agrees to provide another party (franchisee) with the company's brand, services, operation methods and any other support to operate a similar business in exchange for a initial payment as well as a percentage of the generated income in form of a monthly re-occurring fee (royalty fee).

Franchise Disclosure Documents

What is the meaning / definition of Franchise Disclosure Documents?

The term Franchise Disclosure Document, also known under the acronym FDD, refers to a legal document implemented in 2008, in the US. It is used to fully inform potential franchisees about the investment. This document contains major information and has to be given to the franchisee at least 14 days prior to the contract signature. The FDD is part of the due diligence process each potential franchisee must undertake – thoroughly – before signing a franchise agreement.

Franchise Fee

What is the meaning / definition of Franchise Fee in the hospitality industry?

The Franchise Fee or cost is an initial payment that a franchisee makes towards his franchisor in order to join the franchise.

Franchisee

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

The Individual, group or business that possesses or operates a franchise under an agreement with a franchisor.

Being a Hotel Franchise Company can allow business owners to start a business according to a tested methodology. This provides many benefits as well as some tradeoff compared to starting a business from scratch.

Some of the benefits of being a franchisee are that franchisors offer the independence of small business ownership supported by the benefits of a bigger business network. By being part of a bigger organisation a small business can benefit from the accumulated marketing efforts of the brand, thereby enabling a reach not possible for a small business owner.

Franchisors usually provide the training you need to operate their business model, thereby granting you access to unique knowledge.

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