Hotel Revenue Management Glossary

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Revenue Management Strategy

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

Although at all hotels Revenue Management is essential, that doesn't mean it is easy! An individual or team responsible for managing revenue at a hotel, or maybe even across several hotels that are part of an international chain, will find relief in having a Revenue Management Strategy to refer to when dealing with problems and tackling unexpected issues, and of course when seeking to maximise profits through achieving full occupancy at the highest possible rate all year round (every hotel manager's dream).

Synonyms: revenue management strategies
Reverse Auction

What is the meaning / definition of Reverse Auction in the hospitality industry?

The term Reverse Auction, refers to an auction at which the buyer bids for a room offered by the seller. This is the opposite of a traditional auction at which the seller takes bids from buyers to increase the price of the good or service.

For hotels this allows the sale of distressed inventory to guests searching for a night stay. Due to the nature of auctions, the guest can bid up to the amount he/she would like to pay - and the hotel only accepts the bids it would like to accept. By doing so both side are satisfied - the hotel is able to get rid of rooms it couldn't through its normal channels - thereby not occurring a loss, and the guest is able to get a room for a fair price.


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

REVPAM stands for: Revenue Per Available Square Meter

It is a KPI relevant for hotels which rent out its space for conferences and banquets. The utilization efficiency of the sales department is calculated on the revenue per available square meter of the banquet space.

Synonyms: Revenue per available Meter,RevPam
RevPAR - Revenue Per Available Room

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

RevPAR stands for: Revenue Per Available Room

RevPAR is a very classic KPI and regarded as one of the most important financial calculations for any hotel to see how much revenue they have made within a certain period of time.

When an analysis is carried out, RevPAR figures can be compared to RevPAR of the hotel during the same time frame of the previous years or to its compset.

How do you calculate RevPAR?

RevPAR Formula for Hotels, by Xotels


RevPAR Formula 2 for Hotels, by Xotels

Synonyms: Revenue Per Available Room, revpar, Gross Room Revenue
Revpar Index

What is the meaning / definition of RevPar Index in the hospitality industry?

RevPar Index, is a measure that originates from RevPar. It focusses on comparing your hotels RevPar with the RevPar of the hotels in your competitive set. This calculation will allow you to see how well you are executing your sales and revenue management strategies relative to your competition.

The RevPar Index is able to show you what your variance is relative to your competitors and what the gap itself is worth. If your hotel is for example 10% below the other hotels concerning RevPar Index it means that with an investment into your products/ services you might be able to close the gap and harness the revenue your competitor is currently able to capture. By having this information available you are able to justify an investment into your assets.

RevPasf - Revenue/Profit Per Available Space/Time

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

RevPASF stands for: Revenue per Available Space/ Function.

Similar to RevPASF, it considers revenue for an entire day of events, divided by the function spaces. It gives you a better idea of the profit generated by your meeting rooms. This is part of a more global revenue management strategy.

How do you calculate RevPASF?

RevPASF formula: RevPASF = Total function rooms revenue/ total area available

This indicates you how your function rooms are profitable on a given day/ event.

Synonyms: revpasf

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

REVPASH stands for: Revenue Per Available Seat Hour

REVPASH as a revenue management tool for food and beverage outlets in a hotel (similar to RevPar for Rooms). This calculation is useful to measure the usage and revenue of a seat per hour and it allows a better understanding and planning for the food and beverage manager. Restaurants take reservations but walk-in guests are commonly expected during opening hours.

Synonyms: Revenue per available seats and hour, revpash

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

RevPath stands for: Revenue Per Available Treatment Hour

RevPath is a calculation for Spa operations that takes measure to a more detailed level, given the need to “turn over” of rooms during the day. It is very similar to RevPar for Rooms. It helps the spa operation to manage time effectively.

Synonyms: Revenue Per Available Treatment Hour

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

RevPOR stands for: Revenue Per Occupied Room

RevPOR, unlike RevPAR, considers revenue per occupied room which gives you a better understanding of how much profit you make from the guests who actually stay at your property.

Synonyms: Revenue Per Occupied Room, RevPor
RFP - Request For Proposal

What is the meaning / definition of RFP, in the hospitality industry?

RFP stands for Request for Proposal and is a formal solicitation for bids on business from suppliers that are interested in providing a commodity, service or valuable asset to the hotel.

Synonyms: RFP, Request For Proposal
RGI - Revenue Generation Index

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

RGI stands for: Revenue Generation Index.

RGI compares your hotel's RevPar to the average RevPar in the market. It is used to determine if a hotel is gaining a fair share of revenue compared to its compset.

How do you calculate RGI?

RGI Formula for Hotels, by Xotels

Synonyms: Revenue Generation Index, RGI, RevPAR Index
ROI - Return on Investment

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

ROI stands for: Return on Investment

ROI is a profitability ratio used to evaluate the gain or loss generated on an investment. In other words, it indicates how much money was earned on an investment, expressed as a percentage of the purchasing price/ initial investment.

Synonyms: ROI, Return on Investment
Room Block

What is the meaning / definition of Room Block in the hospitality industry?

A Block Booking refers to a group of rooms reserved for a specific customer -- usually for a set period of time.

Synonyms: room blocking, room block
Room Inventory

What is the meaning / definition of Room Inventory in the hospitality industry?

There are perhaps two questions to consider here: 1) What is room inventory? And 2) Why is room inventory so important to hotels large and small across the world?

Well, in simple terms, room inventory is basically a calculation:

The number of rooms a hotel has MINUS the amount of rooms sold
= the number of rooms available for a particular day

Room Type

What is the meaning / definition of Room Type in the hospitality industry?

In Hospitality, the days of a hotel only offering guests standard rooms for reservations are long gone! Nowadays, there are myriad room types and suites at hotels around the world – a delightfully eclectic selection – meaning that any size of group and most preferences can be catered for.

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