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
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

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

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.


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.


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

A person or company that grants a franchise to an individual, group or business through an agreement.

Their role consists of providing everything necessary for the franchisee to operate their business accordingly to the franchisee agreement. A franchisor generally provides a brand, marketing operational procedures and more allowing the franchisee several benefits. Being a Hotel Franchise Company allows a business to grow at a higher pace than organic growth would allow. As the franchisee often incurs most of the costs and the franchisor mostly reaps the royalty fee for his services, this is also a low risk way of growth for companies. The most famous franchisor in the hospitality industry is McDonalds, with its stores spread over the whole world.

Friends & Family Rate

What is the meaning / definition of Friends & Family Rate in the hospitality industry?

The term friend and family rate, refers to the rate given to family members and friends of employees or managers working at hotels.

The concepts which exists with all types of businesses, from hotels to airlines and independent businesses allows a reduction in price for customers affiliated to the companies. This is done as an benefit for employees allowing them to show their friends and family members the experiences they daily create for others.

Full Service Hotel

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

The term full service hotel, describes a hotel which offers a variety of different services and includes all of these services in the price. This type of hotels, generally have a higher price, though guests are sure that when they have booked that they will not encounter further significant costs. The price generally covers costs incurred in the F&B areas (bar, breakfast, lunch, dinner), SPA, laundry, turn-down service, shuttle service, room-service, equipped meeting areas. The opposite to this is a Limited Service Hotel.

Function Room Occupancy

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

The measurement term Function Room Occupancy calculates how a hotel is utilising its space. This is done to ensure hotels are effectively using all space available in their public areas. It can also be used to determine if more or less furniture can or should be added. Function Room Occupancy calculation is a standard practice within most Revenue Management strategies.


Totally occupied function room space/ Total square footage of function room space available = Function Room Occupancy Percentage

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