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Revenue Management & Digital Marketing Terminology

Revenue Management & Digital Marketing Terminology

Below is a comprehensive list of terms and terminology related to revenue management and digital marketing.

 

Alphabetical List of Terms

A

  • Ad Click: The number of times users click on an ad.
  • Ad Impression: The number of times an ad is displayed to users.
  • ADR (Average Daily Rate): The average price of selling a hotel room per day.
  • Algorithms: A set of computational (mathematical and statistical) formulae or rules revenue management systems use to make recommendations or decisions.
  • All Inclusive Hotel: All inclusive hotels incorporate more than solely the price of a room into the price per night, but also three meals per day (Breakfast, Lunch and Dinner), services and activities. Although every hotel is different and may or may not include other services like alcohol, airport transfers, rooms service and specific activities and services, it is a safer way for travellers to budget their expected expenses when travelling. Typically, all inclusive hotels are not located in city centres like boutique hotels, B&Bs and other similar lodging types, as they require large amounts of space to accommodate for the services and activities they are known for.
  • ALOS (Average length of stay): The figure is obtained by adding the total number of nights and dividing by the total number of bookings. Total nights / Total bookings
  • API: an acronym for Application Programming Interface, which is a set of routines, protocols, and tools for building software applications. The API specifies how software components should interact and identifies an endpoint through which systems can exchange data (e.g. shopping for availability results or booking reservations).
  • Affiliate Marketing: A form of marketing where affiliates promote products or services and receive a commission for each sale.

 

B

  • B2B (Business to Business): Known as Business to Business, a term that refers to the sale of products or services from one business to another.
  • B2C (Business to Consumer): Known as Business to Consumer/ Customer is a term that refers to the sale of products or services to individual customers and/or guests to create a profit. B2C is the most common way that hotel sales are made, which is why it is important to target this demographic when advertising and promoting a hotel.
  • Banner Ad: A popular type of digital image ad that can be placed across various websites. The largest and most popular image ad network is run by Google.
  • BAR (Best Available Rate): BAR stands for Best Available Rate which is the lowest rate of the day that is available for guests to book. The BAR rates are available to the general public, does not require pre-payment and does not impose cancellation or change penalties and/or fees, other than those imposed as a result of a hotel property’s normal cancellation policy.
  • Benchmarking: is a foundational element of revenue management. When benchmarking against competitors, it involves evaluating performance based on specific criteria.
  • Blog: Short for “web log”, a blog is a web page or a website that is regularly updated with new written content. Blogs are an important section of a website in digital marketing, as they offer fresh new content on a regular basis which can help attract new visitors, engage existing visitors, and give authority signals to Google.
  • Bounce Rate: The percentage of visitors who leave a website without taking any action.
  • Booking Window : The time period between making a reservation and the arrival date.

 

C

  • Cancellation Rate: Cancellation Rate, often displayed as a percentage, highlight the rate at which a hotel has its bookings cancelled. Hoteliers should be inclined to keep their Cancellation Rate as low as possible.
  • Campaign: A series of advertising messages that share a theme, and market a product or service. In the context of digital marketing, campaigns can be run through search and display network advertising platforms (i.e. Google, Bing), social media, email, or other online platforms.
  • CPC (Cost Per Click): The cost paid each time a user clicks on an ad.
  • CPM (Cost Per Thousand Impressions): The cost for displaying an ad a thousand times.
  • Click Through Rate: The ratio of how many times an advertisement was clicked on, versus how many times it was shown. It is calculated by dividing the ad’s clicks by the ad’s impressions. For example, if an ad is shown to 100 people, and 10 of them click the ad, then it has a click through rate of 10% (10 clicks / 100 impressions = 10%).
  • Conversion Rate: The percentage of visitors who perform a desired action, such as making a purchase.
  • CLV: customer lifetime value; like LTV but granularly looking at each individual guest to thereby spot microsegments and personalization opportunities.

 

D

  • Data Anomalies: Incorrect or outdated data that may have affected the RMS’s calculations.
  • Demand Forecasting: The process of predicting future demand for products or services.
  • Digital Marketing: A catchall term for online work that includes specialized marketing practices like SEO, PPC, CRO, web design, blogging, content, and any other form of advertising on an internet-connected device with a screen. Traditionally, television was not considered digital marketing, however the shift from cable television to internet streaming means that digital advertising can now be served to online TV viewers.
  • Direct Sales: The term Direct Sales refers to the revenue generated in the key Hotel Market Segments using a Direct channel: official hotel website, phone, email, livechat or messaging solutions… which does not entail the payment of any fees or commissions to a Travel Agency.
  • Dynamic Pricing: The practice of changing prices in real-time based on demand and other factors.

 

E

  • EBITDA: The acronym EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. EBITDA measures the operating performance of a company before considering the capital structure such as debt financing. EBITDA is also a significant input in terms of hotel valuation, given that EBITDA multiples are an integral industry-stand
  • E-Commerce: A classification for businesses that conduct transactions over the Internet. The most common form of e-commerce business is an online retailer that sells products directly to the consumer.
  • Eco Hotel: The term Eco Hotel describes a type of hotel which heavily emphasises sustainability in all its services and products delivered. There are many areas where Eco Hotels show their ability to be sustainable, starting with areas such as green energy and ending at small details such as recyclable straws instead of plastic ones. Eco Hotels have become a preferred accommodation type for environmentally conscious
  • Email Marketing: The use of email messages to promote products or services.
  • Engagement Rate: A measure of user interaction with content or an ad.

 

F

  • Forecasting: The use of historical data to predict future trends.
  • Facebook Ads Manager: A tool for creating Facebook ads, managing when and where they’ll run, and tracking how well campaigns are performing on Facebook, Instagram, or their Audience Network.
  • Flexible Price Policy: 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.

 

G

  • Galileo: Galileo is a Global Distribution System (GDS) .It refers to the reservation tool which travel agents use when making an air, hotel, car or other travel service booking.
  • Google Analytics: A tool that provides statistics and analytics for website traffic.

 

H

  • Hospitality Management: Hospitality Management is the field of management of businesses in the hospitality sector. Businesses in this sector include (independent) hotels, bed and breakfasts (B&Bs), resorts, motels, hostels, cruise ships and other hospitality establishments. A person (or Hospitality Management Company) manages the staff and services at a hospitality business. This is commonly referred to as people that manage one or several departments, like a general manager or manager.
  • Hotel Booking Curve: The Hotel Booking Curve is a hotel tool that helps aid in data-driven decision-making.
  • Hotel Brand: A hotel brand is an identity that binds a group of hotels together in the eyes of the customers. The identity is generated by marketing in form of designs, symbols and words. With their brand identity, hotels can differentiate themselves from their competition. Furthermore, besides the brand identity which is portrayed to the customer, hotel brands often have certain quality standards and details which each hotel, which is part of the brand must adhere to. This all contributes to creating a more pronounced brand identity.
    There are also Independent Hotel Groups that offer the same benefits as traditional brands such as marketing power and management expertise, but are less restrictive when it comes to enforcing strict rules, regulations or strong brand identity on the franchisor or chain member.
  • Hotel Market Share: In the Hospitality Industry, all hotels should strive to capture maximum revenue at all times. And, sometimes, comparing revenue levels with other hotels can provide a valuable insight. This can help to establish a hotel’s Market Share: the percentage of business it is getting within the hotel market overall.
  • Hybrid Hotels: In the future, the vast majority of hotels will be “hybrid” properties, where the human and artificial elements coexist, maintaining a service that is as human as possible but reducing costs and improving processes wherever feasible, in a sort of “technological humanism.”
    The hotels of the future can be divided into:
    1. Technocentric hotels: budget, young, hostel, corporate, hi-tech
    2. Anthropocentric hotels: hi-end, niche, luxury, experience
    3. Hybrid hotels: mass leisure

 

I

  • IDS (Internet Distribution System): IDS stands for: Internet Distribution System. This term is generally used to express the hotels distribution via Internet, Intranets, Extranets and other online services.
  • Internet of Things (IOT): The Internet of Things, commonly abbreviated IoT, refers to the ability to connect any device to the internet (or to another device) with a simple on/off switch.
  • Input Override: Adjusting the underlying variables or inputs in the forecasting model, such as modifying demand assumptions or correcting data inaccuracies.
  • Inventory Management: The process of controlling and managing product inventories.

 

K

  • KPI (Key Performance Indicator): Metrics used to evaluate the success of a business or specific activity.
  • Knowledge Graph/Table: A system launched by Google to understand facts about people, places and things and how all these entities are connected to each other. A knowledge graph appears on the SERP and is meant to provide answers, not just links, to search queries so users don't have to navigate to other sites to gather the information.

 

L

  • Lead Generation: The process of attracting and identifying potential customers.
  • LRV (Last Room Value): The term Last Room Value (LRV), refers to the maximum revenue a hotel can expect to make from the last room it has available for sale – as when market demand is high the last room may be sold at a higher rate then normal. It is used to avoid selling the last room below a certain rate.
  • Luxury Hotel: A Luxury Hotel is considered a hotel that provides a luxurious accommodation experience to the guest. There are no set standards (such as stars) for luxury hotels. Often 4 or 5-star hotels describe themselves as ‘luxury’. This also means that any accommodation type can use the term ‘luxury’. including boutique hotels, resorts, and B&Bs.
  • LOS: length of stay; a metric where increases signal growth in guest satisfaction, loyalty and property utilization as well as reduced costs (fewer check-ins and checkout cleans).
  • LTV: lifetime value; an aggregate value for all guests across all revenue streams, giving you a perspective that is uncoupled from a per-room analysis.

 

M

  • Markup: Within revenue management in the hotel industry Markup is used to refer to the amount an OTA increases your net room rate, to set the sell rate.OTA that work with a merchant model work with hotels on the basis of Net Rate. This means a hotel gives the OTA a rate, and the OTA will mark it up (increase) to set a sell rate.
  • Market Segmentation: The process of dividing a market into smaller segments with common characteristics.
  • Meta Search Engine: A search engine that gathers results from multiple search engines.

 

N

  • Net Revenue: The total revenue of a business after deducting expenses and discounts.
  • Net Rate: In hotel distribution we work with many rate levels. Room inventory is sold via some third party distributors at prices that are subject to commission. Others negotiate a (sometimes lower) price with the hotel that does not include a commissions. Such a rate is called a Net Rate.
  • NREVPAR (Net REVPAR): Net Revenue Per Available Room. NREVPAR metric is similar to RevPAR, except that it factors in the net revenues (meaning that it accounts for distribution costs, transaction fees and travel agency commissions).
  • NOI: net operating income; cited as perhaps the most important metric in terms of capturing profitability by factoring in opex, management fees, undistributed expenses and fixed expenses.

 

O

  • Occupancy Rate: The percentage of hotel rooms occupied during a specific time period.
  • Organic Traffic: The number of visitors coming to a website through unpaid search results.
  • OTA (Online Travel Agency): OTAs are online companies whose websites allow consumers to book various travel related services directly via Internet. They are 3rd party agents reselling trips, hotels, cars, flights, vacation packages etc. provided / organized by others.
  • Overbooking: although overbooking is often considered a scary proposition, it is an important strategy for maximizing occupancy and achieving untouchable perfect payouts. By selling more rooms than you have available on a given night, you can avoid being left with empty rooms due to cancellations and no-shows. However, avoid having to walk the guest - an unpleasant experience for both travelers and staff. Limit your exposure to overselling based on cancellation and no-show standards, reducing levels as the arrival date approaches.
  • Outsource Revenue Management: By outsourcing revenue management, hotels can save money and increase earnings generation.

 

P

  • Prepaid Rate: The term Prepaid Rate, refers to paying for the stay at a hotel in full at the time of booking, rather than at arrival or departure from the hotel. Paying the prepaid rate generally can come with large price reductions from 10% to 25% off the BAR (Best Available Rate) – which can lead to large cost savings if you plan ahead.
  • PPC (Pay Per Click): An advertising model where advertisers pay each time someone clicks on their ad.
  • Pricing Strategy: The approach used to set the prices of products or services.

 

R

  • Remote Revenue Management: The term Remote Revenue Management, refers to the practice of revenue management done remotely. Revenue Management focuses on selling the right room to the right client at the right moment at the right price.
  • Revenue Management: The strategy of maximizing revenue by managing demand and pricing.
  • REVPATH (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
  • ROI (Return on Investment): The percentage of profit from an investment relative to its cost.
  • Room block: for example, a group of businessmen who wish to use the hotel facilities for meetings during a two or three-day stay.
  • RevPOR: revenue per occupied room; giving more information on how overnight guests are spending their money besides only on the room booking.
  • RevPAG: revenue per available guest; teasing out the nuances of how occupants might be spending differently, such as for couples, families or bleisure travelers.
  • RevPAF/RevPAM: revenue per available square foot or square meter; getting even more granular in terms of how to optimize all physical spaces.
  • RFM: recency, frequency, monetary value; analysis and modeling that can score and segment guests based on those three key metrics.

 

S

  • SEO (Search Engine Optimization): The process of improving a website’s visibility in search engine results.
  • Social Media Marketing: The use of social media platforms to promote products or services.
  • Stay Controls: Stay controls identify fully booked days and optimise revenue potential on shoulder days.

 

T

  • Target Audience: The specific group of people targeted by a business in its advertising campaigns.
  • Traffic: The number of visitors coming to a website.
  • Total Revenue Management: Total Revenue Management is a much-discussed concept in hospitality, but in reality it has produced a great deal of confusion. Put simply, it is the revenue management of all revenue sources in a hotel. From your RevPAR and GOPPAR to the hotel restaurant, and from the bar, spa and gym to activities and excursions, it encompasses every single hotel income stream.
  • TRevPAR: total revenue per available room; very similar to RevPOR but this statistic also incorporates stay-independent income.

 

U

  • Upselling: The practice of offering a customer a more expensive product or service than what they originally intended to buy.
  • User Experience (UX): The overall experience a user has when interacting with a website or application.
  • Unconstrained demand: Unconstrained demand in hotel revenue management refers to the total demand for a date, irrespective of hotel capacity.
  • Underbooked: Underbooking is a situation that happens when a hotel has failed to sell the number of rooms that reaches their satisfactory booking standards.

 

W

  • Web Analytics: The measurement, collection, analysis, and reporting of web data for the purpose of understanding and optimizing web usage.
  • Wholesaler: A Wholesaler is a 3rd party organization that sells hotel room nights. Wholesalers are companies that buy rooms in bulk then sell them to travel agents and OTAs, allowing hotels to generate more sales. Wholesalers are operating in the B2B segment, meaning they do not sell directly to the public but to other 3rd party sites and distribution channels.

 

Z

  • ZBB (Zero Base Budgeting): Zero Base Budgeting can be abbreviated as ZBB. The term is used when the budgeting for hiring employees takes into account the occupancy expected for a specific time period or season. This is commonly used in seasonal hotels or in hotels where workers may be hired for a limited period of time (temporary contract) during the high season.

 

SOURCES:

https://hsmaiacademy.org/glossary/revenue/

https://www.xotels.com/en/revenue-management/revenue-management-strategies-for-hotels

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