Glossary

Hotel Terms, Explained Plainly

23 definitions of the metrics, contract clauses and operating terms that decide hotel outcomes — written for owners and investors, not for exams.

Every definition here is drawn from our own published work on hotel revenue, contracts, operations and F&B — each term links back to the article it comes from, so you can go from the one-line answer to the full picture.

Revenue & Pricing

RevPAR (Revenue Per Available Room)

RevPAR is the room revenue a hotel generates for every room it has, whether or not that room was sold — calculated as ADR multiplied by occupancy, or total r…

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ADR (Average Daily Rate)

ADR is the average price of the rooms a hotel actually sold, calculated as room revenue divided by rooms sold — it measures pricing power and says nothing ab…

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Occupancy Rate

Occupancy is the share of a hotel's available rooms that were sold in a period — a volume measure that shows how full the hotel is, not how profitably it fil…

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TRevPAR (Total Revenue Per Available Room)

TRevPAR is total revenue per available room — it widens RevPAR to capture every rupee a guest and a square foot of the hotel generate, including food and bev…

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GOPPAR (Gross Operating Profit Per Available Room)

GOPPAR is gross operating profit per available room — the metric that completes the RevPAR picture by bringing cost into it, so performance is judged on prof…

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RevPAR Index

A RevPAR index compares a hotel's RevPAR with that of a defined competitive set, showing whether the hotel is taking more or less than its fair share of the …

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Rate Parity

Rate parity is the contractual commitment that the same room, on the same dates, with the same conditions, carries the same public rate on every channel incl…

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Displacement Analysis

Displacement Analysis

Displacement analysis compares the revenue a group booking brings with the revenue it gives up by blocking rooms that individual guests would otherwise have …

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Length-of-Stay Controls

Length-of-Stay Controls

Length-of-stay controls are restrictions — minimum length of stay, closed to arrival and closed to departure — that manage which bookings a hotel accepts aro…

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MICE (Meetings, Incentives, Conferences and Exhibitions)

MICE is the hotel segment covering meetings, incentives, conferences and exhibitions — group business that typically books mid-week, repeats, and brings sign…

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LNR (Local Negotiated Rate)

An LNR, or local negotiated rate, is an agreed room rate a hotel extends to a specific company for its regular travellers, usually for a defined period and a…

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Brand & Contracts

GOP (Gross Operating Profit)

GOP is a hotel's gross operating profit — revenue less operating expenses, before items such as rent, interest, depreciation and tax — and in a management co…

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Key Money

Key money is capital a hotel operator contributes to win or retain a management or franchise deal — in effect pre-paying the owner a slice of the fees the op…

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Performance Test

Performance Test Clause

A performance test is the clause that lets a hotel owner terminate a management contract without a large penalty if the operator fails agreed performance ben…

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Area of Protection

Area of Protection

An area of protection is the geographic zone around a hotel within which the operator agrees not to open or manage a competing hotel of the same brand, and s…

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TSA (Technical Services Agreement)

A Technical Services Agreement is the brand contract covering a hotel's design and construction phase, under which the operator reviews and approves the proj…

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FF&E Reserve

An FF&E reserve is a percentage of hotel revenue set aside for replacing furniture, fixtures and equipment — deducted before the owner sees any profit and sp…

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PIP (Property Improvement Plan)

A PIP, or property improvement plan, is the schedule of works a hotel brand requires an owner to complete so that the property meets its standards — typicall…

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Operations & Costs

CPOR (Cost Per Occupied Room)

CPOR is the cost of servicing one occupied room, calculated by dividing a department's total spend by occupied room nights — most often used for housekeeping…

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Par Stock

Par stock is the standard quantity of an item a hotel holds to run normally — for linen, one par is a full set for every room, and hotels typically hold arou…

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Food & Beverage

APC (Average Per Cover)

APC, or average per cover, is the average amount each diner spends in a hotel outlet — the food and beverage equivalent of ADR, measuring value per guest rat…

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Capture Ratio

Capture ratio is the share of a hotel's in-house guests who eat in its own outlets for a given meal session — the measure of how much of the captive audience…

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Food Cost Percentage

Food cost percentage is the cost of ingredients expressed as a share of food revenue — in most Indian hotels it should sit between 28% and 35% depending on o…

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