Displacement Cost

Displacement cost refers to the revenue potential lost, or displaced, to the enterprise incurred by accepting one piece of business over a competing opportunity. When a hotel accepts a group, it may have to refuse some volume of non-group business as a result. The revenue from that non-group business is therefore displaced, but the question […]

Combined Method Forecast

Pick up last year (PULY) FC = OTB + PU (Last Year) % Deviation (versus OTB LY) FC = Act (LY) * DEV (LY%) DEV (LY%) = OTB / OTB (LY)

Business on the Books (OTB)

OTB = On The Books;  BOB = Business On Books The most common acronyms, both used interchangeably, for reservations and overnight stays already booked. You should find this information in your Property Management System (PMS). Rooms sold «my hotel» : RN or Revenue = OTB

Lead Time

At a hotel, the time taken between when a customer makes a reservation and their actual arrival is called the Lead Time. Sometimes this time period has to be restricted. Date of arrival –  Date of reservation

Revenue Market Share (RMS)

Revenue market share is the percentage of revenue one hotel makes as compared to the overall competitive market. It is calculated by taking your hotels revenue and dividing that by the total market revenue. Revenue «my hotel» : revenue «market» (incl. my hotel) x 100 = AMS

Actual Market Share (AMS)

Actual market share is the percentage of your hotels number of rooms sold compared to the overall competitive market. It is calculated by taking your hotel room nights sold and dividing that by the total market room nights sold. Number of rooms sold «my hotel» : number of rooms sold «market» (incl. my hotel) x […]

Fair Market Share (FMS)

Fair Market Share is an indication that a hotel’s overall performance stacks up against its immediate competitors. Number of rooms «my hotel» : number of rooms «market» (incl. my hotel) x 100 = FMS

Break Even Point (BEP) – In Unit and Revenue

Break Even Point (BEP) / Room Nights (RN) The break–even point (BEP) or break–even level represents the sales amount—in either unit (quantity) or revenue (sales) terms—that is required to cover total costs, consisting of both fixed and variable costs to the company. Total profit at the break–even point is zero. marginal return = ADR – Variable costs BEP RN = Fix […]