Revenue Management Flashcards

What is GOPPAR in hotel financial management?

Answer: Gross Operating Profit Per Available Room

GOPPAR (Gross Operating Profit Per Available Room) measures profitability rather than just revenue. It is calculated by dividing gross operating profit (revenue minus operating expenses) by total available rooms, giving a truer picture of a hotel's financial performance than RevPAR alone.

What is a 'minimum length of stay' (MLOS) restriction used for in revenue management?

Answer: Preventing short stays that create unprofitable gaps in occupancy around peak nights

MLOS (Minimum Length of Stay) restrictions require guests to book for a minimum number of nights, typically applied around peak demand nights such as holidays or weekends. This prevents single-night bookings that would block higher-demand surrounding dates and helps hotels maximize overall revenue for the entire period.

What does 'pace report' measure in hotel demand forecasting?

Answer: How current booking pace for a future date compares to the same period last year

A pace report compares current booking levels for a future date against bookings at the same point in time the prior year (or against budget). It helps revenue managers identify whether demand is running ahead of or behind historical trends, enabling proactive rate adjustments.

What is 'unconstrained demand' in the context of revenue management forecasting?

Answer: The total demand for a hotel if it had unlimited room inventory

Unconstrained demand is the total number of guests who would like to stay at a hotel if it had infinite room supply. Understanding unconstrained demand helps revenue managers know how much true demand exists beyond what the hotel can accommodate, informing optimal pricing and overbooking strategies.

What is the primary purpose of a hotel's 'Best Available Rate' (BAR)?

Answer: The lowest publicly available rate for a given date and room type

BAR (Best Available Rate) is the lowest non-restricted, publicly available rate for a specific room type on a given date. It serves as the standard reference rate from which other rates (discounts, packages) are derived and fluctuates with demand and booking conditions.

Which forecasting method uses historical booking data to predict future demand by analyzing patterns from the same period in prior years?

Answer: Historical forecasting

Historical forecasting uses data from the same period in previous years as the foundation for predicting future demand. Analysts adjust for known differences (new competition, planned events, economic changes) to refine the forecast. It is one of the most common starting points for demand forecasting in hotels.