EzRMS terminology

This section defines important terms that are used in EzRMS.

  • Revenue Management: The objective of Revenue Management is to sell the right product to the right customer at the right time for the right price and for the right duration, thereby maximizing revenue from a company's products.
  • Revenue Opportunities: Every hotel property for each future date has a wide range of opportunities (potential customers). For any given night a hotel can receive hundreds of booking requests for different products which have different values and conditions.

    Only a Revenue Management system can constantly re-calculate the value of taking a particular booking, compared to all the other possible bookings the hotel might expect to be requested.

    EzRMS assists you in the selection of booking restrictions for a particular product in order to select the most valuable and profitable customer.

    These recommendations can change every day, dependent on the current situation and the physical rate that new bookings pickup. Today's set of recommendations can enable a hotel to earn some additional revenue by selling group rates with a minimum of a two night stay. Tomorrow, if the hotel does not agree with a recommended length-of-stay constraint or minimum rate hurdle, it could be likely that the hotel will have lost the potential extra revenue, which was originally forecast as being achievable on that date.

  • Additional Modules: The following terminology is used in the EzRMS Core and the Ez-REGION Additional Modules.
  • Total Revenue Gain Achievable: In EzRMS terminology, it indicates the amount of extra revenue which can be achieved in the displayed period - revenue over and above that which currently could be expected by the hotel by using the physical controls and constraints they have in place within their PMS system at this time.
  • Current Revenue Gain Due to Acceptance of Recommendations: This shows the hotel the amount of revenue they have already realized to-date by acceptance of the EzRMS recommendations.
  • Remaining Revenue Gain Achievable: This shows the potential revenue gain remaining if they follow / accept the EzRMS recommendations for all future dates shown in this period.
  • Day of the Week: Data can be grouped by day of the week to identify specific trends on certain days. For example,Tuesdays could be busier than Mondays; Fridays and Saturdays could have a totally different business mix than the midweek days.

    Different hotels have different peak days. Accepting a guest who stays only on the peak night can often mean turning away guests who might have stayed longer. It could be more profitable to accept longer-stay guests, even at lower rates, especially if it helps to fill "shoulder" periods that surround peak demand times.

  • Season: Data can also be grouped season. This can allow business mix trends to be established throughout different times of the year. For example, different trends in business mix can occur between summer and winter or High and Low seasons and thus different models can be established.
  • Denials: Denials / Turn Aways are guests or reservations which have been denied at the hotel level normally due to availability of either the room type, rate class or specific business strategy. The denied guest should be recorded, as this data becomes part of the unconstrained forecasting process.
  • Denials To-Date: Shows the amount of denials already historically recorded for this specific date or date range.
  • Cancellations: Bookings / existing reservations which do not materialize to become occupied rooms - can be recorded at any point during the reservation process.
  • Cancellations To-Date: Shows the amount of Cancellations already historically recorded for this specific date or date range.
  • Wait Lists: Hotels may not decide to accept a group or transient booking request for the future due to either the fact that they are already fully booked for that date or that they are predicting business will start picking up very close to the date of arrival.
  • Special Events: Hotel Management must ensure that knowledge regarding Special Events is incorporated in the Revenue Management process.
  • Repetitive Events: Repetitive Events are defined as events that repeat themselves, whether it is on a monthly, yearly or even 3 or 4 year basis. Demand patterns for Repetitive Events can be recorded and used in the forecasting process to establish demand patterns for future dates when the same or similar event occurs.
  • Internal: Events occurring within the hotel, such as internal Conferences, Exhibitions, etc.
  • External: Events such as Shows, (ITB, Air Show), Sporting Events such as Wimbledon, World Cup, etc.
  • Informative: Just used for information purposes but has no effect on the business of the hotel (General Manager's Birthday). Impact will always be flagged as none.
  • Corrupt or Bad Data: This data should also be removed from the historical database, as again these statistics cannot be used to forecast future dates. This is data such as a PMS Night Audit crash or reasons due to severe weather conditions affecting the hotel's business.
  • Allotments – Business Type: In the context of the hospitality industry Tour Operators are usually negotiating block space with the hotel over a period of time. This practice happens often in the main cities or resorts, which are included in the Tour Operator programs. Tour operators never know for sure how many people will end up booking rooms and occasionally programs may be subject to change of itineraries or property due to unforeseen circumstances (for example, terrorist attack, strike) or weather/ geologic conditions (for example, flood, volcanic eruption).
  • Groups: This describes a large number of people visiting and or staying at the hotel for a common reason, usually 10 or more people. Marketing and sales department usually negotiates their rate with a Travel Agency or with a professional organization.
  • Source of Business (or Distribution Channels): Hotels have different choices to promote their products. They can either sell direct through their PMS,via a CRS / GDS or via the Internet.
  • Direct: All bookings are made directly to the hotel either by phone, fax or e-mail, which is cost effective for the hotel but targets a smaller audience.
  • CRS (Central Reservation System): For hotel chains, group of hotels or even independent hotels part of a Hotel Representation Company, reservations are being process at the Central Reservation Office, which is often directly connected to the Airlines GDS's such as Amadeus, Sabre, Worldspan and Galileo.
  • GDS: Although Travel Agents will continue to book hotel rooms via telephone, more and more rooms are booked electronically via Airline global distribution systems.
  • Internet: Internet has become an extension of hotel chains' global distribution systems (GDS).

    It offers two particular strategic possibilities: (1) to reduce costs by bypassing traditional distribution channels (for example, airline GDS's), avoiding commissions, and lowering transaction fees, (2) to enhance customer service by providing more and better information with multimedia.

  • Booking Status: For each reservation number, a hotel will assign a booking status to identify the degree of booking certainty. Hotels can even allocate a different booking status to transient guests (Individuals) and groups and/or allotments to fully evaluate the current level of business and follow the booking changes as we approach the date of arrival.
  • Guaranteed / Unguaranteed: Booking status for transient guests defined as Guaranteed when a reservation is confirmed by credit card or subject to advance deposit. Defined as unguaranteed when a reservation is held without any of guaranty.
  • Tentative / Definite: In terms of group or allotment it is only when the hotel receives the final rooming list that the reservation status changes from Tentative (not confirmed) to Definite.
  • On-The Books (Current level of booking activity): The current 'On-The-Books' figures indicates the amount of reservations (including guaranteed and unguaranteed), which already exist within the Hotel PMS for any given range of future dates.
  • Forecasts: Forecasting is a discipline that identifies total (unconstrained) product demand and revenue.

    A forecast is an evaluation of what will occur in the future (a prediction of events that will occur between now and the future date in question). The function of Revenue Management forecasting is not just a case of applying a set of forecasting rules to predict occupancy levels and/ or revenues but it is a complete discipline that will accurately predict unconstrained demand and revenue by product.

  • Unconstrained Demand: The concept of forecasting unconstrained demand is to forecast the overall demand (total demand)per day irrespective of any physical constraints - limiting factors (rate/ capacity).

    All demand must be considered irrespective of rate (even complementary rates are considered as demand even though the rate is zero). Likewise, the hotel capacity must not be used to restrict the evaluation of demand. In certain circumstances the unconstrained demand may be much higher than the Hotel capacity.

  • Constrained Demand: Constraints of the business are applied (capacity, minimum rate, stay controls, etc.) to the unconstrained demand forecast.
  • Materialized Bookings: For all future dates of arrival the system will predict, based on history and current level of information, the estimate number of reservations, which will materialize. All the bookings that are not counted in the equation of materialization, because of their current booking status (Unguaranteed or Tentative), will be subject to cancellations.
  • Booking Pickup (= Booking built up curve): Booking built up curve shows the number of rooms picked up prior to arrival. The pick up can begin 60, 30, 10 or 2 days prior to arrival. The pick up can also be related to lead-time (Day in advance = number of days in advance of arrival each booking is made, amended or canceled).

    The Booking built up curve represents the Total net bookings or behavioral booking pattern of all segments (Rack Bookings, Business, Leisure, Group, Allocation etc) for a given period. The pick up shown is inclusive of new reservations, cancellations and reservations amendments.

  • Room Category: In the EzRMS concept we define a Room Category as a Product Type - NOT a Room Type (we do not differentiate Double or Twin rooms).
  • Overbooking Limit (Capacity Control/ Occupancy Management): For each Room Category, a total number of reservations are accepted in excess of actual physical supply of rooms in order to counteract the effects of early checkouts, cancellations and no-shows between now and arrival date with the goal of attaining 100% occupancy.
  • Recommendations - Control Methods: Controls can be applied to a rate(s), room type(s), and/or market segment.

    Controls should be set to ensure the correct demand is accepted (save products for the most valuable customers) and the expected revenues are achieved. In the Hotel business, the most valuable persons are the last to book, and rooms have to be saved for these last minute, high price customers.

  • Minimum/ Maximum Length of stay: Controls the number of nights a guest can stay for a guest arriving that day.
  • Open for Sale/ Closed for Sale: This option translates into: can be sold (open) and cannot be sold (closed).
  • Stay Through: No arrivals or departures will be accepted for stay through dates. Guest must arrive prior to the stay through dates and the length of stay must at least span all stay through dates.
  • Allotment Min/ Max: Indicates the minimum and maximum number of Rates/ Rooms to be sold for any given date (for example, Internet).
  • Minimum Guests Per Room: This dictates the least amount of guests that can occupy one room at any time.

    Based around the ancillary spend principle, two guests may pay more for one room than one guest. The ancillary spend of each guest must be added to the equation for the optimization calculation to be completed. When reviewing policy decisions, the process of optimization should always be considered when deciding whether a piece of business is limiting optimal revenues.

  • Bid Price: This figure is the lowest available rate for the day ('lose it' rate) in order for the capacity to be filled at the highest possible rate. The bid price approach to optimization is based around establishing, at any given point in time, the lowest rate to be sold in the market place in order for the capacity to be filled at the highest possible rate.
  • Length Of Stay (LOS) Bid Price: This is the lowest Rate available / acceptable for a given Room Category for a specific day for a specific Length of Stay. This value is calculated by EzRMS over a duration of 28 days. (NB. All other Revenue Management Systems only calculate a LOS Bid price for up to 5 or 7 days.)

    LOS calculations are based around the minimum rate for each day. By using the LOS controls, but changing the way they are used, we can afford the business the maximum opportunity and optimal revenue.

  • History (Historical Data): The accuracy of any revenue management system is directly related to the size and detail of the database it is working from.

    In the Historical Database the following data is recorded: Occupancy (Occupied room, Occupancy %,Occupancy/Denials, Occupancy/Relocations), Revenue (Total, Room Revenue, REVPAR-ADR,Cancellation Revenue, No-Show Revenue) & Upgrades/ Downgrades.

  • Occupied Rooms: Occupied Rooms = (Final Reservations) + (Walk-in.'s + Extended Stays) - (No shows + Early Departures+ Book Outs).
  • Occupancy %: This figure is calculated by dividing number of rooms sold by number of rooms available.
  • Occupancy/Denials: EzRMS allows the hotel to visualize the number of denied business per day, week or month in comparison with the occupancy for a given period in the historical Database.
  • Occupancy/Relocations: EzRMS allows the hotel to visualize the number of book outs (= relocates) per day, week or month in comparison with the occupancy for a given period in the historical Database. This information is valuable to the hotel as it can highlight patterns or re-occurrences during specific times of the year where the demand exceeds the capacity.
  • Total Revenue: Represents all revenues earned by the hotel including Room Revenues and auxiliary revenues such as Food & Beverage, Telephone.
  • Room Revenue: Represents the amount of room sales received.
  • ADR: This figure is commonly known as the Average Daily Rate.

    ADR= Total Room Revenue / Available Rooms or REVPAR = ADR (Average Daily Rate) * Occupancy %

    The REVPAR, rather than expressing the price of the average sale, indicates the revenue that the products as a whole generate for the business. The REVPAR is also referred to as Yield.

  • Cancellation & No-Show Revenue: Each single cancellation or no-show is a cost for the hotel as rooms are temporarily held. If hotel ignore this unpredictable behavior they will carry on losing a great deal of revenue.
  • Total Presold & Room Presold: Every day new bookings come in for future dates. For each new transaction, EzRMS will adjust the amount of business (rooms & auxiliary) already generated or sold.
  • Walk-Ins guests: This describes guests arriving at the hotel without a reservation to stay that night.
  • No-Shows: Occur when a product is reserved, or sold in advance, but in the end the sale does not go through and cannot be recovered.
  • Relocates (= Book outs) / Relocations: This describes guests with reservations who, for one reason or another, are accommodated at another hotel.
  • Capacity: It is the total number of rooms at the property. Capacity is fixed but hotel can reduce the number of rooms made available to sell because of maintenance or refurbishment reasons.

    If the Hotel decides to close the entire property during a specific time of the year (for example, Christmas), EzRMS recommends to set the capacity to zero in the PMS for the dates at which the hotel is to be closed.