Certified Hospitality Revenue Manager (CHRM)

Displacement analysis must compare the total net revenue (including ancillary spend like F&B and subtracting acquisition costs) of the group against the total net revenue of the displaced transient business. Comparing only room revenue or acquisition costs ignores the holistic profitability of the decision.

A Minimum Length of Stay (MinLOS) restriction requires guests arriving on or before the peak night to stay for multiple nights, effectively spilling the peak demand into the softer shoulder nights. MaxLOS would restrict stays, and closing discounts all week or overbooking only addresses Tuesday without helping Monday or Wednesday.

An MPI (Market Penetration Index/Occupancy) of 120 means the hotel is getting more than its fair share of occupancy, while an ARI (Average Rate Index) of 95 means its rates are lower than the comp set average. The strong RGI of 115 indicates this volume-driven strategy is successfully generating superior overall RevPAR, despite the lower rate.

The expected wash (cancellations + no-shows) is 15% of 300 rooms, which equals 45 rooms. The manager should authorize up to this amount but continuously adjust based on the financial risk (cost of walking) and real-time pickup, rather than rigidly stopping at 15 or 300.

In the Merchant Model, the hotel provides a net rate to the OTA, which then determines the final selling price to the consumer (though often bound by parity agreements). The Agency Model involves paying a commission on the retail rate, while the Opaque or Wholesaler models involve different pricing and risk structures.

Applying a ‘wash factor’ based on historical data allows the revenue manager to forecast actual pickup (70 rooms) and safely sell the anticipated unused rooms to transient guests. Holding the rooms until cutoff risks leaving them empty, and canceling the contract is unprofessional and likely a breach of terms.

Price elasticity of demand measures how sensitive consumers are to price changes. Because the 25% increase in demand is proportionately larger than the 10% decrease in price, the demand is considered highly elastic.

With the hotel already at 85% occupancy and pacing well, there is enough demand compression that dropping rates is unnecessary and would only dilute the revenue of the remaining 15% of rooms. Matching or undercutting a competitor is a reactive strategy that ignores the property’s own strong internal demand indicators.

Unconstrained demand represents the true market demand for a specific date, ignoring the hotel’s physical room limit. Knowing this allows the revenue manager to turn away lower-rated business early and hold inventory for higher-paying guests during peak periods.

The SMERF segment is traditionally very price-sensitive (often paying out of pocket rather than on a corporate expense account) and plans events well in advance. Revenue managers use this segment to build base occupancy during softer periods, such as weekends or off-seasons.

GOPPAR takes into account total revenue (rooms, F&B, spa, etc.) minus departmental and undistributed operating expenses, divided by available rooms. This makes it a superior metric for evaluating true profitability, rather than just top-line room revenue (RevPAR).

Rate fences are rules or restrictions that justify a lower price and prevent guests willing to pay a higher rate from accessing the discount. An advance-purchase, non-refundable fence ensures the discounted rate targets committed buyers and prevents existing flexible-rate bookers from easily trading down.

The hurdle rate is the minimum value a room should be sold for on a specific day, determined by demand forecasts. If a requested booking’s value is lower than the hurdle rate, the system rejects it to save the room for higher-paying demand.

The OTA cost is 18% of $150 ($27). The direct cost is 4% of $150 ($6). By shifting a booking from the OTA to direct, the hotel saves the difference ($27 – $6 = $21). This increases net revenue/profitability, but does not change the gross ADR.

Opaque channels hide the name and exact location of the hotel until after the booking is purchased. This allows hotels to deeply discount unsold (distressed) inventory without cannibalizing their retail rates or damaging their brand perception.

Pace reports compare current bookings for a future date against the bookings at the exact same point in time last year. Being 200 rooms behind indicates a negative pace, but the manager must analyze the root cause (e.g., a large group moved dates, shorter booking window) before taking drastic pricing actions.

The true cost of walking a guest extends far beyond the hard costs of paying for the competitor’s room and a taxi. It includes service recovery (amenities, apologies) and the significant soft costs of negative reviews and lost lifetime value of that guest.

Displacement analysis determines the breakeven rate for a group. The revenue manager must calculate the total net revenue (room + ancillary) of the displaced transient business and divide that by the number of group rooms to find the minimum rate the group must be charged to make the deal profitable.

Rate parity refers to a pricing agreement or strategy where a hotel maintains the same public rate for a specific room type and date across all its distribution channels (direct website, Expedia, Booking.com, etc.). This prevents third parties from cannibalizing direct bookings through unauthorized discounting.

RevPAR only measures room revenue. In a complex resort with significant non-room amenities (spa, casino, F&B), TrevPAR (Total Revenue Per Available Room) captures the total guest spend. Stagnant RevPAR is acceptable if the guests occupying the rooms are spending vastly more on ancillary services, driving up TrevPAR and overall profitability.