Glossary
Hotel terms, explained plainly.
Short definitions of the terms hoteliers use every day, with formulas, examples and the questions people ask about them.
Revenue metrics
- ADR (average daily rate)ADR, or average daily rate, is the average price a hotel earns for each room it sells in a period. It is calculated by dividing room revenue by the number of room nights sold. ADR shows how well you are pricing, but says nothing about how many rooms stayed empty.
- ALOS (average length of stay)ALOS, or average length of stay, is the average number of nights guests stay per booking. It is calculated by dividing room nights sold by the number of bookings in a period. A higher ALOS means fewer check-ins, check-outs and full cleans for the same number of room nights.
- ARR (average room rate)ARR, or average room rate, is the average price earned per room sold in a period: room revenue divided by room nights sold. In India the term is used widely and generally means the same as ADR. Some hotels use ARR for a weekly or monthly average and ADR for a single day.
- BAR (best available rate)BAR, or best available rate, is the lowest rate a hotel offers to the general public for a given date without restrictions such as prepayment or a minimum stay. It changes with demand, and most other rate plans are set as a discount or premium to it.
- GOPPARGOPPAR, or gross operating profit per available room, is a hotel's gross operating profit divided by the room nights available in a period. Unlike RevPAR, it takes operating costs into account, so it shows how much profit each available room produces.
- Occupancy rateOccupancy rate is the percentage of a hotel's available room nights that were sold in a period. It is calculated by dividing room nights sold by room nights available. It shows how full the hotel was, but not what guests paid.
- Rack rateA rack rate is the full published price of a hotel room, before any discount, package or negotiated rate. Few guests pay it, but it acts as the reference point from which corporate, promotional and OTA rates are discounted.
- RevPARRevPAR, or revenue per available room, is a hotel's room revenue divided by the number of room nights it had available to sell in a period. It combines price and occupancy into one number, which makes it the standard way to compare hotels of different sizes.
- TRevPARTRevPAR, or total revenue per available room, is all of a hotel's revenue (rooms, food and beverage, banquets, spa and other income) divided by the room nights available in a period. It shows how much each available room earns for the whole business, not just the rooms department.
Front office
- Advance depositAn advance deposit is money paid before the stay or event to secure a booking. The hotel holds it as a credit on the guest's account and sets it against the final bill at check-out. Deposits are common for peak dates, group bookings and banquets.
- City ledgerA city ledger is the hotel's record of money owed by parties who are not currently staying: companies with credit accounts, travel agents, OTAs and guests who left with an unpaid balance. It is the hotel's accounts receivable for stays that were billed rather than paid at check-out.
- Day-use roomA day-use room is a hotel room sold for part of the day, typically a block of hours between the morning and early evening, without an overnight stay. Hotels near airports, stations, hospitals and business districts use day-use and hourly stays to earn from rooms that would otherwise sit empty until the evening.
- FolioA folio is the running account of everything a guest is charged and everything they pay during a stay: room nights, restaurant bills, minibar, laundry, taxes, deposits and payments. At check-out the folio is settled and becomes the basis for the invoice.
- GRC (guest registration card)A GRC, or guest registration card, is the form completed at check-in that records who is staying: name, address, ID details, nationality, arrival and departure dates, room and rate, and the guest's signature. It is the hotel's legal record of the stay.
- Guest ledgerThe guest ledger is the set of accounts for guests who are currently staying in the hotel. It is the total of all open folios: the charges posted to in-house guests, less what they have paid so far. It is also called the front office ledger or transient ledger.
- Night auditA night audit is the daily routine that closes one hotel business day and opens the next. It posts the night's room and tax charges to guest folios, reconciles the day's payments and cash, identifies no-shows and errors, and produces the daily reports for management.
- No-showA no-show is a guest with a confirmed reservation who neither arrives nor cancels before the hotel's cut-off time. The room goes unsold for that night, so most hotels charge a no-show fee, typically the first night, when the booking was guaranteed by card or deposit.
- Out-of-order room (OOO)An out-of-order (OOO) room is one that cannot be sold because it needs repair, renovation or deep cleaning. It is removed from the hotel's available inventory for the period, so it can't be booked and is usually left out when occupancy is calculated.
- OverbookingOverbooking is when a hotel accepts more reservations than it has rooms for a given night. Some hotels do it deliberately to offset expected no-shows and cancellations. It also happens by accident when OTA availability is not updated quickly enough after a booking.
- PaxPax is travel-industry shorthand for the number of people. In a hotel it is the number of guests in a booking, a room or an event: a room booked for 2 pax has two guests, and a banquet for 150 pax is priced and catered for 150 people.
- PMS (property management system)A hotel PMS, or property management system, is the software that runs a hotel's daily operations: reservations, room allocation, check-in and check-out, housekeeping status, guest billing and reports. It is the system of record for rooms, guests and revenue.
- Room blockA room block is a number of rooms held out of general sale for a group, such as a wedding party, a conference or a tour, usually at an agreed rate. Guests book from the block until a cut-off date, after which unsold rooms are released back to general inventory.
- Walk-in guestA walk-in is a guest who arrives at the hotel without a reservation and asks for a room. The front desk checks availability, quotes a rate, registers the guest and takes payment or a deposit on the spot, so the booking and the check-in happen in one step.
Distribution
- Booking engineA hotel booking engine is the software on a hotel's own website that shows live room availability and rates, takes the guest's details and payment, and confirms the reservation. Bookings made through it are direct, so the hotel pays no OTA commission on them.
- Channel managerA channel manager is software that connects a hotel to its online travel agencies (OTAs). It sends the hotel's rates and availability to every channel at once and passes bookings, changes and cancellations back, so the same room is not sold twice.
- Direct bookingA direct booking is a reservation a guest makes with the hotel itself, through its website, by phone, by message or at the desk, rather than through an online travel agency. The hotel pays no OTA commission on it and holds the guest's contact details from the start.
- Minimum length of stay (MLOS)Minimum length of stay (MLOS) is a booking restriction that requires a reservation to cover at least a set number of nights. Hotels apply it on high-demand dates, so that a one-night booking on the busiest night doesn't block a longer, more valuable stay.
- OTA (online travel agency)An OTA, or online travel agency, is a website or app that sells hotel rooms on behalf of hotels and earns a commission on each booking. MakeMyTrip, Goibibo, Booking.com, Agoda and Expedia are examples. OTAs bring reach and marketing that a single hotel can't match, in exchange for a share of the revenue.
- OTA commissionOTA commission is the fee an online travel agency charges a hotel for each booking it delivers, set as a percentage of the booking value. It commonly falls somewhere between 15% and 25%, depending on the OTA, the contract and any extra visibility programmes the hotel has joined.
- Rate parityRate parity is the practice of offering the same price for the same room, dates and conditions on every public sales channel, including OTAs and the hotel's own website. Many OTA contracts require it, and visible differences can push a hotel down in OTA search results.
- Rate planA rate plan is a price for a room type together with its conditions: what is included, such as breakfast, and the rules that apply, such as the cancellation policy, payment terms and minimum stay. One room type usually has several rate plans, and the guest chooses between them.
- Stop-sellA stop-sell is an instruction to stop selling a room type or rate plan for particular dates, on one channel or all of them, even though rooms may still be available. Hotels use it to protect inventory for higher-value bookings or to prevent overbooking.
Food & beverage
- KDS (kitchen display system)A kitchen display system (KDS) is a screen in the kitchen that shows orders as soon as they are entered at the point of sale. It replaces or supplements the printed kitchen order ticket (KOT): cooks see each order, its items and notes, mark dishes as ready, and the order clears from the screen.
- KOT (kitchen order ticket)A KOT, or kitchen order ticket, is the slip or screen entry that tells the kitchen what to prepare. It lists the table or room, the items and quantities, any special instructions and the time of the order. The bill is produced later from the same order.
- Meal plans (EP, CP, MAP, AP)Hotel meal plans describe which meals are included in the room rate. EP (European Plan) is room only. CP (Continental Plan) includes breakfast. MAP (Modified American Plan) includes breakfast and one main meal. AP (American Plan) includes breakfast, lunch and dinner.
India compliance
- E-invoice and IRNAn e-invoice is a GST invoice that has been reported to the government's Invoice Registration Portal. The portal checks it and returns an Invoice Reference Number (IRN) and a signed QR code, which are printed on the invoice. Without them, an invoice that falls under e-invoicing is not valid.
- Form CForm C is the report that hotels, guest houses and anyone else accommodating a foreign national in India must submit to the Foreigners Regional Registration Office (FRRO). It records the foreign guest's passport, visa and stay details and must be filed within 24 hours of arrival.
- SAC codes for hotelsSAC (Services Accounting Code) is the code that classifies a service on a GST invoice in India. Hotels commonly use 996311 for room accommodation, codes in the 99633 group for restaurant and food service, and 996334 for catering at events and banquet halls.
- TCS on OTA bookingsTCS on OTA bookings is tax collected at source under Section 52 of India's GST law. When an online travel agency collects payment from the guest on the hotel's behalf, it deducts a small percentage of the booking value, pays it to the government and reports it against the hotel's GSTIN.
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