Hospitality and Related Services - Tourism: Principles, Practices, Philosophies - page 128

E GLOSSARY E

ADR (average daily rate). A measure of the average rate

paid for rooms sold, calculated by dividing room revenue by
rooms sold (ADR

divided by the total number of available rooms. RevPAR
differs from ADR because RevPAR is affected by the amount
of unoccupied available rooms, while ADR shows only the
average rate of rooms actually sold (Occupancy

&

Room revenue/Rooms sold).

¼

ADR

¼

Food & beverage (F&B) revenue. Revenues derived

from the sale of food (including coffee, milk, tea, and soft
drinks), beverages (including beer, wine, and liquors),
banquet beverages and other F&B sources. Other F&B sources
include meeting room rentals, audiovisual equipment
rentals, cover or service charges or other revenues within the
food and beverage department (includes banquet services
charges).

&

RevPAR).

Room revenue. Total room revenue generated from the sale

or rental of rooms.

&

Rooms available (room supply). The number of rooms in

a hotel or set of hotels multiplied by the number of days in a
specified time period. Example: 100 available rooms in subject
hotel

&

31 days in the month room supply of 3,100 for the

¼

& Occupancy. Occupancy is the percentage of available rooms

that were sold during a specified period of time. Occupancy is
calculated by dividing the number of rooms sold by rooms
available (Occupancy

month.

Rooms sold (room demand). The number of rooms sold in

a specified time period (excludes complimentary rooms).

&

Rooms sold/Rooms available).

¼

Total revenue. Revenue from all hotel operations, including

rooms sold, F&B, parking, laundry, phone, miscellaneous, etc.

&

RevPAR (revenue per available room). Revenue per

available room (RevPAR) is the total guest room revenue

&

The trend toward consolidation and acquisition will continue because chains have the potential for
improvement in productivity and because of the advantages that accrue to large size. Chains can most
effectively use training programs, employee selection programs, major equipment with different
layouts, prices, advertising, equipment, technology, marketing, and so on, and what works well in one
property can be employed chainwide. One reason for the popularity of the referral groups is that
members who are independent operators achieve the marketing bene ts of chains without chain
membership.
Franchising is also well known in the lodging industry and has made a rapid penetration into the

marketplace. However, franchising generates mixed reports. Many managements believe that it is
dif cult to control the franchises and maintain the quality that the chain advertises and the standards
that are supposed to be met. Thus, many chains are buying back franchises to ensure that
management maintains the quality level desired. In other cases, firms are moving ahead rapidly
with franchising because they can conserve cash and expand more rapidly by franchising. In addition,
the franchisee, having invested his or her own capital, has great motivation to succeed.
Franchisees have the advantage that they receive a known as well as the knowledge, advice,

and assistance of a proven operator. Franchising also spreads the costs of promotion, advertising, and
reservation systems over all outlets, making the unit cost much lower. If the franchiser has an excellent
reputation and image, the franchisee bene ts greatly. Most of the companies with franchise operations
also operate company-owned units. Industry predictions are that as the industry grows and matures,
there will be less franchising, which will give the chains more control over their properties and
operations so that they can maintain the desired quality control. Increased competitiveness and
improved properties will necessitate having the ability to make these improvements.
A trend in the lodging industry appears to be that more large properties will be operated under
management contracts. Investors, such as insurance companies, frequently purchase hotel properties
and turn them over to chains or independents to manage

'' name, ''

a process that has advantages to both
parties. The owner has the financial resources and the manager has the reputation and experience to
manage the property pro tably. Other trends are the increased use of central reservation systems,
emphasis on service, and the use of yield management techniques.

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