• News
    • VRM Intel News
    • Latest News
    • Sponsor News
  • COVID-19
  • Marketing
  • Tech
  • OTAs
  • Customer Service
  • Regulations
  • Business
  • Housekeeping
  • Subscribe
  • More
    • Calendar of Events
    • VRM Intel Live!
    • Reports Login
    • VRM Intel Magazine
    • Advertise
    • Authors
    • About Us
    • Contact Us
VRM Intel
  • News
    • Arizonans for Responsible Tourism Pregame Prep Campaign
      Arizonans for Responsible Tourism Hosts Super Bowl Preparedness Campaign for Vacation Rental Operators
    • vacation-rentals-housing-vrm-intel
      Carrots and sticks: Vacation rentals and the creation of affordable, workforce housing
    • Woman dropping off a ballot
      2022 Election Results of Vacation Rental Ballot Measures
    • Recession-Proofing Your Vacation Rental Business
    • How to Increase Your Occupancy in a Competitive Market through Monthly Rentals
    • VRM Intel News
    • Latest News
    • Sponsor News
  • COVID-19
    • Recession-Proofing Your Vacation Rental Business
    • 2022 Vacation Rental acquisitions from AvantStay, VTrips, Vacasa, Meredith, and more
      Who Sold? Here’s What We Know: 2022 Vacation Rental Management Acquisitions
    • 2021/2022 Ski Destinations Showing Big Performance Gains in ADR and RevPAR for Vacation Homes and Condos
    • “It’s like a short-term rental regulation pandemic.” 2022 Spring Vacation Rental Regulatory Trends + Fall Outlook
    • HR 2022: Attracting Today’s New Workforce after the Resignation Tsunami and the Great Renegotiation
  • Marketing
    • Recession-Proofing Your Vacation Rental Business
    • How to Increase Your Occupancy in a Competitive Market through Monthly Rentals
    • board meeting in presentation room
      Tourism Boards and DMOs Offer Seat at the Table for Vacation Rentals
    • Geotargeting & SEM: A How-To Guide on Spending Less & Getting More
    • All About the Data: Predictive Indicators with Jason Sprenkle
  • Tech
    • Recession-Proofing Your Vacation Rental Business
    • Geotargeting & SEM: A How-To Guide on Spending Less & Getting More
    • All About the Data: Predictive Indicators with Jason Sprenkle
    • PriceLabs Announces $30 Million Investment from Summit Partners
    • Ximplifi Adds Owner Portal to Automation Suite for Short Term Rental Accounting
  • OTAs
    • How to Increase Your Occupancy in a Competitive Market through Monthly Rentals
    • Blue Star Acquires Majority Stake in TravelNet Solutions
    • Vacation Rental Data and Revenue Management Conference, DARM 2022, Nashville
      Sessions Details for Upcoming Vacation Rental Data and Revenue Management (DARM) Conference: Livestream/Video Tickets Available
    • Vacasa (VCSA) Stock Falls as Lock-up Period Expires
    • 4 Ways to Stand Out in a Crowded Market: Get Your Brand & Listings in Front of Potential Guests
  • Customer Service
    • Why Not A Hotel? A Guest and Homeowner’s Perspective: There’s No Place Like Home … Or Is There?
    • Leading Proptech Company Guesty Appoints David Aber as CFO
    • Meredith Hospitality Brands Inc. Expands to Mt Hood with Acquisition of Mt Hood Vacation Rentals
    • View of Waikiki from Diamond Head Park, Honolulu, Hawaii
      Honolulu City Council Bans Stays Under 90 Days Across Oahu
    • Are you a Visionary without an Integrator at Your Vacation Rental Management Company?
  • Regulations
    • vacation-rentals-housing-vrm-intel
      Carrots and sticks: Vacation rentals and the creation of affordable, workforce housing
    • Woman dropping off a ballot
      2022 Election Results of Vacation Rental Ballot Measures
    • voters at a polling center voting
      Dozens of Vacation Rental Ballot Measures Heading to Voters this November
    • board meeting in presentation room
      Tourism Boards and DMOs Offer Seat at the Table for Vacation Rentals
    • Arizona state flag outside the legislature buildings at the state capitol
      Arizona Legislature Passes Measure to Restore Some Power to Cities
  • Business
    • Recession-Proofing Your Vacation Rental Business
    • Geotargeting & SEM: A How-To Guide on Spending Less & Getting More
    • All About the Data: Predictive Indicators with Jason Sprenkle
    • PriceLabs Announces $30 Million Investment from Summit Partners
    • Ximplifi Adds Owner Portal to Automation Suite for Short Term Rental Accounting
  • Housekeeping
    • Why Not A Hotel? A Guest and Homeowner’s Perspective: There’s No Place Like Home … Or Is There?
    • Analysis: “Reinventing” Vacation Rental Management by Alex Nigg
    • HR 2022: Attracting Today’s New Workforce after the Resignation Tsunami and the Great Renegotiation
    • Safety First: Evaluating and Addressing Safety Risks at Your Vacation Rentals
    • The Importance of the Guest Experience within Vacation Rental Operations: From the Back of the House to the Front
  • Subscribe
  • More
    • Calendar of Events
    • VRM Intel Live!
    • Reports Login
    • VRM Intel Magazine
    • Advertise
    • Authors
    • About Us
    • Contact Us
  • RSS

Education

Revenue Management Glossary for Vacation Rentals

Revenue Management Glossary for Vacation Rentals
mm
Amy Hinote
August 11, 2019

Revenue Management in the vacation rental industry is a discipline that is growing and developing at a fast pace. At VRM Intel, we collaborated with industry leaders, including Jason Sprenkle and Cliff Johnson, to identify key terms and metrics utilized in the vacation rental industry. As comparative data and revenue management tools continue to mature, establishing a base line of vocabulary will help us advance as an industry. The following glossary is a first step at establishing a common understanding of the terminology necessary for successful revenue management for vacation rentals.

 

Download the VR Acronym Cheat Sheet

Advertised Price             

The nightly price that a vacation rental manager (VRM) is presenting to the consumer.

 

Algorithm

A series of repeatable steps for carrying out a certain type of task with data. As with data structures, people studying computer science learn about different algorithms and their suitability for various tasks. Specific data structures often play a role in how certain algorithms get implemented.

 

Application Programming Interface (API)

API is the acronym for Application Programming Interface, which is a software intermediary that allows two applications to talk to each other. Each time you use an app like Facebook, send an instant message, or check the weather on your phone, you’re using an API.

 

Artificial Intelligence (AI)

Refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving.

 

Availability, Rates & Inventory (ARI)      

The minimum data set that is required to be synchronized between a VRM and a distribution channel to enable online booking (a.k.a. ARRI, which also includes restrictions).

 

Available Nights

Also known as Room Supply or Nights Available. The total number of nights that the VRM is authorized to rent out. Typically, this is the total number of nights less owner reservations and maintenance-related down-time.

 

Available Occupancy

Calculates the percentage of guest nights out of the total nights available for guests to book. By comparison, occupancy, the traditional hospitality KPI, calculates the percentage of guest nights out of the total nights in the period, without considering the owner nights and hold nights. Because owner reservations and hold nights take up some of the nights typically, Available Occupancy is helpful to how well you’ve filled up the properties from the nights that were available for you to fill with guests.

 

Average Booking Window

Represents the average number of days between when the reservation is made by the guest and the check-in date. Average Booking Window is calculated as the average number of days the property is booked in advance of arrival for the selected period. Understanding the expected booking window for a property or group of properties helps you know when to adjust pricing by demonstrating when you should expect the property to book for certain seasons. Larger properties that sleep more people may have longer booking windows since they take more planning. Smaller properties typically have shorter booking windows. Booking windows are also different for different times of the year, and differ between markets.

 

Average Daily Rate (ADR)           

The calculated average nightly rate for a property or group of properties. Calculated by dividing the total rental revenue by total nights sold. It is one of the most common financial indicators to measure performance in the vacation rental industry.

 

Average Length of Stay (ALOS)

Calculated by dividing the total number of nights by the number of stays in a property or group of properties during a specified time period.

 

Average Rate Index (ARI)

A vacation rental KPI that measures the performance of a VRM’s ADR compared to a competitive set during a specified time period.

 

Best Available Rate (BAR)

The lowest available unqualified rate, representing the fair market value for a property for each day.

 

Best Rate Guarantee (BRG)

The promise that the unit price a consumer receives when booking directly with the VRM is the best rate offered in the marketplace. VRMs implement a Best Rate Guarantee (BRG) policy to drive consumers to book direct.

 

Billboard Effect

The theory that accommodations listed on third-party distribution sites gain a reservation benefit in addition to direct sales. That benefit, coined the “billboard effect,” claims a boost in reservations due to the property being listed on an OTA website. Would-be guests gain information about the property from its OTA listing, but then opt to book directly through a channel controlled by the VRM.

 

Booking Curve 

A tool that visually displays bookings over a certain period of time (e.g. room pickup, bookings, and availability). Data is displayed in a graph which shows how bookings develop over time. The data needed to create a booking curve is usually taken from a Property Management System (PMS).

 

Booking Engine

An application which helps support an online reservation. For VRMs, the Booking Engine commonly refers to the application included on a VRM’s website which facilitates online booking through an API connection to the Property Management System (PMS).

 

Booking Pace    

The rate at which reservations are made for a property or group of properties over a specified time period, usually compared to another specified time period. Many VRMs also collect competitive booking pace data for a set of like-type properties. 

 

Booking Window

The number of days between when the reservation is made by the guest and the check-in date.

 

Cancellation Rate

The percentage of reservations that canceled during a period.

 

Canceled Stays

The number of guest stays for check-ins during a given period that canceled prior to arrival.

 

Channel Fee, or Channel Host Fee           

Fee charged by a distribution channel, channel manager, or marketplace. Typically, this fee is deducted from the payment before the VRM collects it.

 

Channel Manager           

An intermediator that provides connectivity between a VRM and third-party distribution channels. The channel manager keeps ARI in sync between the PMS and the third-party systems (a.k.a. Switch, Dumb Pipe, EDI).

 

Closed to Arrival (CTA) 

A yield tool used to close days out from reservations arriving on a particular day. This yield practice originated from the airlines and is not considered a good practice in VR revenue management.

 

Competitive Set, or “Comps”    

A defined group of competitive properties that have a similar type, target market, location, and/or concept.

 

Complex             

A building or community with multiple units (e.g. Condo-hotel, Condominiums, or Townhomes) usually managed by a Home Owners Association (HOA). Individual units are often managed by multiple VRMs.

 

Condo-Hotel    

Also known as a Hotel-condo or a Condotel. A building which is legally a condominium, but which is operated similar to a hotel with a front desk and onsite staff and services.

 

Confidence Interval

The probability that a value will fall between an upper and lower bound of a probability distribution. Data Scientists use confidence intervals to measure uncertainty. A higher probability associated with the confidence interval means that there is a greater degree of certainty that the parameter falls within the bounds of the interval. Therefore, a higher confidence level indicates that the parameters must be broader to ensure that level of confidence.

 

Conversion Rate              

The percentage of users who take a desired action. Also known as the Look-to-Book Ratio.

 

Custom Fees     

Additional fees unique to a property or a group of properties.

 

Data Integrity

The accuracy and consistency (validity) of data over its lifecycle.

 

Data Science

A multi-disciplinary field that uses scientific methods, processes, algorithms, and systems to extract knowledge and insights from structured and unstructured data.

 

Data Scraping

A technique in which a computer program extracts data from human-readable output coming from another program.

 

Data Warehouse

A system used to do quick analysis of business trends using data from many sources.

 

Depth of Inventory        

The number of like-kind units available in a similar region or complex. Inventory can be rolled up onto Representative-Level channels or broken out for Key-Level channels. Example: There are 8 x 2BR/2BA Ocean View units (a.k.a., Key-Level w/Depth.)

 

Direct Booking 

Direct bookings happen when a customer books directly through the VRM and not through a third-party channel.

 

Dynamic Pricing

Dynamic pricing is a customer or user billing mode in which the price for a product frequently rotates based on market demand, growth, and other trends.

 

Global Distribution System (GDS)            

A network that enables automated transactions between VRMs and third-party distribution channels.

 

Gross Revenue, Gross Booking Revenue (GBR) 

Total revenue the VRM collects, including Guest Fees.

 

Guest Fees        

Fees that the VRM charges the guest and are not part of the Rental Revenue (e.g. Cleaning, Booking, Pet, Parking, and Pool).

 

Hold Nights

The number of nights unavailable for booking due to a hold (i.e. maintenance).

 

Key Performance Indicators (KPI)            

A business metric used to evaluate factors crucial to the success of an organization (e.g. ADR, Occupancy Rate, Conversion Rate, and RevPAN).

 

Key-Level Listing, or Key-Level 

A unit-specific listing that represents an exact vacation rental unit. Example: Emerald by the Sea—Unit 312. This is a corner unit on the third floor with a view of the ocean. Individual homes are merchandised as Key-Level Listings (a.k.a., By the Door, Unit Specific).

 

Machine Learning

Machine learning is an application of artificial intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. Machine learning focuses on the development of computer programs that can access data and use it to learn for themselves.

 

Managed Distribution  

A service that helps VRMs optimize online distribution. This includes channel managers and additional service providers such as consolidated contracting, consolidated accounting and reporting, additional content syndication services, revenue and yield management tools with consulting, analytics, transaction processing, and payment services.

 

Merchant Channel

A distribution channel that charges the traveler’s credit card and sends the supplier a net rate (e.g. Expedia, Orbitz, Priceline).

 

Merchant of Record (MOR)

The party that charges the traveler’s credit card. 

 

Minimum Length of Stay, Minimum Night Stay (MLOS)

A restriction dictating the lowest number of nights a guest can stay at a property.

 

Net Rate

The total amount received from a merchant distribution channel which is the amount the traveler paid minus the commissions and/or fees charged by the third-party distribution channel.

 

Occupancy Rate (OCC)

1) The percentage of total available nights that have been rented for a property or a group of properties over a specified time period. 2) The percentage of all rental units that are occupied or rented at a given time.

 

Open Nights

Nights that remain open for guest stays, that are not otherwise already booked by guests (Nights Sold), owners (Owner Nights), or blocked off. This is useful for quickly determining the opportunity remaining for a given period. When combined with ADR for a period of similar rates it can also be useful in calculating the revenue opportunity remaining, or money still “left on the table.”

 

OTA Search Ranking

The order in which your property is listed on the OTA channel search results page.

 

Owner Revenue              

The revenue the property owner receives. Calculated by subtracting the VRM’s Commission from Rental Revenue.

 

Promotions, or Specials

A discounted rate or an extra bonus when booking, such as “4th Night Free.”

 

Property

In the vacation rental industry, a “property” refers to a vacation unit or home of any type.

 

Property Group

For revenue managers and channel managers, this is a group of similar properties in a VRM’s inventory that are priced together.

 

Rack Rate

The full price at which units are sold to customers before discounts.

 

Rate Parity

Defined as maintaining consistent rates for the same property across all channels.

 

Representative Style Listing, or Rep-Level

A listing that represents a certain lodging type in a multi-unit building or complex. This listing might have “Depth of Inventory” and different unit types. Example: 2BR/2BA Ocean View (a.k.a. Hotel Style Listings, By Unit Type, Allocate on Arrival).

 

Return on Investment (ROI)

The benefit (or return) of an investment is divided by the cost of the investment, and the result is expressed as a percentage or a ratio. For VRMs, typically calculated by dividing the rental revenue generated from a source by the cost of the source.

 

Revenue Management

The application of disciplined analytics that predict consumer behavior at the micro-market level, optimize product availability, and price to maximize revenue growth.

 

Revenue Per Available Bedroom (RevPAB)

RevPAR broken down by bedroom, calculates the amount of Unit Revenue earned per bedroom per night. Because RevPAR offers diminishing value when comparing different property types, RevPAB normalizes the data to allow comparisons across properties with different numbers of bedrooms. This allows you to directly compare the rental revenue per bedroom over the number of available nights for 10-bedrooms vs 2-bedrooms. It also provides a more meaningful KPI for comparing the traditional RevPAR across all properties when benchmarking against other companies, as well as for comparing all your properties against one another.

 

Revenue per Available Night (RevPAN)

The revenue collected each night that a property is available to rent out. RevPAN is calculated by dividing rental revenue by the number of available nights for a property or group of properties.

 

Revenue per Available Room (RevPAR)

A performance metric in the hotel industry that is calculated by multiplying a hotel’s ADR by its occupancy rate. A critical KPI for measuring revenue performance, RevPAR takes into account both the ADR at which you booked the property and percentage of number of nights it was booked (Occupancy). This provides a better indicator of overall performance when compared to looking at the ADR or the Occupancy alone. Compared to ADR or Occupancy as stand-alone metrics, RevPAR provides a more complete measure of your company’s success by giving you an overall picture of both rental revenue and occupancy.

In a single figure, RevPAR helps you understand how well your company has filed its properties both in the off-season when demand is low even though rates are also low, and in the high-season when demand is high and rates are also high. Be mindful that in vacation rentals a 10-bedroom is likely to have a significantly higher ADR, and thus RevPAR, than a 2-bedroom property.

For this reason, VRMs are careful to use filters to draw appropriate conclusions when benchmarking RevPAR. For example, a comparison of RevPAR for 3-bedroom properties in a similar location vs other 3-bedroom properties in the same location may prove more insightful than a benchmarking of total RevPAR for a period inclusive of all property types.

 

Rent Per Available Sleeps (RevPAS)

RevPAR broken down by the number a property sleeps, calculates the amount of Unit Revenue per unit of sleeping capacity per night. Because RevPAR offers diminishing value when comparing different property types, RevPAS normalizes the data to allow comparisons across properties with different sleeping capacity. This allows you to directly compare the rental revenue per the sleeping occupancy over the number of available nights for properties that sleep 14 and properties that sleep 2.

 

System of Record (SOR)

A system of record (SOR) is an ISRS (information storage and retrieval system) that is the authoritative source for a particular data element in a system containing multiple sources of the same element. To ensure data integrity, there must be one—and only one—system of record for a given piece of information. This is typically a vacation rental manager’s PMS in the vacation rental industry. 

 

Third-Party Distribution

External channels such as OTAs (e.g. Vrbo, Airbnb and Booking.com). Third-Party Distribution channels also include Tour Operators, Wholesalers, and GDS.

 

Total Revenue Per Available Rental Night (TrevPAR)

Total revenue by the amount of available nights for a selected time period. For hoteliers, this metric is referred to as Total Revenue Per Available “Room” (TrevPAR) and typically includes total revenue for the period included food and beverage and all other revenue. Because most vacation rentals do not have F&B revenue and concierge revenue is still not widespread, TrevPAR only includes unit revenue and other revenue over the total nights in a given period.

 

Total Revenue Per Occupied Rental Night (TrevPOR)

Total Revenue divided by the total guest nights for a selected time period.

 

Traveler Fee

The fee charged directly to the consumer by an OTA which raises the total rate paid above the rate charged by the VRM or homeowner. Also called the “Service Fee” by HomeAway, Airbnb, and TripAdvisor.

 

VRM Commission

A predetermined fee charged by the VRM to the homeowner, as a percentage of rental revenue.

 

Yield Management

See Revenue Management. The process and discipline of making frequent adjustments in the price of a property in response to certain market factors, such as demand or competition.

 

 

Related ItemsdefinitionKPImetricsRevenue Managementrevenue management definitionsrevenue management glossaryrevenue management key termsrevenue management metricsVacation Rental industry
Click to add a comment

Leave a Reply

Cancel reply

Your email address will not be published. Required fields are marked *

Education
August 11, 2019
mm
Amy Hinote @vrmintel

Amy Hinote is the founder and editor-in-chief of VRM Intel Magazine, which provides news, information and resources for the professionally managed vacation rental industry. With a background in finance and over 15 years in the vacation rental industry, Hinote has worked with property management companies, technology companies, intermediaries and investors, and provides insider information about the growing vacation rental industry. She also founded the data company, now known as Key Data Dashboard, which provides aggregated market intelligence and reporting for vacation rental managers. Hinote resides between Alabama's Gulf Coast and Evanston, Illinois.

Related ItemsdefinitionKPImetricsRevenue Managementrevenue management definitionsrevenue management glossaryrevenue management key termsrevenue management metricsVacation Rental industry

More in Education

All About the Data: Predictive Indicators with Jason Sprenkle

Rebecca LombardoAugust 16, 2022
Read More

VRM Intel Live Conference Heads to Ozark Region to Investigate Area’s Massive Growth

Amy HinoteMay 9, 2022
Read More

VRM Intel Live! Events Scheduled for Wilmington, Branson, and Breckenridge

Amy HinoteMarch 30, 2022
Read More

HR 2022: Attracting Today’s New Workforce after the Resignation Tsunami and the Great Renegotiation

Sue JonesMarch 23, 2022
Read More

Skift Founder and CEO Rafat Ali Discusses Upcoming Skift Global Forum, Sep 21-23

Amy HinoteSeptember 18, 2021
Read More

Preview the 2021 DARM Conference Sessions, Aug 17 -18, Charleston, SC

Amy HinoteJune 27, 2021
Read More
Scroll for more
Tap

Sponsor News

  • Recession-Proofing Your Vacation Rental Business
    BusinessOctober 18, 2022
  • How to Increase Your Occupancy in a Competitive Market through Monthly Rentals
    Industry News for Vacation Rental ManagersSeptember 16, 2022
  • PriceLabs Announces $30 Million Investment from Summit Partners
    BusinessAugust 5, 2022
  • Ximplifi Adds Owner Portal to Automation Suite for Short Term Rental Accounting
    BusinessAugust 4, 2022
VRM Intel
Calendar of Events
Videos & Whitepapers
VRMintel Magazine
Subscribe
Advertise
About Us
Authors
Contact Us

Recent News

  • Arizonans for Responsible Tourism Pregame Prep Campaign
    Arizonans for Responsible Tourism Hosts Super Bowl Preparedness Campaign for Vacation Rental Operators
    Industry News for Vacation Rental ManagersJanuary 18, 2023
  • vacation-rentals-housing-vrm-intel
    Carrots and sticks: Vacation rentals and the creation of affordable, workforce housing
    Industry News for Vacation Rental ManagersDecember 6, 2022
  • Woman dropping off a ballot
    2022 Election Results of Vacation Rental Ballot Measures
    Industry News for Vacation Rental ManagersNovember 11, 2022
  • Recession-Proofing Your Vacation Rental Business
    BusinessOctober 18, 2022

View Current Issue

VRMintel Copyright © 2016-17 | Click HERE to Subscribe | Privacy Policy | Disclaimer | Copyright | Jobs | Facebook | Twitter | LinkedIn

Message to Vacation Rental Management Companies: Don’t Give Up
Five Keys to Responding to a Negative Online Review

xxx videos

  • mamadas
  • redwap
  • free porn
  • porno gratis