When you start your first job in the hotel industry, you’ll hear many phrases and acronyms that you may not have come across before. Sue Tinnish, Ph.D., Dean of the School of Hospitality Management at Kendall College, explains that the specialized terms help industry professionals communicate. “It’s like any industry; it has its own vocabulary that just makes it easier for people to talk to each other,” she says. Dr. Tinnish shares 13 important, widely used hospitality terms and their meanings.
1. Front of house/back of house: Front of house is the part of a hotel that the guests see and spend time in. Back of house is the behind-the-scenes area for employees. “It’s where the service carts go,” Dr. Tinnish says. “It’s the lunch room, the break room for the staff.”
2. BEO: BEO stands for banquet event order, which is a document listing the requirements for a catered event. “It specifies every single operational or set-up needs that you have for the specific event,” Dr. Tinnish says. Examples of items found in a BEO are how many chairs are needed and how the chairs should be set up.
3. Attrition: When fewer guests arrive at a hotel than are contracted for, that’s known as attrition. “You would contract for say, 300 rooms, but there might be a little leeway or an expectation that you might not fill all those,” Dr. Tinnish explains.
4. Walk: Because hotels expect some attrition, they may overbook. If more guests show up than were expected, the hotel may not be able to accommodate them all and will have to arrange for some of them to stay in another hotel, which is called walking the guests. “You show up with a reservation and they did not have room for you, so they walk you to another hotel,” Dr. Tinnish says.
5. Comp: Comp stands for complimentary, and to comp guests means to give them something for free. A comp could be a bottle of wine or flowers for a bride and groom, or it could mean waiving the charge on part of a meal if a guest complained about the food. “An unhappy guest, or a guest that’s celebrating something special, would get comped,” Dr. Tinnish says.
6. Occupancy rate: The occupancy rate tells you “what percentage of the rooms are occupied in the hotel,” Dr. Tinnish says. A higher occupancy rate is better because it means the hotel is operating closer to its full capacity.
7. ADR: ADR stands for the average daily rate and is the average income the hotel receives per occupied room. “If you have $50,000 in room revenue and 500 rooms sold, your average daily rate would be $100,” Dr. Tinnish explains. She notes that ADR is important because room prices fluctuate based on demand.
8. RevPAR: RevPAR stands for revenue per available room. This is found by multiplying ADR by the occupancy rate. “Or you could take your total room revenue for the hotel [and] divide it by the total number of available rooms,” Dr. Tinnish says.
9. PMS: PMS stands for a property management system, which is the system hotels use to control their operations. The PMS tracks things like reservations, whether rooms are clean, and lost and found items. “It hooks up with the messenger service. It hooks up with housekeeping,” Dr. Tinnish says.
10. Market segment: A market segment is a group of guests who share similar characteristics; business travelers are an example of a market segment. “Much of the hospitality industry looks at their market and divides it into specific segments,” Dr. Tinnish says.
11. VFR: VFR stands for visiting friends and relatives. It’s a market segment composed of people who are traveling to see friends or family rather than to visit tourist attractions or conduct business. “This is a segment of the industry that a hotel’s pretty interested in,” Dr. Tinnish says.
12. Bleisure: Bleisure refers to a segment of guests who combine business and leisure activities in the same trip. “They’ll choose to stay in their destination and have a little leisure experience after their business,” Dr. Tinnish says, and she notes that bleisure travelers are often millennials.
13. OTA: OTA stands for online travel agency, a website that allows consumers to compare prices and book rooms. OTAs are a challenge to hotels because a hotel makes less money when guests book a room through an OTA than when they book a room through the hotel’s own website. Dr. Tinnish says that the result of OTAs is “more information to consumers, less control for the people in the business.”