Industry Terms – The Letter A

TrevPAR World Industry Terms

AAA

The highest rating given to bonds by bond-rating agencies. AAA bonds are thought to have almost no default risk.

ADR – Average Daily Rate

A measure of the average rate paid for rooms sold, calculated by dividing room revenue by rooms sold.

Average Daily Rate = room revenue / rooms sold

ADR rate index or ARI – The ADR index measures a hotel’s ADR performance relative to an aggregated grouping of hotels for example competitive set, market or sub-market.

An ADR Index of 100 equals fair share of ADR, compared to the aggregated group of hotels. An ADR Index greater than 100 represents more than a fair share of the aggregated group’s ADR performance. Conversely, an ADR Index below 100 reflects less than a fair share of the aggregated group’s ADR performance.

How to calculate an ADR index:

Hotel ADR / Aggregated group of hotels’ ADR x 100 = ADR index

Fair share can be thought of as the subject hotel’s “piece of the pie” in the market. For example, if the subject hotel’s ADR is $50 and the ADR of its competitive set is $50, the subject hotel’s index would total 100.

If the subject hotel’s ADR totaled $60, its index would be 120, indicating the hotel has captured more than its fair share.

If the subject hotel’s ADR totaled $40, its index would be 80, indicating the hotel has captured less than its fair share.

Alternative Accommodations

Accommodations other than hotels such as: vacation home rentals, cruise ships, home-sharing rentals, timeshares, hostels and serviced apartments.

The most recent and most talked about alternative accommodation lately is Airbnb of course.

Amortization Period 

The time-frame during which a loan amount will be paid down to a 0 balance; most hotel loans have a 25 year amortization period, but some may be 20 or 30 year periods.

Auction

A system in which potential buyers place competitive bids on assets and services. The asset or service in question will sell to the party that places the highest bid. In most cases, sellers will pay a listing fee to the auctioneer, regardless of whether the item sells for the desired price.

The Internet has increased the amount of exposure auctions have, and bidders no longer have to be present to participate. Online marketplaces connect buyers and sellers worldwide by allowing individuals to submit their bids (or list their products) online and send payment electronically.

Average Published Rate 

The average published rate is measured by averaging the range of published room rates for various room sizes during different times of the year.

APR = Sum of All Room Type Rates / Number of room types

Author: Derek Martin 

Derek Martin TrevPAR World