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Lodging Industry Glossary

CategoryItemAbbreviationDefinitionInterpretation
OverallLodging BusinessL-Biz.The business of developing, promoting, constructing, owning, leasing, acquiring, financing, managing, and/or operating, or authorizing others the right to develop, promote, construct, own, lease, acquire, finance, manage and/or operate properties where someone pays to stay while they are away from home.
Source: Law Insider
A business that provides services such as facilities and equipments for guests to sleep and stay.
Source: Public Health Control Act
Lodging PropertyL-Prop.A parcel of land and everything that is permanently attached to the land, dedicated to the use of lodging business.
Source: Investopia Dictionary
Summarized as a property dedicated to the lodging business.
Source: Enforcement Decree of Building Act
Market-A place where parties, usually buyers and sellers, can gather to facilitate the exchange of goods and services. The market may be physical like a retail outlet, where people meet face-to-face, or virtual like an online market, where there is no direct physical contact between buyers and sellers.
Source: Investopia Dictionary
Lodging Market: A market where goods or services of the lodging industry are traded
Property Market: A market where real estate properties are traded
Capital Markets: A markets where investment and financial instruments are traded
Type-A statutory or customary classification system for lodging properties by location, configuration of buildings and scope of services provided at the property.
Source: Investopia Dictionary
Refer to Lodging Property Types by Regulation for statutory types, and Lodging Property Types by Hotelysis for customary types.
Region-An area of a country, especially one that has a particular characteristic or is known for something, such as an administrative district, jurisdiction and/or zoning.
Source: Cambridge Dictionary
The spatial domain characterized by a certain standard, and the most commonly used standard is the administrative district.
Source: Doosan Encyclopedia
Supply-An economic concept that describes the total amount of a specific good or service that is available to consumers. Supply can relate to the amount available at a specific price or the amount available across a range of prices if displayed on a graph.
Source: Investopia Dictionary
Supply volume is the sum of the smallest unit products for sale, meaning an available room for room products and an available seat for non-room products for the lodging property.
Demand-An economic concept that relates to a consumer's desire to purchase goods and services and willingness to pay a specific price for them. An increase in the price of a good or service tends to decrease the quantity demanded. Likewise, a decrease in the price of a good or service will increase the quantity demanded.
Source: Investopia Dictionary
Supply volume is the sum of the smallest unit products sold, meaning an occupied room for room products and an occupied seat for non-room products for the lodging property.
Domestic DemandDDThe demand for goods and services by the people, companies, and government within a particular country.
Source: Cambridge Dictionary
For lodging properties, the number of rooms occupied by domestic guests and the number of domestic covers.
International DemandIDThe demand for goods and services by the people, companies, and government outside a particular country.
Source: Cambridge Dictionary
For lodging properties, the number of rooms occupied by international guests and the number of international covers.
Price-The amount of money for which something is sold or offered for sale.
Source: Cambridge Dictionary
The average daily rate for room products, and the average check for non-room products.
Profit-The financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question.
Source: Investopia Dictionary
Loss-A situation in which a business or an organization spends more money than it earns, or loses money in another way.
Source: Cambridge Dictionary
Face-The nominal value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the holder at maturity.
Source: Investopia Dictionary
For real estate, the face rent is a figure that disregards incentives such as rent-free periods, rent reductions and fit-out contributions. For lodging properties, the face price is a figure that accounts only for the products sold disregarding unsold inventories.
Effective-The real value of a security, as traded between the seller and the buyer. For stocks and bonds, the effective value is the cost of the stock for the buyer to obtain the ownership.
Source: Investopia Dictionary
For real estate, the effective rent is a figure that accounts for incentives such as rent-free periods, rent reductions and fit-out contributions. For lodging properties, the effective price is a figure that accounts for all products available whether sold or unsold.
Demand StabilizationD-Stab.The process of demand for goods and services starting to remain at about the same level, rather than changing a lot.
Source: Cambridge Dictionary
The first step in stabilizing the operation of a lodging property is the process until the occupancy reaches a certain level and does not change significantly afterwards.
Price StabilizationP-Stab.The process of prices for goods and services starting to remain at about the same level, rather than changing a lot.
Source: Cambridge Dictionary
The second step in stabilizing the operation of a lodging property is the process until the average daily rate reaches a certain level and does not change significantly afterwards.
Cost StabilizationC-Stab.The process of expenses to produce goods and services starting to remain at about the same level, rather than changing a lot.
Source: Cambridge Dictionary
The third step in stabilizing the operation of a lodging property is the process until the ratio of gross operating profit to total revenue reaches a certain level and does not change significantly afterwards.
Life CycleLCA course of events that brings a new product into existence and follows its growth into a mature product and eventual critical mass and decline.
Source: Investopia Dictionary
The amount of expenditure required for maintenance and reinvestment for a lodging property varies depending on the life cycle stage.
Market CycleMCA type of recurrent fluctuation found in the aggregate economic activity of a nation - a cycle that consists of expansions occurring at about the same time in many economic activities, followed by similarly general contractions.
Source: Investopia Dictionary
Refer to Business Cycle Theories for the overall economic cycles. In the lodging industry, the market cycle can be captured in the timeseries data of Room RevPAR.
SupplyBusinessBiz.An organization or enterprising entity engaged in commercial, industrial, or professional activities. The purpose of a business is to organize some sort of economic production of goods or services.
Source: Investopia Dictionary
If 1 owner or operator owns or operates 3 lodging properties of different types and regions, the number of businesses is counted as 1.
PropertyProp.Anything that a person or a business has legal title over, affording owners certain enforceable rights over said items. Examples of property, which may be tangible or intangible, include automotive vehicles, industrial equipment, furniture, and real estate.
Source: Investopia Dictionary
If 1 owner or operator owns or operates 3 lodging properties of different types and regions, the number of properties is counted as 3.
OutletOlt.A shop that is one of many owned by a particular company and that sells the goods and services produced by the company.
Source: Cambridge Dictionary
If 1 owner or operator owns or operates 3 lodging properties of a type and region under 3 different names or brands, the number of outlets is counted as 3.
Front-of-HouseFOHThe part of a lodging property that is open to the customers, whether generating revenues or not.
Source: Wikipedia
Includes revenue-generating spaces such as rooms and other facilities as well as public facilities provided free of charge to customers in a lodging property such as lobbies, lounges, and parking lots.
Back-of-HouseBOHThe part of a lodging property that is not open to the customers, used for producing goods and services.
Source: Wikipedia
In general, a space that is separated from customer circulations, available only to enployees, such as kitchens, warehouses, laundry rooms, linen rooms, and offices.
Room-A sleeping room, including any adjacent private living area, in a lodging property which is rented to guests for their use as an overnight accommodation.
Source: Law Insider
Rooms out of orders for reasons such as renovation are excluded from the number of rooms for the period of unavailability.
Other Facility-Features and services offered at lodging properties, other than rooms such as restaurant, golf, pool, spa, casino, meeting spaces, etc.
Source: STR Glossary
If a lodging property is a part of a mixed-use building, the part used for purposes other than the lodging business while directly operated by the operator of the loding property shall be included in the other facility.
Public Facility-A portion of a building that is generally accessible to all occupants: such an area may include, but is not limited to, hallways, stairways, laundry, recreational rooms, playgrounds, community centers, garages, and boundary fences.
Source: Law Insider
If an outlet with a characteristic of room or other facilities in a lodging property while leased/subleased to or managed by a third-party shall be included in the public facility.
Operating DaysDaysThe aggregate of all days on which the lodging property is in operation or could have been in operation in a specified time period.
Source: Law Insider
Seat-A piece of furniture whether movable or fixed that has been designed for someone to sit on, which is rented to customers for their use of dining or meeting in a lodging property.
Source: Law Insider
Seat HourSHThe amount of time that a customer occupied a seat in a restautant or a similar establishmant.
Source: Hotelysis
This measure is restricted from use for analysis purposes if there is a property or outlet that does not use a computerized POS system.
Site AreaLAThe area according to survey data, contained within the boundaries of the sub-division, sub divisions, or plot of land on which the premises are situated, or, where the boundaries of the site have not been defined by survey, the area contained within the recognised boundaries or limits of the site as determined by the engineer.
Source: Law Insider
If 1 property or multiple lodging properties are built on multiple lots and operated by 1 operator, the number of sites is counted as 1.
Gross Floor AreaGFAThe sum of the gross floor area of all floors of all buildings on a site measured from the exterior faces of the exterior walls or from the centrelines of walls separating two buildings.
Source: Law Insider
The sum of floor area for all properties, if multiple lodging properties of a type are built on multiple lots and operated by a single operator.
Non-lodging Facility AreaNFAIn the case of a mixed-use property, the aggregate area of floors used other than for lodging business.
Source: Hotelysis
The sum of area for all floors used for purposes other than lodging business and not operated by the lodging property operator, if a lodging property is included as a part of a mixed-use building.
Lodging Facility AreaLFAThe aggregate area of floors used exclusively for lodging business, including rooms, food and beverage and other public spaces.
Source: Hotelysis
Same as the gross floor area of a property, if the entire building is used by a single lodging business.
Room Facility AreaRFAIn a lodging property, the aggregate area of floors used exclusively for guestrooms, including corridors, stairs, elevators, linen rooms, etc.
Source: Hotelysis
If a part of the BOH related to room operation is installed separately outside the room floor, it is included in the room facility.
Other Facility AreaOFAIn a lodging property, the aggregate area of floors used exclusively for non-room operations, including corridors, stairs, elevators, kitchen, etc.
Source: Hotelysis
If a part of the BOH related to non-room operation is installed separately outside the room floor, it is included in the other facility.
Public Facility AreaPFAIn a lodging property, the aggregate area of floors used other than to generate revenues, including lobby, parking, administrative office, mechanical/electrical/plumbing spaces.
Source: Hotelysis
If multiple lodging properties share a public space, the area of the space is distributed in proportionate to the lodging facility area of each property as public facility area.
Rooms AvailableRATotal number of rooms in a lodging property or set of lodging properties in a specified time period, calculated as the number of rooms available in a day multiplied by the number of operating days.
Source: STR Glossary
Rooms Available = Number of Rooms X Operating Days
Seats AvailableSATotal number of seats at non-room facilities, in a lodging property or set of lodging properties, available in a specified time period, calculated as the number of seats multiplied by the number of operating days.
Source: STR Glossary
Seats Available = Number of Seats X Operating Days
Seat Hours AvailableSHATotal number of seat hours at non-room facilities, in a lodging property or set of lodging properties, available in a specified time period, calculated as the number of seats available multiplied by the total operating hours.
Source: STR Glossary
Seat Hours Available = Seats Available X Operating Hours Per Day
DemandInternational TravelerI-Trav.A non-resident traveler within the country of reference, either as part of a international tourism trip or part of an outbound tourism trip.
Source: UNWTO Glossary
Using the tourist arrivals statistics based on international visitors and immigrations statistics by the Immigration and Foreigners Policy Division of Ministry of Justice.
Domestic TravelerD-Trav.A resident traveler within the country of reference, either as part of a domestic tourism trip or part of an outbound tourism trip.
Source: UNWTO Glossary
Estimated based on the results of the National Travel Survey by the Korea Culture & Tourism Institute and the Population Census by the Statistics Korea.
Guest-A customer who paid to consume room products in the lodging property.
Source: Hotelysis
If 2 guests stay in 1 room for 2 days, the number of guests is calculated as 4.
Rooms OccupiedROTotal number of rooms sold in a specified time period, excluding complimentary rooms.
Source: STR Glossary
If 2 guests stay in 1 room for 2 days, the number of rooms occupied is calculated as 2.
OccupancyOCCPercentage of rooms sold over the total inventory during a specified time period, calculated by dividing the number of rooms occupied by rooms available.
Source: STR Glossary
Occupancy = Rooms Occupied / Rooms Available
Guests Per Occupied RoomGPORThe number of guests divided by the total number of rooms occupied at the lodging property in a specified time period.
Source: STR Glossary
Guests Per Occupied Room = Number of Guests / Rooms Occupied
Guests Per Available RoomGPARThe number of guests divided by the total number of rooms available at the lodging property in a specified time period.
Source: STR Glossary
Guests Per Available Room = Number of Guests / Rooms Available
Cover-A customers who paid to consume non-room products in the lodging property.
Source: Hotelysis
Number of Covers = Seats Occupied
Seat Hours OccupiedSHOTotal number of seat hours at non-room facilities, in a lodging property or set of lodging properties, sold in a specified time period.
Source: STR Glossary
If 2 covers occupy a 4-top table for 2 hours, the seat hours occupied are calculated as 4.
TurnoverTOThe rate at which seats sold at non-room facilities over the total inventory during a specified time period, calculated by dividing the number of covers by seats available.
Source: STR Glossary
Turnover = Number of Covers / Seat Hours Available
Covers Per GuestCPGThe number of covers divided by the number of guests at the lodging property in a specified time period.
Source: STR Glossary
Covers Per Guest = Number of Covers / Number of Guests
Covers Per Square Meter-The number of covers divided by the other facility area of the lodging property in a specified time period.
Source: STR Glossary
Covers Per Square Meter = Covers / Other Facility Area
Covers Per Occupied Room-The number of covers divided by the total number of rooms occupied at the lodging property in a specified time period.
Source: STR Glossary
Covers Per Occupied Room = Covers / Rooms Occupied
Covers Per Available RoomCPARThe number of covers divided by the total number of rooms available at the lodging property in a specified time period.
Source: STR Glossary
Covers Per Available Room = Covers / Rooms Available
PriceAverage Daily RateADRA measure of the average rate paid for rooms occupied, calculated by dividing room revenue by rooms occupied at the lodging property in a specified time period.
Source: STR Glossary
Average Daily Rate = Room Revenue / Rooms Occupied
Room Revenue Per GuestRRevPGTotal room revenue divided by the number of guests at the lodging property in a specified time period.
Source: STR Glossary
Room Revenue Per Guest = Room Revenue / Number of Guests
Room Revenue Per Available RoomRRevPARTotal room revenue divided by the total number of available rooms at the lodging property in a specified time period.
Source: STR Glossary
Room Revenue Per Available Room = Room Revenue / Rooms Available = Occupancy X Average Daily Rate
Average CheckACThe average amount spent by a customer on a visit to non-room facilities, calculated by dividing the other revenue by the number of covers in a specified time period.
Source: Law Insider
Average Check = Other Revenue / Number of Covers
Other Revenue Per Available SeatORevPASTotal other revenue divided by the total number of seats available at the lodging property in a specified time period.
Source: STR Glossary
Other Revenue Per Available Seat = Other Revenue / Seats Available
Other Revenue Per Available Seat HourORevPASHTotal other revenue divided by the total number of seat hours available at the lodging property in a specified time period.
Source: STR Glossary
Other Revenue Per Available Seat Hour = Other Revenue / Seat Hours Available
Other Revenue Per Square MeterORevPSQMTotal other revenue divided by the other facility area of the lodging property in a specified time period.
Source: STR Glossary
Other Revenue Per Square Meter = Other Revenue / Other Facility Area
Other Revenue Per Occupied RoomORevPORTotal other revenue divided by the total number of rooms occupied at the lodging property in a specified time period.
Source: STR Glossary
Other Revenue Per Occupied Room = Other Revenue / Rooms Occupied
Other Revenue Per Available RoomORevPARTotal other revenue divided by the total number of rooms available at the lodging property in a specified time period.
Source: STR Glossary
Other Revenue Per Available Room = Other Revenue / Rooms Available
Total Revenue Per Available RoomTRevPARTotal revenue, including room revenue and other revenue, divided by the total number of rooms available at the lodging property in a specified time period.
Source: STR Glossary
Total Revenue Per Available Room = Total Revenue / Rooms Available = Room Revenue Per Available Room + Other Revenue Per Available Room
Dynamic PricingDPA pricing strategy in which businesses set flexible prices for products or services based on current market demands.
Source: Wikipedia
The average daily rate is a weighted average of room rates by rooms occupied.
Revenue ManagementRMThe application of disciplined analytics that predict consumer behaviour at the micro-market levels and optimize product availability, leveraging price elasticity to maximize revenue growth and thereby, profit.
Source: Wikipedia
Effective when goods or services of the same or similar quality are distributed in mass for seasonal demand.
Profit and LossIncome StatementISOne of the three important financial statements used for reporting a company's financial performance over a specific accounting period, focusing on the company’s revenues and expenses during a particular period.
Source: Investopia Dictionary
Room RevenueRRev.Revenue generated from the guestroom rentals or sales in a specified time period.
Source: STR Glossary
Rooms that are not used due to a no-show are not included in the rooms occupied but the revenue included in the room revenue.
Other RevenueORev.Revenue derived from the sale of food, beverage and relevant services sold at a property’s non-room departments in a specified time period.
Source: STR Glossary
Total RevenueTRev.Revenue from all lodging property operations - including rooms, F&B, other revenue departments, such as spa, golf, parking, rentals, leases, resort fees and cancellation fees - in a specified time period.
Source: STR Glossary
Total Revenue = Room Revenue + Other Revenue
Direct ExpenseDirEx.The expense that can be directly tied to the production of specific goods or services. A direct expense can be traced to the cost object, which can be a service, product, or department.
Source: Investopia Dictionary
Direct Expense = Room Expense + Other Expense + Undistributed Expense
Indirect ExpenseIndEx.The expense of something that is not directly involved in making a particular product or providing a particular service, including the cost of renting a building or of training staff.
Source: Cambridge Dictionary
Indirect Expense = Commission Fee + Fixed Charges
Room ExpenseRDEx.Room expenses include labor costs, such as salaries and wages for front desk, housekeeping, reservations, bell staff and laundry, employee benefits, costs to purchase linen, cleaning supplies, guest supplies and uniforms, franchise and reservation fees and travel agent commissions.
Source: STR Glossary
Room Expense = Room Fixed Expense + Room Variable Expense
Other ExpenseODEx.Other expenses include the cost of goods sold for food and beverages, labor costs and related benefits, china, silverware, linens, restaurant and kitchen supplies, menus printing and special promotions.
Source: STR Glossary
Other Expense = Other Fixed Expense + Other Variable Expense
Undistributed ExpenseUndEx.All expenses that may not be included in operating expenses, subject to the accounting principles, of whatever kind and from whatever source, relating to the ownership, operation, repair, maintenance and management of the property that are incurred on a regular basis.
Source: Law Insider
Undistributed Expense = Undistributed Fixed Expense + Undistributed Variable Expense
Commission FeeComFeeA payment to someone or a system that sells goods and/or services on behalf of the owner or the operator, which is paid dependant upon the amount sold, and normally included in the undistributed expense.
Source: Cambridge Dictionary
Includes the base management fee and the incentive management fee, but excludes the franchise fee, the reservation fee, the travel agent commissionand the credit card commission. USALI sparates the commission fee from the undistributed expense.
Base Management FeeBMFeeA fixed percentage of revenues payable to the manager under management agreements for property management services.
Source: Law Insider
Incentive Management FeeIMFeeAn override or profit participation payable to the manager under management agreements for property management services.
Source: Law Insider
In general, set the percentage to intervals of thresholds for gross operating profit, net operating profit or surplus of the onwer's target rate of return.
Franchise FeeFranFeeAny fee or charge that a franchisee or subfranchisor is required to pay or agrees to pay for the right to enter into a business under a franchise agreement.
Source: Law Insider
In general, composed of license fee, advertising charges and membership program charges.
Reservation FeeResFeeThe fee charged by a lodging property for booking a room, similar to a security deposit while refundable if the buyer cancels the booking before the fees deadline.
Source: Xotel
Travel Agent CommissionTACTravel Agent Commissions are amounts payable to a Travel Agent in return for a guest reservation, including OTA fees.
Source: RMS Cloud
Credit Card CommissionCCCThe fee charged by a credit card organizations for processing payments through credit cards, including payment processing, assessment and interchange fees.
Source: Hotelysis
Fixed ChargesFCA business cost such as rent, interest, and insurance that does not change with the amount of business that a company does.
Source: Cambridge Dictionary
Effective Full Time EmployeeEFTEAn employee's scheduled hours divided by the employer's hours for a full-time work-week. When an employer has a 40-hour work-week, employees who are scheduled to work 40 hours per week are 1.0 EFTEs. Employees scheduled to work 20 hours per week are 0.5 EFTEs.
Source: SHRM
Labor CostLCThe sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer. The labor cost is broken into direct and indirect costs. Direct costs include wages for the employees that produce a product, while indirect costs are associated with support labor.
Source: Investopia Dictionary
Fixed ExpenseFixEx.An expense that does not change with an increase or decrease in the number of goods or services produced or sold. Fixed expenses have to be paid by a company, independent of any specific business activities, meaning that they are generally indirect, in that they don't apply to a company's production of any goods or services.
Source: Investopia Dictionary
Includes labor costs of full time employees, where the labor costs of EFTEs are considered as those for full time employees.
Variable ExpenseVarEx.An expense that changes in proportion to how much a company produces or sells. Variable expenses increase or decrease depending on a company's production or sales volume - they rise as production increases and fall as production decreases.
Source: Investopia Dictionary
There is a difference in the effect of changes in revenues on cash flows, depending upon the mix of fixed and variable expenses.
Distribution ExpenseDistEx.The total of all those expenses that the producer of a product incurs to make possible the delivery of the product from its location to the end customer’s location.
Source: Wall Street Mojo
The sum of franchise fee, reservation fee and travel agent commision, among which the reservation fee and the travel agent commission are included in the room expense and the franchise fee is included in the undistributed expense.
Depreciation CostDCAn accounting method used to allocate the cost of wear-and-tear of a tangible asset over its useful life. Depreciation represents how much of an asset's value has been used.
Source: Investopia Dictionary
A hypothetical expense pursuant to tax laws, which is recorded as a cash and cash equivalents in the balance sheet.
Bad Debt CostBDCA bad debt cost is recognized when a receivable is no longer collectible because a customer is unable to fulfill their obligation to pay an outstanding debt due to bankruptcy or other financial problems.
Source: Investopia Dictionary
Typically, included in the undistributed expense, and the part of revenues are set as a bad debt allowancein the balance sheet for the purpose of matching revenue and expense accruals.
Capital ExpenditureCapEx.Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment, including repairing a roof, purchasing a piece of equipment, or building a new factory.
Source: Investopia Dictionary
Capital expenditure is an action to increase the value of assets through acquisition or renovation, and is recorded as as an asset item rather than an expense item in accounting.
ReserveRsrv.A savings account or other highly liquid asset set aside by an individual or business to meet any future costs or financial obligations, especially those arising unexpectedly.
Source: Investopia Dictionary
The capital expenditure reserves, whose amount is equivalent to ordinary depreciation expense, is formalization of reserving for future capital expenditure projects, recognized as a restricted cash in accounting.
Departmental ProfitDPThe profits attributable to the revenue-generating departments, which shall be determined on an accrual basis and in accordance with the applicable accounting principles on a consistent basis.
Source: Law Insider
Departmental Profit = Total Revenue - Room Expense - Other Expense
Gross Operating ProfitGOPA company’s profit from selling goods or services in a particular period before costs not directly related to producing them, such as fixed charges and interest payments.
Source: Cambridge Dictionary
GOP = Departmental Profit - Undistributed Expense = Total Revenue - Direct Expense
Earnings Before Interest, Taxes, Depreciation, and AmortizationEBITDAAn alternate measure of profitability to net income. By stripping out the non-cash depreciation and amortization expense as well as taxes and debt costs dependent on the capital structure, EBITDA attempts to represent cash profit generated by the company’s operations.
Source: Investopia Dictionary
EBITDA = GOP - Indirect Expense
Net Operating IncomeNOIA calculation used to analyze the profitability of income-generating real estate investments. NOI equals all revenue from the property, minus all reasonably necessary operating expenses, including direct and indirect expenses.
Source: Investopia Dictionary
NOI = EBITDA - Capital Expenditure Reserve
Net IncomeNIAn indicator of a company's profitability, calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses.
Source: Investopia Dictionary
Net Income = Net Operating Income - Depreciation Expense + Non-operating Revenue - Non-operating Expense - Income Tax
Financial PositionBalance SheetBSA financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders, reporting a company's assets, liabilities, and shareholder equity at a specific point in time.
Source: Investopia Dictionary
Non-current AssetNCAA company's long-term investments for which the full value will not be realized within the accounting year. They are typically highly illiquid, meaning these assets cannot easily be converted into cash.
Source: Investopia Dictionary
Non-current Asset = Tangible Asset + Intangible Asset
Tangible AssetTan.AAn asset that has a finite monetary value and usually a physical form. Tangible assets can typically always be transacted for some monetary value though the liquidity of different markets will vary.
Source: Investopia Dictionary
Tangible Asset = Tangible (Land) + Tangible (Building) + Tangible (FF&E)
Tangible (Land)Tan.LInitial value of land is measured according to its acquisition cost but is not depreciated because of its potential to appreciate in value.
Source: Investopia Dictionary
Tangible (Building)Tan.BInitial value of building is measured according to its acquisition cost and the costs associated with bringing assets to its intended use, which is depreciated over the depreciable life of 40 years.
Source: Investopia Dictionary
Tangible (FF&E)Tan.FInitial value of furniture, fixture and equipment is measured according to its acquisition cost, which is depreciated over the depreciable life from 5 to 15 years.
Source: Investopia Dictionary
Intangible AssetInt.AAn asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets.
Source: Investopia Dictionary
Current AssetCAAll the assets of a company that are expected to be conveniently sold, consumed, used, or exhausted through standard business operations with one year, including cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.
Source: Investopia Dictionary
Total AssetTAA resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.
Source: Investopia Dictionary
The sum of non-current asset and the current asset, where the weight of intangible assets increases over time.
EquityEq.The amount of money that would be returned to a company's shareholders if all of the assets were liquidated and all of the company's debt was paid off in the case of liquidation.
Source: Investopia Dictionary
Paid-in CapitalPICThe amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares plus amounts in excess of par value.
Source: Investopia Dictionary
Preferred shares are usually recognized as equities in the balance sheet, while there are cases to be recognized as liabilities, depending on the terms of redemption or conversion.
Earned SurplusESThe balance of the net profits, net income, and gains of a corporation after deducting losses and distributions to stockholders and transfers to capital stock accounts, which is not taxable if distributed as a dividend.
Source: Cornell Legal Encyclopedia
Cumulative profits that can be used as the funds for reinvestment or dividend payment, net of the amount of reinvestment and dividend payments already made.
Capital SurplusCSThe surplus resulting after common stock is sold for more than its par value. Capital surplus includes equity or net worth otherwise not classifiable as capital stock or retained earnings.
Source: Investopia Dictionary
Occurs when an asset is sold at a price higher than its acquisition cost.
Capital GainCGThe increase in the value of a capital asset when it is sold, occurring when an asset is sold for more than originally paid for. Capital gains are calculated by subtracting the original purchase price from the sale price.
Source: Investopia Dictionary
The amount of increased asset net of the existing balance of equity and liabilities, which generally tends to increase over time through accumulation of earned surplus.
Capital LossCLThe loss incurred when a capital asset, such as an investment or real estate, decreases in value. This loss is not realized until the asset is sold for a price that is lower than the original purchase price.
Source: Investopia Dictionary
The amount of decreased asset net of the existing balance of equity and liabilities, which occurs upon exhausting of accumulated earned surplus due to continuous loss in operating cash flows.
Impaired CapitalICThe equity that has a market value less than the value listed on the company's balance sheet. When the equity is deemed to be impaired, it will need to be written down on the company's balance sheet to its current market value.
Source: Investopia Dictionary
The impaired capital means that the market value of equity is lower than its book value, while the capital loss means a decrease in the book value of equity.
LiabilityLb.Something a person or company owes, usually a sum of money. Liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.
Source: Investopia Dictionary
Liability = Non-current Liability + Current Liability
Non-current LiabilityNCLThe long-term financial obligation listed on a company’s balance sheet. These liabilities have obligations that become due beyond twelve months in the future, including debentures, long-term loans, bonds payable, deferred tax liabilities, long-term lease obligations, and pension benefit obligations.
Source: Investopia Dictionary
Current LiabilityCLA company's short-term financial obligations that are due within one year or within a normal operating cycle, the time it takes a company to purchase inventory and convert it to cash from sales. An example of a current liability is money owed to suppliers in the form of accounts payable.
Source: Investopia Dictionary
Working CapitalWCThe difference between a company’s current assets - such as cash, accounts receivable/customers’ unpaid bills, and inventories of raw materials and finished goods - and its current liabilities, such as accounts payable and debts.
Source: Investopia Dictionary
Refer to Working Capital for Lodging Business in Korea for working capital.
DevelopmentLand CostLan.CThe costs and expenses incurred by the owner of a lodging property in purchasing the land, whether a lot or a set of lots, for the purpose of constructing a lodging property.
Source: Law Insider
Construction CostCon.CThe costs incurred by the actual construction works themselves, and on some projects may be determined by the value of the contract with the main contractor. The contract may include costs that might not in themselves be considered hard costs, may include costs that it is not possible to determine when the construction contract is awarded, and there may be construction works that are awarded by the client outside of the main contract.
Source: Designing Buildings
Furniture, Fixtures, and Equipment CostFFE.CThe costs and expenses incurred by the owner or the operator of a lodging property in purchasing any furniture, equipment or other personal properties and/or the cost to move and install same in the property.
Source: Law Insider
Pre-opening CostPre.CThe expenses incurred during the startup or formation of a new business, limited to only those expenses that would be treated as normal business expenses under standard accounting principles if the company were already in operation.
Source: Smart Capital Mind
Initial Working CapitalIWCThe working capital required for commencement of operations at lodging properties, including the amount required to fund initial guestroom amenities, food and beverage inventories, retail inventories and initial house bank balances required for working capital.
Source: Law Insider
ValueDiscount RateDRThe interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.
Source: Investopia Dictionary
WACC is used to valuate the long-term cash flows, while the capitalization rate is used to valuate the short-term cash flows.
Capitalization RateCap%The rate of return that is expected to be generated on a real estate investment property, computed based on the net income which the property is expected to generate and is calculated by dividing net operating income by property asset value and is expressed as a percentage. It is used to estimate the investor's potential return on their investment in the real estate market.
Source: Investopia Dictionary
The capitalization is based upon actual transactions, and the implied capitalization rate can be used if there are not enough transaction cases.
Implied Capitalization RateI-Cap%A measure of yield calculated as net operating income generated in the last 12 months divided by an implied real estate value based on the property's equity capitalization and outstanding debts.
Source: S&P Global
Refer to Implied Cap Rates for Lodging Properties in Seoul for capitalization rate.
Weighted Average Cost of CapitalWACCA firm's average after-tax cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt, meaning the average rate a company expects to pay to finance its assets.
Source: Investopia Dictionary
A discount rate frquently used to evaluate and reflect the value by source of capital, subject to risk tolerence of each.
Internal Rate of ReturnIRRA metric used in financial analysis to estimate the profitability of potential investments, meaning a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.
Source: Investopia Dictionary
The expected rate of return calculted by comprehensively considering the investment outcomes, such as dividends and caital gains.
Weighted Average Return on AssetsWARAThe collective rates of return on the various types of tangible and intangible assets of a company, presuming that each class of a company's asset base carries its own rate of return, each unique to the asset's underlying operational risk as well as its ability to attain debt and equity.
Source: Wikipedia
A discount rate that more accurately evaluates and reflects the value of intangible assets in evaluating the enterprise value.
Present ValuePVThe current value of a future sum of money or stream of cash flows, calculated by discounting future cash flows at the discount rate.
Source: Investopia Dictionary
Net Present ValueNPVThe difference between the present value of cash inflows and the present value of cash outflows over a period of time.
Source: Investopia Dictionary
NPV = PV - Acquisition Price
Income ValueIVThe value of a property estimated based on the income the property generates. It’s used by taking the net operating income (NOI) of the rent collected and dividing it by the capitalization rate.
Source: Investopia Dictionary
Book ValueBVThe cost of carrying an asset on a company's balance sheet, and calculated by netting the asset against its accumulated depreciation.
Source: Investopia Dictionary
Replacement CostRCThe amount of money a business must currently spend to replace an essential asset like a real estate property, an investment security, a lien, or another item, with one of the same or higher value.
Source: Investopia Dictionary
EconomyGross Domestic ProductGDPThe total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
Source: Investopia Dictionary
Using the annual figures of the nominal gross domestic products in KRW from ECOS by Bank of Korea.
Gross National IncomeGNIAn estimate of the total value of all the final products and services turned out in a given period by the means of production owned by a country's residents.
Source: Investopia Dictionary
Using the annual figures of the nominal gross national income in KRW from ECOS by Bank of Korea.
Gross Regional Domestic ProductGRDPA statistic that measures the size of a region's economy. It is the aggregate of gross value added (GVA) of all resident producer units in the region, and analogous to national gross domestic product.
Source: Wikipedia
Using the annual figures of GRDP by MSA from KOSIS by Statistics Korea.
Inflation RateCPI%A rise in prices, which can be translated as the decline of purchasing power over time. The rate at which purchasing power drops can be reflected in the average price increase of a basket of selected goods and services over some period of time.
Source: Investopia Dictionary
Using the annual figures of percentage changes in comsumer prices by MSA from KOSIS by Statistics Korea.
Wage GrowthWG%A rise of wage adjusted for inflations, often expressed in percentage. An increase in wage growth implies price inflation in the economy while a low wage growth indicates deflation that needs artificial interferences such as through fiscal policies by federal/state government.
Source: Wikipedia
Using the average monthly wages and their growth rates from KOSIS by Statistics Korea.
Exchange RateFXA rate at which one currency will be exchanged for another currency and affects trade and the movement of money between countries.
Source: Investopia Dictionary
Using the annual figures of the exchange rates for currencies of major countries to KRW based upon the base rate of exchange from ECOS by Bank of Korea.
Base Interest RateBase%A percentage value that central banks set as a guide for the financial sector as to define the price of credit in a country.
Source: Alpari Glossary
Using the annual figures of the BOK base interest rates from ECOS by Bank of Korea.
Deposit Interest RateDeposit%The rate paid by commercial or similar banks for demand, time, or savings deposits. The terms and conditions attached to these rates differ by country, however, limiting their comparability.
Source: World Bank Data
Using the annual figures of the deposit intereat rate of savings banks based upon the new handling amounts from ECOS by Bank of Korea.
Lending Interest RateLending%The bank rate that usually meets the short- and medium-term financing needs of the private sector, the rate of which is differentiated according to creditworthiness of borrowers and objectives of financing.
Source: World Bank Data
Using the annual figures of the lending intereat rate of savings banks based upon the new handling amounts from ECOS by Bank of Korea.
Interest Rate Spread%SpreadThe interest rate charged by banks on loans to private sector customers minus the interest rate paid to the central banks or savings deposits.
Source: World Bank Data
Derived from the base interest rate, the deposit interest rate and the lending interest rate data.
AnalysisTimeseriesTSA sequence of data points that occur in successive order over some period of time. In investing, a time series tracks the movement of the chosen data points, such as a security’s price, over a specified period of time with data points recorded at regular intervals.
Source: Investopia Dictionary
Timeseries analysis is applicable to indicators calculated on the same basis, and it can be applied to indicators of unit figures such as per available room, per occupied room, per available seat and per cover for lodging properties.
Seasonality-ㅁ characteristic of a time series in which the data experiences regular and predictable changes that recur every calendar year. Any predictable fluctuation or pattern that recurs or repeats over a one-year period is said to be seasonal.
Source: Investopia Dictionary
Seasonality refers to the case where demand, price and revenues differ by month, and is used as a criterion for distinguishing between high season and low season within a year.
SnapshotSSA piece of information or short description that gives an understanding of a situation at a particular time.
Source: Cambridge Dictionary
The statement of financial position records a snapshot of assets, liabilities, and equities at the end of the accounting period, while the income statement records the sum of revenues and expenses throughout the fiscal year.
Annualizedp.a.To annualize a number means to convert a short-term calculation or rate into an annual rate. Typically, an investment that yields a short-term rate of return is annualized to determine an annual rate of return, which may also include compounding or reinvestment of interest and dividends.
Source: Investopia Dictionary
When comparing the operational performance of 2010 between the lodging properties opened in 2005 and October 2010 respectively, the analysis should be conducted for October to December or for annualized figures.
Sum-The whole number or amount when two or more numbers or amounts have been added together.
Source: Cambridge Dictionary
AverageAvg.The result of adding two or more amounts together and dividing the total by the number of amounts.
Source: Cambridge Dictionary
Standard DeviationSDev.A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance. The more spread out the data, the higher the standard deviation.
Source: Investopia Dictionary
If the probability of data points falling within mean ± 2 * standard deviation interval is 95.44%, the data points is distributed in accordance with the normal distribution. In particular, the case of mean of 0 and the standard deviation of 1 is called the standard normal distribution.
VarianceVar.A difference between two or more things that have a common attribute.
Source: Cambridge Dictionary
If the 2005 value for a particular data item is 100 and the 2010 value is 150, then the variance from 2005 to in 2010 is 150 - 100 = 50.
Growth Rate%Chg.The percentage change of a specific variable within a specific time period.
Source: Investopia Dictionary
If the 2005 value for a particular data item is 100 and the 2010 value is 150, then the growth rate from 2005 to in 2010 is {(150 - 100) / 100} * 100 = 50%.
Compound Annual Growth RateCAGRThe rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment’s life span.
Source: Investopia Dictionary
The average annual growth rate under the compounding method, by which the CAGR from 2005 to 2010 is calculated as 8% if the 2005 value for a particular data item is 100 and the 2010 value is 150.
IndexIdx.A system that measures the present value of something when compared to its previous value or a fixed standard.
Source: Cambridge Dictionary
Although the comcept of index can be applied to diachronic and synchronic changes, Hotelysis uses it only to the diachronic data such as timeseries.
PenetrationPen.A measure of how much a product or service is being used by customers compared to the total estimated market for that product or service.
Source: Investopia Dictionary
Distinguishing with the index confined to the timeseries, the penetration is used for synchronic data to measure the relative positioning of the subject to the comparable set.
Share-The percent of total supply, demand or revenue generated by a particular company in an industry, calculated by dividing the company's supply, demand or revenue by the total supply, demand or revenue of the industry over the same period.
Source: Investopia Dictionary
In general, the fair share is used to measure the supply volume, while the market share is used for demand volume.
Month-to-MonthMTMA measure used to compare financial results for one month with those in previous months.
Source: Cambridge Dictionary
When analyzing recent trends of an indicator without seasonality, MTM figure compared to the previous month is used.
Trailing Twelve MonthsTTMA term used to describe the past 12 consecutive months of a company’s performance data, that’s used for reporting financial figures. The 12 months studied do not necessarily coincide with a fiscal-year ending period.
Source: Investopia Dictionary
When analyzing recent trends of an indicator on an annualized basis using the most recent data, TTM figure is used.
Year-over-YearYOYA frequently used financial comparison for looking at two or more measurable events on an annualized basis. Observing YOY performance allows for gauging if a company’s financial performance is improving, static, or worsening.
Source: Investopia Dictionary
When analyzing recent trends of an indicator on an annualized basis without taking into consideration of seasonality, YOY figure compared to the same period last year is used.
Year-to-DateYTDThe period of time beginning the first day of the current calendar year or fiscal year up to the current date. YTD information is useful for analyzing business trends over time or comparing performance data to competitors or peers in the same industry.
Source: Investopia Dictionary
When analyzing recent trends of an indicator on an annualized basis with taking into consideration of seasonality, YTD figure compared to the same period last year is used.
Per PropertyPPCalculated as dividing by the number of properties in question in a selected market or property.
Source: STR Glossary
Used for the income statement or the balance sheet with the average per property figures, but its significance is limited when there is a large difference in facility mix between properties.
Per RoomPRCalculated as dividing by the number of rooms in a selected market or property.
Source: STR Glossary
A measure of evaluating lodging properties with a type and region by sale unit, but its significance is limited when there is a large difference in mix between room and other facilities.
Per Available RoomPARCalculated as dividing by the number of rooms available in a selected market or property.
Source: STR Glossary
A measure to evaluate revenue or expense of a lodging property or an outlet if they are dependent upon supply volume of room product.
Per Occupied RoomPORCalculated as dividing by the number of rooms occupied in a selected market or property.
Source: STR Glossary
A measure to evaluate revenue or expense of a lodging property or an outlet if they are dependent upon demand volume of room product.
Per GuestPGCalculated as dividing by the number of guests in a selected market or property.
Source: STR Glossary
A measure to calculate the actual selling price if the room rate is dependant upon the number of guests or if the room is sold for a unit less than a day.
Per SeatPSCalculated as dividing by the number of seats in a selected market or property.
Source: STR Glossary
A measure to evaluate revenue or expense of a lodging property or an outlet if they are dependent upon supply volume of non-room product, applicable for indicators not impacted by operating days or operating hours.
Per Available SeatPASCalculated as dividing by the seats available in a selected market or property.
Source: STR Glossary
A measure to evaluate revenue or expense of a lodging property or an outlet if they are dependent upon supply volume of non-room product, applicable for indicators not impacted by operating hours but by operating days.
Per Available Seat HourPASHCalculated as dividing by the seat hours available in a selected market or property.
Source: STR Glossary
A measure to evaluate revenue or expense of a lodging property or an outlet if they are dependent upon supply volume of non-room product, applicable for indicators impacted by operating days and operating hours.
Per CoverPCCalculated as dividing by the number of covers in a selected market or property.
Source: STR Glossary
A measure to evaluate revenue or expense of a lodging property or an outlet if they are dependent upon demand volume of non-room product.
Per Square MeterPSQMCalculated as dividing by the area of facility in question in a selected market or property.
Source: STR Glossary
A measure to evaluate revenue or expense of a lodging property or an outlet if they are dependent upon the floor area of the product.
Per EFTEPEFTECalculated as dividing by the number of EFTEs in a selected market or property.
Source: STR Glossary
A measure to evaluate the appropriateness of staffing size depending upon productivity and efficiency of employees.
Competing Property-A loding property that directly or indirectly competes with, is substantially similar to, or serves as a reasonable substitute for, the subject lodging property.
Source: Law Insider
A lodging property directly competing with the subject property for the same demand, with similar facility mix and operation performance.
Competitive Set-A competitive set is a group of properties that compete with a specific property for business and is selected with the purpose of benchmarking the performance against the competition.
Source: STR Glossary
The most accurate benchmarking criteria if competing properties with similar facility mix and operating performance can be identified in a given market.
Operating EfficiencyO-Eff.A measure of efficiency of direct costs in producing goods and services, calculated as the gross operating profit divided by the total revenue.
Source: Hotelysis
Operating Efficiency = GOP / Total Revenue
Asset EfficiencyA-Eff.A measure of efficiency of indirect costs in producing goods and services, calculated as the net operating income divided by the gross operating profit.
Source: Hotelysis
Asset Efficiency = NOI / GOP

* 'Definitions' in the table are based upon STR Glossary, UNWTO Glossary, RMS Cloud, Xotel, Investopia Dictionary, World Bank Data, S&P Global, Wall Street Mojo, Smart Capital Mind, Alpari Glossary, Law Insider, Cornell Legal Encyclopedia, SHRM, Designing Buildings, Cambridge Dictionary, Wikipedia, and modified to the context of lodging industry. 'Interpretations' in the table are added to provide clarity in association with the compiling standards of Hotelysis and the context of lodging industry of Korea.

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