Every industry seems to have its own language. This is no different in the hospitality industry. If you’re a business owner just getting your hotel or restaurant off the ground, you may feel confused or overwhelmed by the different terms and phrases used by those with many more years of experience in the industry. Or, perhaps you’re a seasoned hospitality vet who needs a refresher on a few terms. Either way, there’s a lot to keep track of, and it’s easy for some words and phrases to get lost in the mix.
At Payday HCM, we understand the importance of understanding the key terms of your industry, as well as how difficult it can be to keep track of all of them. Our own industry of human capital management services includes an extraordinary broad range of terms that, even for us, it’s helpful to have a point of reference.
That’s why, in this article, we’ve compiled a list of terms and definitions for words and phrases used within the hospitality industry. The list includes things exclusive to the hospitality industry, as well as some payroll and human resource-related terms that, while not entirely industry-specific, are still important to know.
ADR (Average Daily Rate)
A metric used by hotels to calculate the average amount of revenue earned per occupied room in a given time period (total room revenue ÷ number of rooms sold).
Allotment
A block of rooms set aside by a hotel that is sold by a third party, such as a travel agency.
Allowances
Specific amounts allocated to employees for certain expenses, like travel or meals.
Applicant Tracking System (ATS)
A software tool used to manage and streamline the hiring process by organizing and tracking job applicants.
Average Basket Size
The average cost of the items sold in one order, typically referring to delivery orders for restaurants.
Back of House (BOH)
Back of the house, referring to the back end of the restaurant, including the kitchen, dishwashing units, and prep areas.
Banquet Event Order (BEO)
A document that outlines the details of a scheduled event, including itineraries, menus, and setup requirements.
Benefits
Non-wage compensation provided to employees, such as health insurance, retirement plans, or paid time off.
Bed Tax
A local tax imposed on the cost of lodging that is collected from guests (also known as an occupancy tax or transient lodging tax).
Compensation
The total monetary and non-monetary benefits an employee receives for their work.
Complete Meeting Package (CMP)
An all-inclusive pricing model used for corporate retreats or multi-day training programs. It typically includes hotel rooms, meeting room rental, meals, and AV equipment.
Compliance Audits
Reviews conducted to ensure an organization’s adherence to legal and regulatory requirements.
Covers
The number of total customers served in any given night. For example, if you had a restaurant of 20 tables, each capable of seating two people, the maximum number of covers you could have in any given night would be 40.
Eco-Certification
Certification that a hotel meets environmental sustainability standards, including reducing energy consumption, conserving water, or sourcing eco-friendly products.
Employee Assistance Program (EAP)
Services offered to employees to help with personal or work-related issues.
Equal Employment Opportunity (EEO)
Policies and practices ensuring fair treatment of employees regardless of race, gender, religion, or other protected characteristics.
Estimated Time of Arrival/Departure (ETA/ETD)
The expected check-in or check-out time of a guest, which helps front desk and housekeeping teams manage room readiness and staffing.
Exempt Employee
An employee who is not eligible for overtime pay, typically due to their job classification.
FICA
Federal Insurance Contributions Act; a U.S. payroll tax that funds Social Security and Medicare programs.
Front Office
Department of a hotel responsible for check-ins, check-outs, reservations, and other guest interactions.
Front of House
The customer-facing side of a restaurant, including servers, bussers or server assistants, and hosts.
Global Distribution System (GDS)
An online network that allows travel agents and online travel agencies to make reservations with hotels, airlines, and car rental companies in real-time. Popular GDS systems include Sabre, Amadeus, and Travelport.
Guest Satisfaction Index (GSI)
A numerical score representing how satisfied guests are with their hotel stay, compiled from different sources, such as exit surveys and online review platforms.
Hazard Analysis Critical Control Point (HACCP)
A food safety management system that regulates biological, chemical, and physical hazards spanning from raw material production, acquisition, and handling to manufacturing, distribution, and consumption of the final product.
Holiday pay
Additional compensation given to employees for working on or being scheduled off on holidays.
Hospitality
The act of welcoming a guests and treating them with the utmost respect, helping them feel welcome and cared for.
Hotel Management System (HMS)
Software that manages hotel reservations, check-ins/check-outs, housekeeping coordination, and billing. Popular HMS platforms include Opera and Cloudbeds.
Housekeeping
Department of a hotel in charge of cleaning and maintaining guest rooms and public areas.
HR Compliance
Ensuring all HR practices adhere to laws and regulations.
HRIS (Human Resource Information System)
Software used to manage HR processes such as payroll, benefits, and employee data.
Incidental Charges
Charges accrued by guests outside of the regular room rate.
Minimum wage
The lowest hourly rate an employer is legally required to pay employees.
Non-exempt employee
An employee entitled to overtime pay under labor laws.
Night Audit
The process of reviewing and reconciling a hotel’s transactions at the end of the day, typically between 11 p.m. and 6 a.m.
Occupancy Rate
A percentage of rooms occupied during a set time period ([occupied rooms ÷ total available rooms] × 100).
Occupational Safety and Health Administration (OSHA)
A government agency responsible for enforcing workplace safety and health standards.
Onboarding
The process of integrating new employees into the organization and equipping them with the tools and knowledge to succeed.
Online Travel Agency (OTA)
A website or platform other than a hotel’s proprietary site that facilitates hotel or other travel bookings.
Overtime
Additional pay earned by employees for hours worked beyond their standard work schedule.
PAX
The number of people or guests, typically used in event planning.
Payroll software
Digital tools used to automate and streamline payroll management.
Payroll taxes
Taxes imposed on employers and employees to fund government programs like Social Security and Medicare.
Point of Sale (POS)
The point at which a transaction occurs.
Point of Sale (POS) System
A system used to facilitate and record transactions, typically in places like bars, restaurants, or hotels.
Revenue Per Available Room (RevPAR)
A number that combines occupancy and average daily rate (ADR) that demonstrates whether a hotel is generating revenue (ADR × Occupancy Rate).
Runner
Someone who brings, or “runs,” prepared dishes to the corresponding tables when an order is ready.
Salary
A fixed, regular payment made by an employer to an employee, typically on a monthly or bi-weekly basis.
Shelf Life
The length of time a particular ingredient can sit on the shelf before expiring.
Sidework
Tasks typically done by the front-of-house staff that is required to keep the restaurant operational, but performed during downtimes in service, including polishing and rolling silverware, refilling salt and pepper shakers, and refilling napkins.
Table Turns
The number of times a specific table has been sat in a given shift i.e. how many parties have gone through the entire meal process at a given table.
Taxable income
The portion of an employee’s earnings subject to taxation.
Time tracking
Monitoring and recording the hours worked by employees for accurate payroll processing.
Time and Attendance
Systems used to track employee working hours and absences.
Timesheet
A record used to track the hours worked by an employee.
Top
The number of customers in a party e.g., a party of five is a five-top
Turn-Down Service
Evening housekeeping service that prepares a room for sleep, including dimming the lights, preparing bed linens, and extra amenities.
Walk-In Guest
A guest or party that arrives without a reservation and inquires about a table or a room.
Withholding
The portion of an employee’s earnings retained by the employer for taxes and other deductions.
Workers' Compensation
Insurance coverage that provides benefits to employees injured on the job.
Workforce Analytics
The use of data to analyze and optimize workforce performance and decision-making.
Workplace Culture
The values, behaviors, and atmosphere that shape the work environment of an organization.
The Hospitality Industry, from A-to-Z
It can be tough keeping track of everything you need to keep track of in the hospitality industry. Whether you’re a hotel, restaurant, bar, or another type of business, this industry requires intimate knowledge and constant attention, something that can be difficult to provide when you’re spending all of your time on the fundamentals, like payroll and HR. Luckily, you’re not alone—Payday’s payroll and human resources service for the hospitality industry can help lighten the administrative load and help you focus on delivering outstanding service to your guests.
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