Establishing Room Rates in Hotel

Establishing Room Rates in Hotel

          Front office will almost always have more than one room rate category for each of its guestrooms. Room rate categories generally correspond to types of rooms (suites, two beds, one bed, etc.,) that are comparable square footage and furnishings. Differences are based on criteria such as room size, location view, furnishings and amenities.

            In commercial hotels, each room rate category is assigned a rack (standard or retail) rate based on the number of persons occupying the room.

            Resorts, on the other hand often have the same rate for one or two persons in the room, and use room sixe, view and location as part of the room pricing structure.

The rack rate is standard price determined by the front office management.

Often, rack rates must be reported to local and state authorites.

Special rated are often quoted to grops and certain guests for promotional purposes during low occupancy periods. Special room rate categories include.

Corporate or Commercial rate: The rate offered to companies that provide frequent business for the hotel or its chain.

Group rate: The rate offered to groups, meetings and conventions using the hotel for their functions.

Promotional Rate: The rate offered to individuals who may belong to an affinity group sich as American automobile association or American Association of Retired Persons to promote their patronage. The rate may also be extended during special low occupancy periods to any guest to promote occupancy.

Incentive Rate: The rate offered to guests i affliated organisations such as travel agencies and airlines because potential referral business. The rate may alxo be offered to promote future business. It is often to group leaders, meeting planners, tour operators, and others capable of providing the hotel wth additional room sales.

Family Rate: A rate reserved for families with children.

Pckage Plan Rate: A rate that includes a guestroom in combination with other events or activities such as breakfast, golf, tennis, or parking.

Complementary Rate: A room rate provided to special guests and/or important industry Leaders.

         

          The Front Office Manager must be sure that the sale of rooms at special rates is rigidly controlled. Special rates represent discounts from the rack rate therefore may adversely affect the average room rate and room revenue. FO manager understand the circumstances of giving special rates.

          Establishing rack rates for room types and determining discount categories and special rates are major management decisions. To establish room rates that will ensure the hotels profitability, management should carefully consider such factors as operating costs; inflationary factors, and completion.