Room rate in Hotel | 14 Types & Many more

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In a hotel, understanding the booking a room can be a complicated process, especially when it comes to navigating the different types of rates that hotel offer. With so many options available, it can be challenging to know which rate is best for your/guest needs and budget.

Room rate in hotel

In this blog post, I want to help you understand the 14 different types of rates that you might encounter when booking a room in a hotel or you as a learner of hospitality this will give you the overall types of rate that hotel offers.  From Rack rates to special promotions and packages, I’ll explain what each rate includes and how it can benefit you as a guest or a learner. So let’s get the start.

First I will tell what is the Room rate in Hotel

What is the Room rate?

The room rate in a hotel refers to the cost that a guest pays to book a particular type of room for a specific period of time. The room rate can vary depending on a variety of factors, including the location of the hotel, the season, the type of room, and any special promotions or discounts that may be available.

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Different types of Room Rates in Hotel

Rack rate

The rack rate is understood to be the highest published rate a hotel can charge for a specific room. Rack rates can differ between room types, configuration, and designation. On the back of most hotel room doors, a tariff sheet will be posted.

Corporate rate

This designation is designed to promote the corporate market segment. It is offered generally to any guest who Knows to ask for it. Typically, the corporate rate reflects a 10 to 20 percent discount off of the rack rate.

Volume account rates

Also called preferred rates, the volume account rate trades a further discount off of the corporate rate in exchange for a guaranteed number of room nights within a specific time frame. Organizations who know that they have a certain level of transient volume that they can bring to a certain hotel can negotiate for this volume discount.

Government rate

Also known as the per diem rate, is a discounted rate offered by hotels to government employees on official business travel. The rate is set by the General Services Administration (GSA) in the United States and varies by location, season, and other factors. The government rate is intended to help control travel costs for government agencies while providing reasonable accommodations for their employees. To receive the government rate, government employees must present their government ID or travel orders at check-in, and reservations must be made through an approved government travel system or contracted travel agency.

Seasonal Rate

Resorts and other location types that see a fluctuation in demand due to weather or the operation of a nearby attraction will vary their rates accordingly. Offering a different rate for in season and out-of-season (also called off-season) allows the hotel to alter their rate structure to compensate for this cyclical demand. This fluctuations offer in Rate called a Seasonal Rate.

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Weekday/Weekend rates

Hotels of all location types see fluctuation in demand during certain days of the week. The hotel industry looks at the days of the week slightly differently than the public might.

In some cases, hotels may charge a higher rate for weekends compared to weekdays. This is because weekends are typically more popular for leisure travel, so there may be more demand for rooms. However, this is not always the case, and some hotels may offer special rates or packages for weekend stays to attract more guests.

Membership rate

The membership rate in a hotel typically refers to the cost of becoming a member of a hotel’s loyalty program or membership program.

The benefit of offering membership rates is the free advertising given to participating hotels by being listed in the organizations’ guidebooks.

Walk-in rate

This type of rate designation may vary from night to night. It is set each night by the front office or rooms manager based on the remaining unoccupied rooms in the hotel. The walk-in rate may be set fairly high to maximize room revenue.

Premium rates

Premium rates are applied to any room that offers something “extra.”

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There are two methods of implementing the premium designation:

1) Fixed premium rates are set, standard rates quoted for each codesignation regardless of demand. They do not vary.

2) Variable premium rates are determined based on the other available rates.

Advance purchase rates

A relatively new trend in hotel rate structures, an advance purchase rate offers a greater discount based on the number of days in advance it is booked.

Half day rate

The half-day rate at a hotel typically refers to a discounted rate that is charged for a room rental for a portion of the day, typically up to 6 hours. The exact half-day rate can vary depending on the hotel, location, season, and room type.

Package rates

A hotel package combines one or more hotel products or services to make the new entity more attractive. Called ‘Bundling’, a hotel will package the room (and its rate) with another Service or amenity. Often this entails pricing.

Per person rates

It is rare for a standard room to house more than four people. Based on the number of people, hotels may charge a present amount for each additional occupant.

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There are a few hotels that do not charge per person rates because they value the outlet and ancillary revenue that additional occupants will surely generate.

Group rate

The group rate in a hotel is a discounted rate that is offered to groups of travelers who book multiple rooms together. The specific requirements for a group rate can vary from hotel to hotel, but typically, a group rate is offered to parties booking 10 or more rooms at the same time.

Frequently asked Questions

Which factor can affected room rate in hotel ?

The room rate can be affected by several factors, such as the demand for rooms during peak season or special events, and the level of competition among hotels in the area. It is also common for hotels to offer discounted rates for longer stays or for booking in advance.

Why hotels have different types of room rates ?

There different reasons for having a different types of room rates in hotel that may include –

Seasonal demand – Hotels typically charge higher rates during peak seasons when demand is high. For example, hotels in beach destinations may charge higher rates during the summer months when more people are on vacation.

Room type and size – Different room types and sizes can vary in price. For example, a standard room may be less expensive than a suite.

Amenities and services – Hotels may offer different amenities and services such as free breakfast, Wi-Fi, or access to a fitness center, which can affect the room rate.

Length of stay – Some hotels offer discounted rates for guests who stay for multiple nights or extended periods.

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Advance booking – Guests who book their rooms well in advance may receive lower rates, while last-minute bookings may be more expensive.

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Group bookings – Hotels may offer special rates for group bookings, which can vary depending on the size of the group.

How to calculate Room rate in Hotel ?

Calculating room rates in hotels typically involves considering several factors, including the cost of the room itself, the cost of any amenities or services included in the room rate, and the hotel’s operating costs and profit margins. In my opinion you can consider the following factors to calculate the Room rate in hotel –

Determine the room’s base cost – Start by calculating the basic cost of the room, which includes the cost of any fixed expenses such as utilities, taxes, and maintenance. The base cost of a room is usually calculated per night.

Factor in variable costs – Depending on the hotel, there may be additional costs associated with staying in a room, such as meals, room service, or parking. Consider whether these costs are included in the room rate or if they are charged separately.

Consider market demand – The price of a room can also be influenced by the demand for rooms in the area. During peak travel seasons or when there are major events in the area, hotel prices may be higher.

Assess competition – Look at the prices of other hotels in the area offering similar accommodations to see where your hotel stands in terms of pricing.

Determine the hotel’s desired profit margin – Hotels need to generate revenue to cover their costs and make a profit. Determine how much of a profit margin is desired and adjust the room rate accordingly.

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Adjust the room rate based on occupancy –  Hotels may offer discounts for guests who stay for longer periods or during slower seasons when occupancy is lower.

You can considering these factors,  can determine the appropriate room rates of your hotel. And make a profit, while also remaining competitive in the market

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