Tariff means rate and when applied to rooms of a hotel it
means room rate.
Hotel room rate fixation is a difficult task. They are both
qualifiable and quantifiable.
The quantifiable aspect is that they can be measured and
structed to meet certain criteria.
The qualifiable aspect is that large amount of discretion are
allowed in which rates are implemented.
The combination of all the rates offered at a hotel is called
BASIS OF CHARGING
Standards of service
Price cuts for special business
Rates must be competitive with other hotels of the
same standard and providing almost similar services
and facilities as provided by other hotels situated in
the same vicinity of the city.
The category of customers coming to the hotel must
also be considered.
Their social status and financial status.
Example. Paying capacity , should be kept in mind.
STANDARDS OF SERVICES
Standards of services provided by the hotel are also
important while fixing room tariff.
The U.S.P. of hotel should be kept in mind while
deciding the room tariff.
More the amenities , higher the standard , so also
higher the room rate.
The locality in which the hotel is situated gains prominence
while fixing room rates.
If the hotel is situated in a posh locality where all the
shopping malls and other facilities, approaches to airports
are worthy. room rate would be comparably higher .
The guest would not mind paying more if he get amenities
and facilities to his taste and likings.
Various amenities the hotel is going to provide to the
guests such as air –conditioning in all the rooms ,
carpeting, swimming pool & tennis court equipment ,
conference halls , lobbies.
Special aspects of continental and Indian cuisine ,
cutlery and crockery , modern equipments and
These things do count when factors of room – rates
The location of the room also matters a lot.
Front rooms and rooms opening to better views would cost
more than dark rooms , corner rooms or opening to
The amount of publicity done by a hotel and special budgets
prescribed for hotel publicity also matters in deciding the
This type of expense has to be adjusted somehow as it has
no source of return but is a must in popularizing the various
services of a hotel.
Check-in and check-out basis
Twenty-four hour basis
Rule of thumb
CHECK –IN AND CHECK-OUT BASIS
It is the most common way of fixation of tariff
The hotel fixes a specific time usually 12.00 noon as
check-out time which means the guest charging
cycle begins from 12.00 noon and finishes at 12.00
noon on the next day.
For a guest staying in a hotel after 12.00 noon , next
day’s charge may be levied.
Accounting keeping is simple in this system.
TWENTY-FOUR HOUR BASIS
In this system the charges of room starts from the
time when the guest checks in and he has to pay for
one day upto 24 hours from the time of arrival.
This system is good for small and budget hotels
In this system the guest is charged on the basis of
number of nights that he spend in the hotel he
irrespective of time of arrival.
If he spends two nights he will be charged for two
nights with a minimum of one day charges
Sometimes a guest may stay in the hotel for a few
hours only and may not spend the night in the hotel
In such cases where he stays only for six hours
maximum hotels may charge special discounted rate
and the rate is called “day rate or day use rate”.
INCLUSIVE & NON INCLUSIVE RATES
Hotels also charge room rates on the basis of meals provided
or not provided along with room to the guest.
European plan: where the tariff of room includes only in
the room rate for meals charged extra rate.
Continental plan: where the room tariff includes along with
room rate the continental breakfast also.
American plan: where the room tariff includes alongwith
room rates the English breakfast , table d’hote lunch and
dinner may also include.
Modified American plan : where the room tariff alongwith
room rates include English breakfast and one of the two
major meals either lunch or dinner.
RULE OF THUMB
Another very traditional way of charging room rate
is rule of thumb.
In this system “one Rupee” rate is fixed for every
Rs1000/- spent on room construction cost.
This is also called as ‘cost rate formula’.
ROOM TARIFF CARD
Room tariff is a document published by the hotel
for use by the travel trade , organization and
individual prospective guest.
The list includes prices of rooms classified into
different categories , such as single room , double
room , twin room , suites , etc. and meal plans such
as American , European and Continental etc.
Meals such as American , European and
Rack rate is a term which refers to the normal room
rate of the hotel.
This is the room rate which is published on the
room tariff card.
This is also the rate which is written on the shannon
slip which is slipped in room rate of those hotels
which operate on whitney system.
This programmes covers corporate offices and
usually 15-25%discount can be given to the officers
coming from corporates.
The corporate rate is widely accepted as the
transient target rate for most hotels.
This is simply an average rate goal a hotel fixes
achieve for a certain day or market segment.
A Room tariff published in a document to group operators
which is commissionable only to retail travel agents , tour
operators and wholesalers.
Generally commissionable at 10% of the published rack rate.
GOVERNMENT RATE AND
Government employees are given per day allowance
for their travelling.
Accommodation and food by their office and some
hotels offer them a rate which give them room and
accommodation with in that price.
DISCOUNTED RATE: Airlines , travel agent
discounts rates should be fixed in competition to
other hotels of the area.
SEASONAL RATE, CRIB RATE AND
EXTRA BED RATE
Seasonal Rate: Season and Resort hotel which usually have
fluctuating demand change their rate usually as per the
seasonally and offer different rates for In season and off
Crib Rate : A special rate applicable to children below 12
years of age and accompanying their parents.
Extra bed Rate: Generally one fourth of the published room
Special rates for families – for example , one couple and a
child below 5 years , then the rate may be for one double
One couple with two children below 12 years , the rate may
be one double room plus one extra bed rate etc.