The document discusses room tariff fixation in hotels. It explains that tariff is the rate or charges offered to guests and may include meals depending on the hotel plan. There are two bases for fixing room tariffs: cost-based pricing which covers operational costs plus a return on investment, and market-based pricing which sets prices based on current market conditions and competitors' rates. Some methods of market-based pricing mentioned are competition-based rates, market tolerance, and rate cutting during off seasons. Cost-based methods include the rule of thumb ratio and Hubbart formula which determines average selling price.

1. ASSIGNMENT-III
MODULE-III
CODE- HPM 103
SUBJECT-FRONT OFFICE OPERATIONS
SUBMITTED TO- PROFESSOR SAPTARSHI HALDAR
SUBMITTED BY-PRATIKSHA DIYALI
DATE-30TH JANUARY 2021
BATCH-2020-2023

2. Tariff
Tariff is the rate or charges offered to the
guest by the hotel for the use of different
facilities and services, during their stay in
the hotel. Commonly tariff is a charge of
room rates and other facilities. ... Tariff
card may include meals depending upon
the types of the plan of the hotel
provided to the guest.

3. BASIS OF ROOM TARIFF FIXATION
A hotel fixes the room tariff on the
following two bases:
1)Cost Based Pricing is a room rent determination
technique that covers the basic cost of operations at a given level
of service, plus the pre- determined % of return on investment.
2)Market Based Pricing is defined as a process of setting
prices of goods/services based on the current market conditions.
... If the features of a product are more than that of competitor's,
then company may set prices same to provide better value to the
customers or may set high to account for additional feature.

4. MARKET BASED PRICING
Some common methods of market based pricing
are:
a)As per Competition: Arriving at a
price based on competing hotel’s
rates.
b)Market Tolerance: Checking
competing hotel’s best available
rates.

5. c)Rate Cutting: Lowering of rates
to increase occupancy levels
especially during off seasons.
d)Inclusive & non-Inclusive of
taxes: Charging of room rates on
the basis of meals, provided on
CP/MAP/AP basis.

6. COST BASED PRICING
Some methods of cost based pricing are:
a)Rule of thumb: this is also known as cost rate
formula or 1:1000 ratios. This is the oldest method of
determining the room rent of any hotel. According to this
approach, the room rent should be fixed at the rate of Rs.
1 for each Rs. 1000 spent on the construction and
furnishing of the room (cost per room or room cost),
assuming that the average occupancy is 70% for the year.
(Cost per room or room cost = cost of
(land+construction+fixture+fitting)

7. b)Hubbart formula: Also
known as bottom up approach. This is a
scientific way and most recent approach, of
determining the room rent, was developed
by Roy Hubbart in America in the 1940s.it
resolve all the problems of the rule of
thumb approach. To determine the average
selling price per room, the approach
consider operating cost, desired profit and
expected number of the rooms sold.