Types of rack rates


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Types of rack rates

  2. 2. ROOM
  3. 3. TARIFF  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 “Rate Structure.
  4. 4. BASIS OF CHARGING  Competition  Customer’s profile  Standards of service  Locality  Various amenities  Room location  Publicity  Price cuts for special business
  5. 5. COMPETITION  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.
  6. 6. CUSTOMER’S PROFILE  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.
  7. 7. 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.
  8. 8. LOCALITY  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.
  9. 9. VARIOUS AMENITIES  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 machinery.  These things do count when factors of room – rates are considered.
  11. 11. ROOM LOCATION  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 indifferent chambers.
  12. 12. PUBLICITY  The amount of publicity done by a hotel and special budgets prescribed for hotel publicity also matters in deciding the room rates.  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.
  13. 13. TARIFF FIXATION  Check-in and check-out basis  Twenty-four hour basis  Night basis  Day basis  Inclusive taxes  Rule of thumb  Hubbart’s formula
  14. 14. 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.
  15. 15. 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 only.
  16. 16. NIGHT BASIS  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
  17. 17. DAY BASIS  Sometimes a guest may stay in the hotel for a few hours only and may not spend the night in the hotel at all.  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”.
  18. 18. 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.
  19. 19. 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’.
  20. 20. 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 Continental also.
  21. 21. RACK RATE  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.
  22. 22. CORPORATE RATE  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.
  23. 23. GROUP RATE  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.
  24. 24. GOVERNMENT RATE AND DISCOUNTED RATE  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.
  25. 25. 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 season.  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 rate.
  26. 26. FAMILY RATE  Special rates for families – for example , one couple and a child below 5 years , then the rate may be for one double room.  One couple with two children below 12 years , the rate may be one double room plus one extra bed rate etc.