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# Thumb rule

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### Thumb rule

1. 1. Presented By: Sarbottam Silwal 20,2nd Semester
2. 2. Hotel rooms have following abstracts: 1. Major Source Of Revenue 2. Highly Perishable 3. Differs As Per Establishment 4. Differs As Per Type 5. Once Build Can Be Sold Again And Again
3. 3.  Rack rate  Seasonal rate  Special event rate  Corporate rate  Government rate  Group rate  Package rate
4. 4.  A property management system (PMS) is a computer system used to manage guest bookings, online reservations, check-in/check-out, and guest purchases of amenities offered by the hotel.  While pricing rooms, the hotel shall keep in mind that rate should be between a minimum (determined by cost structure) and a maximum (determined by competition structure)
5. 5.  While establishing room rates, management shall be careful about its  operating costs  inflationary factors, and  competition. Generally, there are four popular approaches to pricing rooms:  Cost Approach  Market Condition Approach  Thumb rule Approach  Hubbart formula Approach
6. 6.  Introduced In The 1940s  In This Approach, The Rate Of A Room Shall Be \$ 1 For Each \$ 1,000 Of Construction And Furnishing Cost Per Room, Assuming A 70% Occupancy Rate.  Every \$ 1000 Investment In A Hotel Property Should Support \$ 1 In Average Daily Rate (Adr)  It Is Most Effective Tool Use During The Sale And Purchase Of Hotel Property  Easy To Calculate.
7. 7.  To illustrate suppose a 190-room hotel has costed \$ 9,500,000 of Construction and Furnishing Costs. Therfeore, the cost per room is \$ 50000 which would mean that the price per room shall be \$ 50.
8. 8. This Approach, However, Fails To Take İnto Consideration  The İnflation Term  The Contribution Of Other Facilities  Services Towards The Hotel’s Desired Profitablity  Assumes A Ceratin Level Of Occupancy Rate.