The document discusses different approaches to pricing hotel rooms, including the Hubbart formula approach. The Hubbart formula introduced in the 1940s suggests setting the average daily rate for a hotel room at $1 for every $1,000 spent on constructing and furnishing the room, assuming a 70% occupancy rate. For example, a 190-room hotel that cost $9.5 million to construct would price rooms at $50 per night under this approach. However, this approach does not account for inflation, other facilities/services, or the desired profit level and assumes a certain occupancy rate.

1. Presented By:
Sarbottam Silwal
20,2nd Semester

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.  Rack rate
 Seasonal rate
 Special event rate
 Corporate rate
 Government rate
 Group rate
 Package rate

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.  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.  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.  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. 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.