ROOM RATE DESTINATIO
In general, a hotel designates a standard rate for each category of rooms offered to guest Apart from the standard rates, hotels also offer discounted rates to attract additional business from multiple market segments. Hotels have various room rate designations as illustrated in Fig. 6.3.
Rack rate Hotels generally fix a standard rate for each category of rooms offered for accommodation to the guests. The standard rate of a particular type of room before
any discount is called rack rate. Traditionally, a rate board was placed near the room rack, and hence the name rack rate. The tariff card of a hotel should mention the taas applicable on room rents. For example, the rack rate for a standard room may be 5000++++means exclusive of taxes or taxes extra).
Corporate rate This is a promotional rate to attract the corporate market segment The corporate rate is generally 10-20 per cent lower than the rack rate. For example, the corporate rate for a standard room may be 4000++
Seasonal rate Depending on the desirability of a location at a particular time of the year, destinations have high, low, and shoulder semona. Destinations much as hill stationa or beaches receive heavy sourist traffic during particular period(s) of the year, the rest of the year is a lean period in terms of tourism. The duration when the tourist traffic (and the demand for hotel rooms) at a particular place is high, it is known as the peak season. When the demand fir hotel rooms drops down, it is known as the off-season. During peak season, hotels do not offer any discount, rather they may charge a higher room rate, known as the seasonal rate. In order to attract the guests during low-demand period, hotels offer a discounted rate known as the off-season rate. Hotels in these locations mention their seasonal and off-season rates clearly on the tariff card. For example, rainy season is off season in Shimla, whereas winners and summers are season time, as visitors go there to see snow in winters and to escape the heat during summers.
Advance purchase rate Though popular in the airlines industry, the advance purchase rate is a relatively new concept in the hospitality industry. It entails heavy discounts on room rates when room bookings are done in advance. The rate of discount depends on the advance period and the number of rooms available at the time of booking, that is, a hotel may offer more discount for a room that is booked two months in advance compared to a room that is booked 15 days in advance. The advance booking of rooms ensures a certain amount of revenue at a given time and thus helps the management in planning a revenue management strategy.
Weekday/Weekend rate Some of the hotels observe a fluctuation in their occupancy levels with regard to the days of the werk. The demand for rooms in a hotel is perhaps more on certain days in a week. Hotels analyse their demand levels over a period of time and fix a higher rate during high-demand periods and a lower room rate during low-demand periods. In vacation/resort hotels, the weekend rate would be higher than weekday rate as the demand for rooms is higher during weekends. It would be vice versa in the case of a commercial hotel.
Day and half-day rate The day rate, charged from the guests not staying overnight at a hotel, is lower than the rack rate. For instance, if a guest checka in at 10 am and checks out the same evening at around 5 pm, he/she may be charged the day rate. However, all hotels may not have day rates.
Sometimes a guest might wish to stay for a very short duration of time, not excreding five hours. For example, a transit traveller, who has to catch a flight in few hours, might want to take rest in a hotel, or a person might want to rent a room for a short bussght
meeting. In these cases, the half-day rate, which is a bit higher than the numerical half of the rack rate, is charged from guests.
Group rate Since a large group (more than 15 persons provides bulk business to a hotel, it offers discounted rates to groups. The group rate depends on the number of persons in the group and the frequency of their visits. The rates are negotiated by the sales team of the hotel and the representatives of the group.
Tour group (series group) wholesale rate These are heavily discounted rates for wholesalers who operate a series of tours for groups arriving and departing together. For example, a tour operator may conduct a week's tour of the Golden Triangle (Delhi- Agra-Jaipur-Delhi) on the and, uath, and zand of every month for groups of 20 people. The tour operator guarantees the hotel that it would provide this series of business every month for a period of one year. In return, the hotel offers a heavy discount to the operator and allocates or "blocks" rooms for the series for the entire year.
Travel agent rate Travel agents sell travel products such as hotel rooms or airlines bookings on a commission basis to the end users (guests). They provide a substantial volume of business to hotels, hence, hotels offer them special discounts and commissions. Some of the major travel agencies are Cox & Kings, Thomas Cook, etc.
Volume guarantee rate Hotels offer a special rate (lower than the rack rate) to attract high volume of business from special market segments. A hotel may have a contractual agreement with a company, according to which the company's representatives are entitled to a special discounted rate when they reserve a room in the hotel. The percentage of discount will depend on the volume of business promised and the mutual understanding between the hotel and the company at the time of making the agreement. A frequent business customer might be offered a CP (Continental Plan) at the standard room rate.
Airlines/Crew rate It is a special discounted rate for the crew of one or more airlines that offer certain volume of business throughout the year on a consistent and continuous basis.
Government rate When government officials travel for official work, they are given a travel allowance to cover their hotel, meals, and other out-of-pocket expenses. Based on their designation, this amount is fixed and given in advance. A hotel interested in catering to this segment may quote room rates that match their travel allowances. The hotel may ask for proof of identity from guests before they can avail the government rates.
Educational rate Educational rates are special rates offered by hotels to students and educationists who have a limited travel budget. They are a significant source of business because of their large numbers and frequency of visits. They provide a large chunk of repeat business to hotels.
Membership rate Membership rates are offered to guests who are members of influential organizations that provide high volumes of business to hotels. The membership rates are much lower than the rack rates and may also include discounts on food and beverage. Special discounted rates are given to FHRAI members, UN employees, travel writers, etc.
Introductory rate The intupductory rate is offered by a hotel on the opening of a new property in towering face hotel's marketing strategy to make inroadsin existing market by offering a price lower than what is offered by competitors with same standards. In general, the introductory, rate is offered till the hotel is established it may be revoked as per the management's decision.
Complimentary rate When a hotel does not charge the room rent from a guest, iti known as complimentary rate. Hotels generally offer complimentary rooms (also called comp rooms) to the tour/group leader. They also offer comp rooms to tour operaten travel agencies, and local dignitaries who are vital to the public relations programme of the hotel. Hotels also provide complimentary rooms along with marriage packages and bulk bookings.
Crib rate This is the rate charged for children above five years and below 18 years of age accompanying their parents. The hotel provides a crib bed in the room for infanu.
Package rate A package rate is quoted for a bouquet of products or services. The rate is generally lower than the sum of the prices of individual products or services offered in the bouquet. These rates are tailor-made for specific guest requirements. A package rate may include room rent, meals, special arrangements (such as marriage set-ups, banquet halls, and meeting room) and may also include products and services offered by other service providers such as transportation (rail, road, and air), and sightseeing. In Exhibit 6.1, the details of a weekend offer from Orchid Hotel, Mumbai are given.
A package rate is more economical than the individual purchase of each of the products and services. It is a marketing strategy to sell the slow-moving items along with the hot-selling products. Moreover, when the products and services are sold in a bunch, the cost of individual advertisements is cut down. The money thus saved by the hotels in passed to the guest in the form of lower prices. Hotels offer the following packages
Meeting package A complete meeting package includes the residential arrangement of the delegates, meeting room, food and beverage requirements (meals, tea/coffee, macks), along with transportation facility, audiovisual equipment like projectors to the meeting delegates.
Meal package A meal package is the combination of room rent and meals, which may cover all major meals or a combination of breakfast and lunch/dinner. The hotel offers meal packages based on the requirement of guests and the suitability of the hotel's operations. The various meal plans offered by hotels are discused at length in the subsequent section.
Marriage package A marriage package includes all the necessary arrangements for marriage, such as mandap, priest, party hall/lawn, accommodation for the marriage party, arrangement of reception buffet, and even a complimentary room/suite for the newly wedded couple.
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