Standard Procedure for Developing Hotel Room Rates / Negotiated Rates
Setting the right room rates is crucial for a hotel’s financial success, and that’s where Sales and Marketing come in. The primary objective of Sales and Marketing in this regard is to ensure that the hotel’s room rates are competitive enough to attract guests while still generating enough revenue to meet the hotel’s financial goals.
One of the most effective ways to achieve this is by negotiating rates with corporate clients or travel agencies. Negotiated rates are special rates that hotels offer to these organizations in exchange for guaranteed business. These rates are usually lower than the hotel’s standard rates but still high enough to ensure profitability.
To develop these negotiated rates, Sales and Marketing teams work closely with the hotel’s Revenue Management department. Together, they analyze the hotel’s historical data to identify periods of low occupancy and determine the most effective rate strategies to fill those rooms. They also take into account market trends, competitor rates, and upcoming events in the area to ensure that the hotel’s rates are always competitive.
In addition to setting negotiated rates, Sales and Marketing also work on developing promotional packages and special offers to attract more guests. By creating enticing packages that include room rates, meals, and other amenities, they can generate more revenue for the hotel while providing guests with a great value.
Overall, Sales and Marketing play a critical role in developing hotel room rates and ensuring that the hotel’s rates are competitive, profitable, and appealing to guests.
Developing Hotel Room Rates Standard procedure:
- Price Rate determination is one of the marketing’s most crucial tasks and concerns.
- If a potential guest rejects the sales offer because of the rate then all efforts done by the sales team are wasted.
- Room rates for each Hotel should be developed to produce a satisfactory profit, competitively priced, and should always offer an excellent price-value relationship.
- The hotel sales team should keep in mind that the bookers and guests are strongly influenced by the price/rate.
- To effectively set rates on a day-to-day basis, it is essential to have a comprehensive understanding of your competitor’s rate structures.
- This would not only include rack or published rates, but also corporate, special corporate, discount, wholesale, contract, and group rates plus others that are pertinent to your marketplace. (Different Types of Rates in hotel)
- It is the responsibility of the General Manager and Front Office Manager to frequently review information on the competition’s rates as well as demand.
- The Hotel Sales and Front desk team should perform Daily calls around, Competitive analysis, Compare Rates (online), Review GDS displays, OTA (Online Travel Agent) rates, etc.
- For specially contracted and negotiated rate agreements, the setting of rates should be a fluid process with sufficient flexibility to act and react to current and future market conditions.
- Pricing of the hotel rooms should change at any time when required and should be based on the following:
- Occupancy of the hotel.
- Average Length of stay.
- Profit objectives.
- Supply of product in the market.
- Area or City demand.
- Season ( Peak, Valley, and Shoulder).
- Number of Guaranteed room nights.
- Price/value relationship
- Competition’s pricing.
- All rate changes and revisions must be agreed upon by the General Manager and the Director of sales and Marketing.
- Once approved, it is the responsibility of the Revenue Manager or Reservation Manager to load the new rates into the Hotel Property Management System (PMS), Channel Manager, OTA’s, and GDS.
- Internal communication needs to be sent to advise all the appropriate parties within the Hotel about the new rate change.
Training Summary questions:
Q1. Does anyone know when the pricing of the hotel rooms to be changed?
Q2. What is the main factor that influences the bookers?
Q3. Who is responsible for reviewing the competition’s rate?
Q4. Give a few examples of different types of rates in hotels.
Q5. Who should approve the rate changes?
SOP Number: Sales and Marketing SOP – 10 Department: Sales and Marketing – Sales Date Issued: 26-Jun-2017 Time to Train: 30 Minutes