Types Of Rates / Rate Codes Used In Hotels

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Types of Rate Codes used in hotels

Hotels always have more than one rate code category for each room type. Room rates categories generally correspond to the types of rooms available to sell in the hotel ( Eg: Suite, Deluxe, Premier, Studio, Penthouse, etc. ).

Room Rates and rate codes may also vary according to the available room features such as room size, location, view, furnishing, décors, etc, and also with competitor’s pricing.

Standard Room Rates Types and Rate codes used in the hospitality industry:

Rack Rate: This is the Standard rate or Published tariff defined by the hotel management for a particular room category/type. This is generally printed on the tariff sheet of the hotel and these details are also submitted to the local government authorities for hotel licensing and in some countries for Gov. tax compliance. In other words, these rates are always without any sort of discount.

Corporate or Commercial Rate: These are rates offered to companies that provide frequent business for the hotel or its chain. This rate may vary according to the volume of business guaranteed by the companies. Eg: NEG1, COR1 etc.

ADHOC Rate Code: These are normally non-standard rates that are offered as special one-time rates for first-time corporations.

Group Rate: These are rates that are offered to groups, meetings, and conventions using the hotel for their functions.

Promotional Rate Codes: These rates are generally offered during low occupancy periods to any guest to promote occupancy. Early Bird Rates, Stay for 3 and pay for 1, etc. are some examples. These rates may also include certain add-ons to attract customers like free WiFi for 24 Hrs, free buffet dinner, etc.

Incentive Rate Code: The Rate offered to individuals who belong to an association or are holders of special membership cards or Credit cards. E.g.: Amex / VISA / Master cardholders get a 5% discount on Rack Rate, Lufthansa Frequent Flyer members get a 25% discount, etc. For hotels, these rates always give potential referral business.

Early-bird Rate: This type of rate is only open X days before arrival. E.g.: Open only 7 Days before arrival, 14 Days Before Arrival, 30 Days Before arrival Etc.

Family Rate: A rate reserved for families with children. Usually, these rates include Extra Bed charges and may also include some free add-on activities for children.

Package Rate: Rates that include a guest room in combination with other available events or activities. ( Eg: Best of London package which includes room rental, all meals, site seeing, airport transfers, etc. ) Package rate can be also a simple room and meal package like American Plan ( AP), Modified American Plan (MAP), Continental Plan ( CP ), etc.

Best Available Rates ( BAR ): These rate codes are the lowest discounted rate available for a day which can be offered to the guest by the Reservation or Front desk staff. BAR can be of different types:

‘Dynamic BAR’ – Has different tiers and each tier will be opened and closed according to the occupancy of the hotel. ( The new age hotel management software does this automatically for the Revenue Managers.)

Sample Dynamic BAR Rate
 BAR Level  Open / Close when Occupancy Between
BAR -01 0% TO 25 %
BAR -02 26 % TO 35 %
BAR – 03 36% TO 50%
BAR – 04 51% TO 75%
BAR – 05 76% TO 100%

‘Daily BAR’ – Has a pre-defined daily room rate regardless of room categories ( Run of the house) and occupancy, these rates are set according to the day of the week, as per the demand for hotel rooms in the city, special day’s or seasons, as per the room demand forecast done by the hotel revenue manager.

Sample Daily BAR Rate 
 DATE DAY  RATE ($)
19/10/2016 WED 200.00
20/10/2016 THU 200.00
21/10/2016 FRI 250.00
22/10/2016 SAT 250.00
23/10/2016 SUN 250.00
24/10/2016 MON 200.00
25/10/2016 TUE 200.00

Complimentary Rate: A Room rate with zero room charge that is offered to special guests, industry leaders, Gov. officials, etc.

House use Rate: A Room rate with zero room charge which is used for room stays for hotel purposes. Eg: Manager or duty room, In-house General / Resident manager room, etc.

Zero Rate Code: This kind of rate is used as a system requirement for PMSs as these would be tagged to Dummy rooms, Paymaster rooms, and Group Master rooms.

Virtual Rate / Follow Rates: A Special Type of rate code whose values are derived from another rate code or rate group. E.g.: BAR1 which is 10% off on the Rack Rate.


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