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How to Define Room Rates in hotel | Resort, Negotiated Rates or Corporate Rates Development, Developing room rates in hotel. Factors for Defining Room Rates for hotel.

Standard Procedure for Developing Hotel Room Rates / Negotiated Rates

SOP Number: S&M – 10

Department: Sales and Marketing – Sales

Date Issued: 26-Jun-2017

Time to Train: 30 Minutes

Developing Hotel Room Rates Standard procedure:

  • Price Rate determination is one of the marketings most crucial tasks and concern.

  • If a potential guest rejects the sales offer because of 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.

  • Hotel sales team should keep in mind that the bookers and guests are strongly influenced by the price / rate.

  • In order 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 call around, Competitive analysis, Compare Rates (on-line), 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:

  1. Occupancy of the hotel.

  2. Average Length of stay.

  3. Profit objectives.

  4. Supply of product in the market.

  5. Area or City demand.

  6. Season ( Peak, Valley and Shoulder).

  7. Number of Guaranteed room nights.

  8. Price / value relationship

  9. 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 need to be send 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 which influence the bookers?

Q3. Who is responsible for reviewing the competition’s rate?

Q4. Give few examples of different types of rates in hotel?

Q5. Who should approve the rate changes?

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Authored and managed by Augustine, a hotelier with over 20 years of experience in the industry. He has a 3-year diploma with 'honors' from the American Hotel & Lodging Educational Institute and a Bachelor of Computer Application - BCA Degree.