Hotel rates types: discover the best pricing for your hotel

25 May 2022

Maddalena Mazzaferri
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Countless times you have probably wondered how to correctly set hotel rates for your accommodation. Just as countless are the tools that allow you to monitor the performance and therefore suggest the best selling price for your rooms or apartments, on the basis of a careful analysis of specific parameters related to the most different features of the market.

Without getting too technical, however, we can certainly say that offering your customers a wide range of possibilities, a wide selection of rates, can without any doubt allow your guest to choose the rate plan that suits them best and thus increase the bookings.

The basics: Bottom Rate and Rack Rate

Before referring to all the types of hotel rates you could create, it is necessary to introduce a basic concept essential to establish the price range within which we can move and create the various types of rates to be offered to our customers, we talk about Bottom and Rack rates. The first term refers to a minimum rate, a base price below which we will never fall, even in low season, as selling our rooms at a lower price could represent a mere economic loss. The bottom rate is then determined by internal dynamics, on the basis of the costs to be covered and the profit margin. On the other hand, the Rack Rate is set by the relevant authorities and represents the ceiling beyond which we cannot push the sale price of our rooms without incurring sanctions that would in any case force us to reset our sale price. Once the minimum and the maximum limits have been identified, we can then decide how to set hotel rates and what to offer our customers.

The main hotel rates

We have decided to divide the different types of hotel rates taking into account three main parameters: target audience, treatment and flexibility.

The target audience

According to who is interfacing with the accommodation to book, we can divide the rates into two macro categories:
  1. B2C – Business to Customer The end consumer is the one who searches for rates and completes the connection process for himself to any of the direct booking sites (Booking Engine) or through the OTAs (Booking.com, Airbnb, and the other sites for renting vacation rental homes and hotels)
  2. B2B – Business to Business In this case, there is a third person between the accommodation and the end consumer who, like a bridge, provides a connection, as an intermediary in the booking process. Classic examples of intermediaries are travel agencies or tour operators, with whom specific contracts are concluded for the sale of the rates.
The rate that reaches the end consumer is often increased by the tour operators by a value, called a mark-up, which corresponds to their percentage of profit.

The treatment

In this paragraph, instead, we outline the various types of rates according to the treatment and the services included in the rate. Namely:
  • Room Only The cost of the room only includes the overnight stay in the chosen room/apartment.
  • B&B The breakfast is included.
  • HB – Half board It is the rate that in addition to the breakfast, also includes another meal choosing between lunch and dinner.
  • FB – Full Board The rate including breakfast and both main meals.
  • All Inclusive This rate is usually found in tourist resorts where, in addition to the main meals and the breakfast, drinks and snacks are included.

The flexibility

In this paragraph, we describe instead the various kind of hotel rates on the basis of the treatment and the services included in the rate. Namely:
  1. Not Ref – Non Refundable These are the hotel rates that cost less than the standard rate (usually about 10 per cent off) exactly because they represent rates that cannot be modified nor cancelled. Reservations of NR rates, in fact, are collected immediately and no refund is paid to the end consumer in case of cancellation.
  2. FLEX The exact opposite of the type of rate just described: flexible hotel rates, as the name suggests, guarantee the guest freedom to change and to cancel the reservation, according to cancellation policies established by the accommodation, which are far less restrictive than those related to the Standard rate.
Tariffazione Alberghiera

A more complex type of hotel pricing: the package deals

Package deals are special hotel rates with various features that are an advantage for the guest and are often available for limited times of the year. A package deal is so-called because in the selling price are included specific services that make the offer in question special, usually enabling the guest to obtain a complete experience at a very advantageous rate, therefore cheaper than the cost that the standard rate would be with the addition of single extras, otherwise the guest can also take advantage of services that are not available during other periods of the year. We can therefore define package prices as special hotel rates, as they can include the features we have mentioned in the previous paragraphs – Not Refundable, breakfast included, HB – together with other ancillary services that complement and enhance the customer’s experience – a sightseeing tour, an aperitif with a SPA path, etc.

What Octorate offers you

For a careful analysis of your property’s history with the aim of setting rates that suit the type of room and the time of the year, useOctoRMS: Octorate’s Revenue Management System can suggest the best hotel sale rates starting from the minimum rate that you set up! To top it off, a dashboard of advanced statistics to monitor your sales strategy and increase your revenue! (see the article about the RevPAR). In addition, Octorate allows you to set up a tailor-made configuration so that you can offer your guests a wide range of opportunities! With the Rate Plans function, you can set countless rates according to their degree of flexibility and the type of treatment, create package deals with included extras with which you can use useful  upselling e cross-selling strategies and a price correction that will automatically vary the sale cost of the type of room associated. Sell your hotel rates without commission charges thanks to the Booking Engine, your fully customizable booking engine compatible with any type of website. Would you like to find out more? Book a free demo!

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Frequently asked questions

📉 What does the Bottom Rate show in Hotel pricing?
The Bottom Rate is one of the hotel rates that indicates a minimum rate: a base price below which we will never go, even in low season, as selling our rooms at a lower price could represent a mere economic loss.
🎢 What does the Rack Rate show in hotel pricing?
The Rack Rate represents the ceiling beyond which we cannot push the price of our hotel rates without incurring sanctions that would still force us to reset the sale price.
❓What are the main hotel rates?
  • Room Only -When the cost of the room only includes the overnight stay
  • B&B – When the breakfast is included.
  • HB – Half board – When, in addition to breakfast, one of the meals between lunch and dinner is also included.
  • FB – Full Board -It includes breakfast and both main meals.
  • All Inclusive – A rate available in tourist resorts where, in addition to the main meals and breakfast, drinks and snacks are included.
  • Non Refundable – Rates that cost less than standard ones, because they represent the rates that cannot be modified nor cancelled.
  • FLEX – These rates guarantee the guest the freedom to change and to cancel the reservation, according to the cancellation policies established by the accommodation, which are far less restrictive than those for the Standard rate.
🆒 What are the package deals and what are they for?
The package deals are special hotel rates. They include the Not Refundable, breakfast included, half board, along with other ancillary services that complement and enhance the customer’s experience (a sightseeing tour, an aperitif with a spa path, etc.).

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Maddalena Mazzaferri

Maddalena Mazzaferri

Book a Free Demo

Book a Demo to see how Octorate can simplify the management of your Hotel, B&B, Vacation Rental, Apartment or Hostel.

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