10 ROOM RATES AND POLICIES

S. Thilagamani

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Introduction:

 

Accommodation is the core product of any hotel and is the largest revenue of operation. Accommodation product refers to rooms and other related products or services that hotel guest will consume during their stay. Front desk personnel should have adequate knowledge which enables them to recommend or explain their guest of all the services and room types available and offered by the hotel.

 

The term tariff means rate and when applied to rooms of a hotel it means room rate. The combination of all the rates offered at a hotel is called “Rate Structure”.

 

Objectives:

 

This module will enable the learners to

 

1.      Compile the rate structures at various hotels and the procedure for handling the rooms

2.      Study the room policies as fixed by the hotel authorities

3.      Ways of fixation of rates and deciding rate structures and prepare tariff cards

 

 

Factors affecting rate structure at a hotel:

 

Various basis of charging room tariff are used by the hotel and room rate are fixed based on the following factors

 

1. Competition :

 

Rates must be competitive with the other hotels of the same standard and provide almost similar services and facilities as provided by the other hotels situated in the same vicinity of the city.

 

2. Custome r’s Profile:

 

The category of customers coming to the hotel must be considered at social and financial status and the spending power of the capacity.

 

3. Standards of service:

 

Standards of services provided by the hotel are also important while fixing room tariff. More the amenities, higher the standard, higher is the room rate.

 

4. Price cuts  for special business:

 

At the time of price cuts for special business may be done. The rate tariff may vary in order to get business, the price of business is income which would not otherwise get.

 

5. Locality:

 

The locality in which the hotel is situated gains prominence while fixing room rates. If the hotel is situated in a posh locality, where all the shopping, travel facilities, the room rate will be comparably higher than those situated in backward and sub urban areas usually the suburban hotels. Naturally the guest would prefer to pay more when amenities and facilities are good.

 

6. Surroundings and cost of land, Building, Architecture: Surroundings also play a great consideration as the hotel proprietors lakhs of rupees in décor and furnishing and hence need a fair and an equitable return on his spending.

 

7. Other Amenities:

 

The various amenities offered by the hotel such as air conditioning, swimming pools, carpeting of floors, banqueting, conference hall, lounge, parking spaces, restaurant with Indian and continental cuisine with modern cutlery and crockery do count when factors of room rates are considered.

 

8.   Room Location:

 

The location of the room also is the important factor. Rooms with good views, and in front areas would be fixed at a higher rate than those with darker room and corner rooms.

 

9. Publicity:

 

The amount of advertising and publicity done by the hotel and special budgets prescribed for hotel publicity also matters in fixing the room rates. This type of expense has to be adjusted as it has no source of returns, but it is the must to popularise the various amenities facilities of the hotel.

 

Room Types According To Price, Layout And Facilities

 

Economy

A room for an economical rate, usually short of standard facilities likes air conditioner, television and other amenities.

 

Standard

 

A room sold at moderate rate, equipped with standard facilities and amenities like air con, toiletries, television, bed, night table.

 

Deluxe

 

A more luxurious and spacious with amenities of superior quality, sold a much higher price than standard rooms.

 

Studio / Murphy room

 

A  room that is fitted with a sofa bed or murphy bed which can be transformed from bed room in the night time to a living room in day time.

 

Studio

 

A room with a studio bed, which can be converted into a bed. It may also be called an executive room.

 

Connecting room

 

Two or more rooms with entrance doors from the outside door between them through which guests can get through each bedroom without going out of their rooms.

 

Adjacent or adjoining rooms

 

Rooms located side by side that do not necessarily have a connecting door.

 

Suite

 

A room with a parlor or living room connected to one or more full sized bedrooms, equipped with luxury amenities. A room with one or more bed rooms and a living space. The bed rooms might be singles, doubles or twin doubles

 

Hollywood twin room

 

A room that accommodate 2 persons with 2 twin beds joined together by a common headboard, Medium tariff and budget hotels tends to provide many of these room settings which cater both couples and pairs in two.

 

Smoking / Non s moking room

 

Many hotels provide both smoking and non smoking rooms for their guest, in order to minimize the effect of secondhand smoke exposure on Non smoking guests, some hotel groups , all smoking rooms are in certain floors and separate them from no n smoking rooms.

 

President suite

 

Most expensive room provided by the hotel. Usually only 1 is provided in a hotel. It always has 1 or more bed rooms and living space with strong emphasis on grand- in-room decoration, high quality amenities and supply and tailor made services.

 

Villas

 

A special form of accommodation which can be found in some resort hotels. It’s a kind of standalone house which gives extra privacy and space to hotel guests. A fully equipped villa contains not only bed rooms and living room but a private swimming pool, Jacuzzi, balcony. It is suitable for couples, families and large groups.

 

Room for extended stay

 

This type of room is found in the service apartments and hotels which targets for long stay. Open kitchen or cooking equipment is available in the room. Some would also provide housekeeping services in a regular basis

 

Executive floored room

 

A room located at the executive floor with which it enables convenient access to the executive lounge. Besides, some hotels provide female executive floors , with their rooms assigned to female guest only due to safety and security reasons.

 

The Room Rate’s Impact on Guest Demand

 

Room rates communicate a great deal about a hotel. Higher than average rates indicate a well-run property. The rate of growth in room prices has held roughly steady at 5.8 per cent per year for more than 30 years

 

Room Rate Structure

 

The combination of all the rates offered at a hotel is called the rate structure. Hotel room rates are both quantifiable and qualifiable.

 

Room Rate Designations

  1. The individual room rates within the rate structure are allocated a value based on certain characteristics
  2. The room rate designation is the term used to specify the rate threshold within the overall structure, and therefore defines what position a specific rate will take within the overall rate hierarchy .The types of room rates are
  • Government Rate
  • Seasonal Rate
  • Weekday/weekend Rate
  • Membership Rate
  • Industry Rate
  • Walk-in Rate
  • Premium Rate
  • Advance Purchase Rate
  • Package Rate
  • Per person and Group rates

 

Weekly rates

 

These are less than seven times the daily rate.

 

Corporate rates

 

By guaranteeing a number of room-nights per year, the corporation negotiates a better rate, a corporate rate, from the hotel chain.

 

Commercial rates

 

Are the small hotel’s answers to corporate rates, smaller hotels make arrangements with small commercial clients

 

Government rate

 

Federal, state, and local governments reimburse traveling employees up to a fixed dollar amount. Difficulties may arise when the per-diem guest encounters the desk. Some chains accept the government rates, but individual properties may not.

 

Employee courtesy rates

 

Most hotel chains extend special rates to their employees when they travel within the chain.

 

Pay rack rate

 

Although not really a discount, some upscale chains are experimenting with added perks for guest who actually pay full rack rate.

 

Senior citizen rate :

 

People over the age of 50 are the best money savers. They love to travel, and they’re careful with money.

 

Weekday/Weekend rates

 

Hotels of all location types will see fluctuating demand during certain days o f the week

 

Auction travel sites:

 

Auctioning is a form of discounting that has gained popularity with the individual traveler .To qualify for deep discounts, travel auction companies often require a degree of flexibility on the part of the customer (non-prime-time flight schedules and less popular travel dates are the norm).

 

Special Rates

 

Government rate

 

Within most major cities, government agencies set predetermined rates that they will reimburse travelling employees for. This reimbursement rate is called a per diem, and for government employees, usually covers hotel, meals and other expenses. These per d iems are set a year in advance and published so that all interested hotels can offer it.

 

Rack rate

 

The rack rate is the highest published rate a hotel can charge for a specific room. Rack rates can differ between room type, configuration, and designation.

 

Seasonal rates

 

Resorts and other location types that see a fluctuation in demand due to the weather or the operation of a nearby attraction will vary their rates accordingly. Offering a different rate for in-season and out-season (off season) allows the hotel to alter their rate structure to compensate for this cyclical demand. A seasonal rate designation can apply to other rates as well.

 

Corporate rate

 

This designation is designed to promote the corporate market segment. Typically the corporate rate reflects a 10 to 20% discount off the rack rate. The corporate rate is widely accepted as the transient target rate for most hotels. The target rate is simply an average rate goal a hotel sets to achieve for a certain day or market segment

 

Volume Account rates

 

Also called preferred rates, the volume account rate trades a further discount of the corporate rate in exchange for a guaranteed number of room nights within a specific time period.

 

The level of this discount is contingent upon the volume. These volume accounts are usually assigned a grade based on production and hotels with predetermine the number of room nights required to achieve each grade, and assign a rate accordingly

 

Membe rship rates

 

Some organizations (such as Automobile Clubs) have a large number of members who enjoy travel and often develop travel guidebooks to assist their members in choosing a hotel. Hotels must offer a special rate and have a certain level of quality, service and cleanliness in order for the organization to recommend them. These membership rates are usually 50% off the rack rate

 

Industry rate

 

Those who work in the travel industry such as travel agents, employees from other hotels, meeting planners etc. are often extended the courtesy of discounted rates. Industry rates can vary from 30 to 50% off the rack rate, depending on the location and seasonality factors.

 

Walk-in rate

 

This may vary from night to night. A walk-in is a guest who arrives without a reservation. With few remaining rooms, the walk- in rate may be set fairly high, and an empty hotel may reduce the rate significantly.

 

Premium Rates

 

Room configurations have standard, those with views or other amenities; can command a room rate premium. Premium rates are offered to any room that offers something “extra”.

 

Advance Purchase Rates

 

An advanced purchase rate offers a greater discount based on the number of days in advance it is booked. A 7, 10 or 21 day advance purchase rate will have a corresponding lower rate.

 

Half-day rates

 

Some hotels offer certain guests as an alternative meeting room and these rooms are often used for just a few hours so a half-day room rate may be assigned based on half the value of the rack rate. Half-day rates are also commonly offered at airports.

 

Package Rates

 

Meal Packages

 

These include meals in the rate. They may include only one meal per day (usually breakfast) or all meals and beverages included

Vacation Packages

 

These include room rates and one or more of the following: airline tickets, transportation, tickets to local attractions or shows etc

 

Meeting Packages

 

This rate usually includes coffee breaks, meals, audiovisual equipment and the cost of the meeting room all together

 

Group rates

 

It is difficult to categories these rates as a specific designation because they can differ greatly. A group rate is determined by many factors, but are typically lower than transient rates because they are booked in advance and contractually obligated

 

Room Policies

 

The policy of tariff fixation can be done on the following basis

 

1.   Check in and Check out basis :

 

It is the most way of fixation of tariff and the hotel fixes a specific time usually 12 noon as check out time which means the guest charging cycle begins from 12 noon and finishes at 12 noon on the next day. For a guest staying in the hotel after 12 noon, the next days charge may be levied. For example, guest coming at 10am on a particular day and 6pm on the same day, the guest may be charged for 2 days. Account keeping is simple in this system.

 

2.   Twenty Four Hours Basis:

 

In this system, the charges of room start from the time when the guest the check in and he has to pay for one day up to 24 hours from the time of check inn. For example of the guest arrives at 9am on a particular day, then his one day charges shall be up to 9 am on the next day and if he continues to occupy the room even after 9 am another day’s rate will be added. This system is good for small and budget hotels.

 

3.    On the basis of Competitors rate :

 

Some hotels fix their room tariff based on the charges of the hotels in their neighborhood are done. This is not realistic method as the amenities and services may vary from one hotel to another

 

4.      Night Basis:

 

In this system, the guest is charged based on the number of nights that he spends in the hotel irrespective of the time of arrival. If the guest spends two nights, he will be charged with 2 days tariff.

 

5.     Day Rate :

 

Sometimes the guest may stay in the hotel for few hours and may not stay at night. In such cases, where he stays for 6 hours, maximum hotels may charge special discounted rate which is usually the 50 percentage of the rack rate. This rate is day rate or day use rate.

 

6.    Rule of Thumb:

 

This is another traditional way of charging room. In this rate, one rupee rate is fixed for every 1000 rupees spent on room construction cost. This is also called as cost rate formula.

 

Room Status Codes

  • OCC – Occupied
  • VC – Vacant & Clean
  • VD – Vacant & Dirty
  • OR – Occupied & Ready
  • OC – Occupied & Clean
  • OD – Occupied & Dirty
  • CO – Check Out
  • OOO – Out of Order
  • DND – Do Not Disturb
  • V/O or O/V – Status Unclear
  • LO – Lock Out Room
  • DO – Due out Room
  • DNCO – Did not Checked Out
  • VCI – Vacant, Cleaned & Inspected
  • HL – Heavy Luggage
  • LL – Light Luggage
  • NL – No Luggage
  • DL -Double Lock
  • CL – Chain Lock
  • HU – House use
  • NCI – Newly checked In
  • NS – No Show
  • SO – Slept out
  • BLO – Blocked
  • V -Vacant Room
  • MUR – Make Up Room

These are the commonly used terms that denotes the room status

 

Conclusion:

 

The vital aspects that governs the room rates and policies are the amenities at rooms, guest services, guest satisfaction, retention of guests that helps to increase the average room revenue and thereby the hotel’s revenue. Since there is mushrooming growth of midscale hotels that provide all services equal to those offered by the star hotels in the metropolitan and other cities, it is must that the hotel authorities fix rates in accordance to the occupancy rates and the guest services offered.

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Web references

 

 

Book References

 

  1. Aggarwal, R. Hotel Front office – Systems and Procedure, Sublime Publications, Jaipur, 2002.
  2. Bhatnagar, S.K. Front Office Management, Frank Bros, New Delhi, 2004.
  3. Andre w, S. Text book of Front Office Management and Operation, Tata McGraw Hill Publishing Company Ltd, Ne w Delhi, 2008.
  4. Ismail, S.A. Front Office Ope ration and Manage ment, Thomson Asia Pvt Ltd, 2004.