How to increase revenue with Hotel Rate Plan
In recent years, the hotel industry has seen the effects of oversaturation due to the increasing popularity of vacation rentals and different stay providers.
Due to this excessive quantities of stay choices, the pricing challenges for the hotel owners have increased. Therefore, It is nearly impossible to track and update the rates weekly or monthly.
So, to tackle this, the hoteliers have opted for a new pricing strategy for hotels, the Hotel Rate Plan. In this blog, we will discuss how you can increase your revenue with a hotel rate plan.
Why do hoteliers use different hotel rate plans?
The Hotel rate plan refers to the classification of a specific room type rate offered by the hotel. It can include various options such as base rate, meal plan, non-refundable plan and many others.
Setting a room rate for the hotel is one of the most crucial decisions for a hotelier since it can affect the entire hotel’s revenue.
An appropriate room rate is the key to beating the competition and maximizing occupancy. At first, it may seem a little weird to use a different variety of rate plans, but if you put it into practice, it will definitely be worthwhile.
Having different rate plans helps hoteliers optimize occupancy in hotels during high and low hotel seasons and ensures a steady flow of guests to maximize hotel revenue potential.
The variety of hotel rate plans gives travelers more options and the flexibility to decide what suits their needs best. It’s an effective way for hotel owners to place themselves against the competition for the number one choice for travelers.
Without different rate plans, it would be difficult for the hoteliers to maintain high occupancy every week across different room types.
Now that we have a good understanding of hotel rate plans and their needs, Let’s look the top hotel rate plans for your hotel.
Base rate plans
Best available rate plan
The best available rate plan also known as BAR is the lowest discounted rate that can be offered to break even. Most hotels have at least two base rates for both high and low hotel season.
Standard Rate Plan (RACK).
The standard rate plan, known as the RACK rate, is the rate that is listed on the hotel’s website that exclude any discount offers or promotions. It is not the highest or the lowest rate, instead it is just the current rate for the specific room type.
All season rate plans
They are also known as the evergreen rate plan as they retain the value regardless of hotel location, target audience and hotel season.
There are multiple factors for this rate plan such as cancellation policy, length of stay, booking window and more.
Following are the few types of Hotel Rate plans:
Breakfast rate plan
If you own a restaurant or offer meals, try including breakfast in your rate. This rate plan is popular among families and tourists looking for convenience and affordable meals. You can adjust the room type rates with your breakfast rate to provide an option to your guest.
Advance purchasing rate plan
This rate plan allows guests to book the stay at a discounted rate if they have made the booking far enough in advance. Hoteliers set the discount in the percentage of the base room price with respect to the number of advance days.
For example: If guests book the room 7 days before the stay date, they will receive a 10% discount or if they book 15 days prior to the stay date, they can avail 20% discount on the booking.
It is effective in peak seasons when there is less chance of bookings, So the guests usually prefer to book in advance. Also, the hotel owners set this up with a non-refundable cancellation fee.
Non-refundable rate plan
The non-refundable rate plans are a bit cheaper room rates than base room rates. This plan prevents guests from canceling their booking without a cost involved. This plan usually guarantees revenue from the hotel booking.
Flexible rate plan
This plan offers guests free cancellation on the booking in exchange for a slightly expensive rate. This plan provides peace of mind for the guest while booking, especially if the guest’s vacation is uncertain.
Length of stay (LOS) rate
LOS (Length of stay) rate plan encourages your guests for extended stays. The longer the guest stays in your hotel, the more discount they will receive. It will significantly increase the hotel occupancy rate and boost the overall hotel revenue.
Conclusion
In the above article, we have learned how rate plans contribute to the occupancy and revenue of the hotel. Also, we have learned the importance of having different rate plans and how hotels can leverage them for all the hotel seasons.
Having a variety of rate plans is also beneficial for the guests as they will be more flexible in finding the best option during the booking.
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