Hotel Case

Paragraph 3.2

A hotel has many room rates for different target groups, some of these rates are:

- Rack rate

The official maximum price of a room that a hotel publishes in its brochures, on its website, at the reception desk and in the hotel room itself. They can reduce this price, but may never increase it.

- Best Available Rate (BAR)

Making sure all channels present the same rates. BAR rates are established by the Revenue Manager for the duration of a year, but can be changed any time. Booking directly with the hotel itself offers the chance of special offers or loyalty programs.

- Commercial, corporate or executive rate

Mainly for business guests, they are offered a membership card for that specific hotel company (chain). The corporate rates are established for a while season and may give a 8-15% reduction on accommodation for its management and associates. Depends on the number of rooms booked, applies:

- Always for very big accounts.

- For standard rooms and if no standard rooms are available, best available rate for luxury rooms.

- Only if the hotel occupancy remains below a certain level.

- Group rate

A hotel will accord special rates for groups. Reduction on room rates given by hotels depends on the number of room nights and the season.

- Packages

Include travel, accommodation, meals, car rental and possibly excursions. The discounts differ for business hotels and resorts because they have different occupancy patterns.

- Day use rate

A charge of 50% of the room rate to make use of a late check-out. Usually when the hotel has enough space for arriving guests, this is not charged.

- Confidential rate

A guest books through a travel agency or on a on-line intermediary and pays an all-in price for travel and accommodation with or without meals and/or excursions. The guest is not able to have an insight in the room rate.

In case of a merchant agreement sites such as Expedia buy rooms at a reduced rate and sell them at a small mark-up. Both room rate and mark-up are confirmed in a contract, so that the hotel can ensure a rate parity. A disadvantage for the hotel is that the number of rooms made available cannot be changed.

In case of a commissionable agreement the intermediary does not ask for a pre-payment. The costs for accommodation are paid at the front desk of the hotel which pays a commission to the intermediary. Is expensive due to labor and administration costs. The hotel can close the availability of accommodation at any time though.

Tour operators are travel wholesalers who design and operate tours around the world and market them through retail travel agencies or airlines. Tour operators make