ROOM TARIFF STRUCTUREA. Room TariffB. Room Rate DesignationC. Tariff CardD. Rack RateE. Meal Plans

Tariff means the rate for the room we are charging from the guest and we have quoted on the tariff card/ hotel brochure.

It is difficult task as the rates have to be changed

There are various methods to fix the room rates

It depends on various factors There are various rates for various clients,

FIT, GIT, Off season, etc Taxes as applicable/ taxes extra . Taxes are

added to these tariff rates when preparing the final bill

FACTORS WHILE DECIDING ROOM TARIFF Customers profile: tourists/ paying capacity/

social status Competition & Room position in city ( market

based pricing): what is the room rate of our competitors in the city , how much is the competition, how many rooms of our hotel category are available in the city,

Category of hotel and standards of service: whether we are 5 star or 3 star or a guesthouse , what is the level of service and amenities in our hotel, what is the cost of providing these services, a 5 star will charge 10000 rs / night, but a 3 star will charge 4000 , small hotels charge 1000 only.

Cost of hotel project(cost based pricing): how much we have invested in setting up the hotel. A 5 star with 100 rooms will cost 50 crore. Management wants return on investment. (ROI)

Pay back period and loan/ finance : for loan of 1 lakh we have to pay 2000 rs/month, for 1 crore =2 lakh per month, generally we pay within 7 years

Location of room: the rooms facing the sea, lakes, ice, other view will be charged more, the rooms of club class are superior,

BASIS OF FIXING THE PRICES 24 hours rates : eg. 10000 for 24 hours check in 10.00 am, check out 9.00 am 12.00 noon checkout time: if guest comes at

7.00 am, then leaves the next day at 10.00 am, then we will charge 2 days tariff.

Day rates : if guest will not stay in night, 5000 rs Night basis : widespread method, eg . Guest is

spending 3 nights, 2 days then we will charge for 3 nights.

Rule of thumb: 1 rs for every 1000 rs spent on hotel

Hubbart formulae

Rack rate : the rate which is printed on tariff card eg, 10000 Rs/ night

Group rates: when there is a group of 10 or more persons and taking more rooms, 10% discount on tariff, 9000 Rs/ night

Volume rates: when travel agents/companies give bulk business for the year, given 20 – 30 % discount. 7000 Rs/night. Bulk business of minimum 1,00,000 rs/year

Off season rates: in Udaipur season from October to march. 20% - 50% discount given in off season from April to September so rooms will be occupied in off season also

Travel agents rates : all hotels give travel agents commission (TAC) 20% on tariff . 8000 rs/ night

Tour rates: special rates for tour operators who sell packages , it includes room and all meals. Eg 4000rs/ person / day on twin sharing basis

Company/ government rates: 30% less on tariff

Crew rate: given to airlines for stay of cabin crew, pilots, hostesses etc. 30%less then printed tariff

Weekday/ weekend rate: discount is offered on weekdays from Monday to Friday

Package rate: package given to MICE, marriages, conferences, for eg 100 rooms are booked, then we charge say 7000 rs/ room /night, We will also give all meals for 2000 rs/ pax .

Crib rates : rates we charge for childeren. Children below 12 years are free, we charge 2000 rs/ night for children above 12 years.

Family rate: family will include accommodation for 2 adults and 2 children . Suite room/ family room with extra bed is given

Plan : EP(only room),CP(room +breakfast) , MAP(room + breakfast + one meal), AP(room + breakfast+ lunch + dinner)

HUBBART FORMULAE

Investment + Working capital 10,00,00,000own 5cr,finance 5 cr

Room nights( 100 rooms* 200 nights = 20000 room nights) return on investment( 15% on 5 cr )

75,00,000

+ income taxes 50,00,000 required profit before tax 1,25,00,000 + interest expenses10% on 5 cr 50,00,000 required profit before tax and interest

1,75,00,000

+ depreciation and local taxes 25,00,000

Required profit 2,00,00,000

Operating Expenses

Salary (100 employees* 1,50,000 rs /year)

1,50,00,000

Electricity & power 50,00,000Repair and maintenance 25,00,000Advertisement and other 75,00,000Total operating expenses 3,00,00,000

Required operating income 5,00,00,000

- Income from other departments F&B, laundry, rentals

1,00,00,000

Required room department profit 4,00,00,000

AVERAGE ROOM RATE ( 4,00,00,000 ÷ 20,000 )

2000 rs/ night