Rate Plans form part of the crucial infrastructure for your hotel’s pricing strategy – the different rates you sell on your brand website and other distribution channels are effective and impactful by establishing the right combination of rate plans.
Having the right number of rate plans and the flexibility is key to maximising revenue. Typically, all hotels will have some standard rate plans that are in use (or active) throughout.
The Best Available Rate (BAR)
BAR is a rate that has become the industry norm for bookers seeking the best rate at any given time. While the rate plan (BAR) does not change, the actual rates can change dynamically depending on how they are set up and systems in use.
It is important to optimise BAR in a way that your hotel stays competitive. Equally importantly it should be possible to provide your guests with a best rate guarantee on your brand website.
BAR can be set up to be dynamic – see simple example below where the levels are set to be at a static value difference of $10. It is possible to set this as a percentage as well.
|BAR Level||Best Available Rate||Open or close based on occupancy|
|BAR 1||$75||Below 25 %|
|BAR 2||$85||26 % TO 35 %|
|BAR 3||$95||36% TO 50%|
|BAR 4||$105||51% TO 75%|
|BAR 5||$115||76% TO 100%|
The Bed & Breakfast (B&B) Rate
The breakfast inclusive rate is popular in most parts of the world. However they tend to be more critical where breakfast is not typically included in the BAR rate. In the US, hotels tend to have breakfast inclusive BAR where as in Europe they tend to have two separate plans one with breakfast and the other without.
And even if your hotel serves complimentary breakfast, it will still allow an option to create a premium breakfast inclusive rate plan.
The Advance Purchase Rate Plans
These rate plans offer a certain discount percentage off BAR (usually in the range of 15-20%) provided these are booked ahead of time (usually about 7-14 days before arrival date). These criteria can and should be changed based on business needs, type of hotel and location. For example, a boutique hotel in Rome may have a shorter booking window compared to a boutique resort hotel in Cornwall.
Typically, these rate plans are non-refundable and non-cancellable. So, it passes on the price advantage to the guest while the hotel retains a guaranteed amount of base business.
Dynamic discounts on BAR can be also offered based on length of stay. For example, stay 3 nights and save 20% or someone staying for 7 nights can get 30% off BAR depending on your market and seasonality.
Package Rate Plans
These rate plans allow hotels to combine the room rate with other travel components such as flights, experiences, dining etc. The actual room rate is not publicly visible in a package (or shouldn’t be) and is sold as a bundle.
Other rate plans that can be key elements of your hotel’s pricing and distribution strategy can include the following:
Corporate Rate Plans
If business travellers are part of your mix, then corporate rate plans will be required to manage different types of businesses and different tiered rates offered to them based on the volume of business they bring.
Group Rate Plans
If you are expecting small groups at your boutique hotel, it may be good to have a dedicated rate plan that allows you to facilitate these bookings
Loyalty Rate Plan
If your hotel has a loyalty programme, then this will allow your hotel to offer a dedicated special rate to guests who are members.
Measuring the impact of rate plans
While it may be technically possible to have a wide range of rate plans, it is important to audit and understand which ones are working and most utilised by your guests. Understanding how many room nights and revenue came through which rate plans will allow your hotel to improve on any initial pricing and rate strategy.
Having too many rate plans can also confuse the booker during the booking journey. Ideally, a boutique hotel should have no more than 4 to 5 rate plans available. And this means that understanding which rate plans work well is important so that you can manage the booking journey and conversion better.
A rate plan that only delivers less than 10-15% of your hotels overall revenue in a certain period should be reviewed and tweaked or replaced by another plan.