In the hotel industry, room tariff is one of the most essential components of front office operations. It is the main source of revenue for the hotel and plays a vital role in financial management, marketing, and guest satisfaction.
'Room tariff' refers to the price a hotel charges for renting a room to a guest for a specific period, usually per night.
The Front Office Department is responsible for communicating this rate, recording it, and ensuring correct billing during the guest’s stay.
The tariff is determined by various factors such as location, category of hotel, facilities offered, season, and competition.
Room Tariff can be defined as:
“The amount of money charged by a hotel for the use of its accommodation and services for a specific period.”
In simple terms, it is the rate per room per night charged by the hotel to its guests.
Factors Affecting Room Tariff
The tariff of a room is not fixed permanently; it depends on multiple internal and external factors. Some key factors are:
Location of the Hotel:
Hotels in city centers, near airports, or prime tourist destinations charge higher tariffs compared to those in rural or suburban areas.Category of the Hotel:
Star-rated or luxury hotels have higher tariffs than budget or economy hotels.Facilities and Amenities:
Hotels with modern facilities such as swimming pools, spas, Wi-Fi, conference halls, and restaurants usually charge more.Type of Room:
Room type greatly influences the tariff — suites are costlier than deluxe or standard rooms.Seasonal Demand:
During peak seasons or festivals, the room rates rise, whereas they may drop during off-season periods.Duration of Stay:
Guests staying longer might be given a special rate or discount.Competitor Pricing:
Hotels often compare their tariff with nearby competitors before deciding their rates.Guest Profile:
Corporate clients or travel agencies might receive negotiated rates.Government Regulations:
In some cities, local taxes or tourism levies can affect final room tariffs.Occupancy Level:
Hotels with high occupancy may increase their tariffs, while low occupancy may result in promotional discounts.
Components of Room Tariff
A hotel’s room tariff usually includes several elements such as:
Room Rent:
The basic cost of occupying the room.Meal Plan (if applicable):
Depending on the meal plan (EP, CP, MAP, AP), the tariff may include meals.Service Charges:
A fixed percentage added for hotel services.Luxury/Accommodation Tax:
Government-imposed tax on room charges.Discounts (if any):
Reductions are offered to special guests, travel agents, or during promotions.
Different Types of Room Tariffs
Hotels design multiple tariff structures depending on guest category and purpose of visit. The major types are:
1. Rack Rate:
The standard or published rate of a room before any discount.
It is the highest rate charged by the hotel to guests.
Example:
Rack Rate for Deluxe Room = ₹6,000 per night.
2. Corporate Rate:
Offered to business travelers or companies who send frequent guests to the hotel.
Usually 10–20% less than the rack rate.
Example:
Corporate Rate = ₹4,800 per night.
3. Commercial Rate:
Given to travel agents, tour operators, or commercial organizations that book rooms in bulk.
4. Group Rate:
Special discounted rate for groups such as conferences, seminars, or tour groups.
5. Package Rate:
Inclusive rate covering room, meals, and sometimes sightseeing or transportation.
Used mostly by resort or tourist hotels.
6. Weekend Rate:
Lower rate offered on weekends to attract local or leisure travelers.
7. Government Rate:
Special rate applicable to government officials or departments.
8. Airline Rate:
Hotels located near airports offer special rates to airline crew and transit passengers.
9. Seasonal Rate:
Rates vary according to the season — high during tourist season and low during off-season.
10. Day Rate / Hourly Rate:
Rate charged for a few hours (used for short stays or layovers).