ROOM TARIFF STRUCTURE A. Room Tariff B. Room Rate Designation C. Tariff Card D. Rack Rate E.

Meal
Plans

2.  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

3. 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.

4.  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,

5. 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

6.  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

7.  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

8.  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)

9. HUBBART FORMULAE Investment + Working capital 10,00,00,000 own 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

10. Operating Expenses Salary (100 employees* 1,50,000 rs /year) 1,50,00,000 Electricity & power
50,00,000 Repair and maintenance 25,00,000 Advertisement and other 75,00,000 Total 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