Pricing for Room Tariffs

sunandaC

New member
Here, we go through the guidelines for fixing reasonable room tariffs. While fixing room tariffs, it is essential that we assign due weightage to the price structure to be adopted.

The average room rate should not be much higher than the competitive hotels otherwise the market will not welcome it. A hotel may also adopt a policy to give high pay roll to provide a higher standard of services which the customers are ready to pay.


The following are the economic criteria on room tariffs:

• The total amount of net operating costs (after contribution from the food and beverage departments). Net operating costs, net operating cost plus rent (if payable) net operating cost plus interest and net operating cost plus a target return on capital.


• This helps in calculating the total room sales and to achieve various levels of profits with the assumption that room department cost ratios, staff numbers and staff standards are known.


• On the basis of the above, a schedule should be produced as per the average room rates required in order to break even and/or to achieve the profit targets at various occupancy levels.


• Budgets on room sales are to be planned based on sales mix taking into account the different sources of business.


• After this, based on the current quoted tariffs, it is possible to calculate the different sources of business, must/not be exceeded if the average rate required is to be achieved
 
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