Rack rate is the published or list price of a hotel room. It’s the highest price that a hotel is willing to charge for a room, and it serves as a benchmark for pricing.
Here are some key aspects of rack rate:
- Baseline Price: Rack rate is the starting point for pricing negotiations and promotions.
- Flexibility: Rack rates can be adjusted based on factors such as seasonality, demand, and competitive pressures.
revenue management activities related to rack rate
- Dynamic Pricing: Revenue managers can use rack rate as a starting point for implementing dynamic pricing strategies, adjusting rates based on demand and market conditions.
- Promotional Pricing: Rack rate can be used to create promotional offers, such as discounts or packages, that attract guests and drive bookings.
By effectively managing rack rate, revenue managers can optimize pricing, maximize revenue, and maintain a strong brand image.