Fundamentals Of Accomodation Tariff Fixation For A Hotel

In general we can say that there are two basic fundamental of approaching the problem of accomodation tariff fixation

a. Cost based pricing: which include method such as * Rule of Thumb and * Hubbart formula. Basically in cost based pricing system the emphases is on covering cost of operation of service and to this a given rate of return is added.

b. Market based pricing: here what the customer is ready to pay becomes the starting pointof the fixation of tariff and the hotel management then works to build the cost of the product or service in a such a way that the hotel recieves a reasonable reason rate of return on that basis. Which can be classified in the following tariff fixation method: 1. Copititors price, price taking, price

Upside down, top down method. This is also called as Market Tolerance Method. In these case, the hotel in competition sit to call each other to see what rate each other to see what rate each is offering each night. The process is called “Shopping” or “Call Around”. It is important that before meeting hotels in competition sit to call each other to see what rate each is offering each night. It is also important that before meeting hotel should not disclose their identity as then it will be against the ethics and the process is called “Price fixing”. 3. Rate cutting; Reducing rate (Usually during off seasons) the lowering of the rate is expected to bring an increase in the occupancy.

Here one point is veri necessary that to cover the loss of revenue due to the reduction in rate, a very high percen tage of increasing in occupancy will be required. 4. Inclusive and Non inclusive rates. 5. Guest characteristics. Usually tariff will also vary with the guests requirements for example; *If the guest arriving late; staying over night and leaving next certain morning after breakfast would opt for M.A.P *Long term staying guests usually eat their meals in hotel and ask for A.P

c. SPA hotels. Here the residents usually in addition to all meals also takes other services such as laundry etc.. and hence may be on special tariff such as residential contract

That class of guest who are adventurous types and experimenting type and who may want to experiences food and its quality of various restraurants of the hotel may stay on European plan.

f. Guest of a remotely situated resort who usually have no choice but to eat meals in the hotel may stay in the resort on A.P.

g. Hotel characteristic. Some hotels prefer to operate on inclusive tariff. The main charasteristic are as follows: a. Grade: The guest and staff ratio is the main considerations. a five star hotel will have a higher staff guest ratio then a lower category as extra staff will be needed in providing direct guet to service. In such cases itemized bills are more useful. b. Size: The larger the hotel the more will be its room tariff as the construction, modern technology, more staff and cost aplied will be more.

c. Duration: another main consideration will be length of stay of the guest arrived. A long staying guest on itemized bill will be a long one.

d. Marketing Consideration: When the guest is on full baord plan (meals Inclusion) and suppose does not want it; then he should expect a reduction in the final bill of his (which is usually not given). This often encourage guests to take advantage of the the wider choice because they feel free to choose and thus help to increse restaurant sales in