The importance of creating an easy-to-manage hotel tariff model
The management of derived rates has a certain importance in defining the rate model of a hotel.
In this article we will explain why it is important to define a tariff plan that is simple to manage but at the same time also convenient in terms of revenue.
The tariff derivation is a fundamental functionality for a hotel management software, because it allows the hotelier to simplify the definition of prices.
Before explaining what a derived tariff consists of, let’s try to define what we mean by the terms “tariff” and “price“.
Difference between tariff and price
The price is the amount for which a room is offered for sale for a given combination of guests, date and treatment.
The rate, on the other hand, defines the booking conditions for a particular accommodation and the relative treatment.
Example of definition of a tariff model that exclusively uses the tariff derivation
Let’s start with a practical example of a tariff definition, taking into consideration a hotel that offers the “Room Only” and “Bed and Breakfast” treatment.
Our example hotel is made up of 2 TYPES of accommodation: double and suites.
We suggest our hypothetical hotel manager to create 5 rates:
- Room only;
- Non-refundable overnight stay (early bird);
- Bed and Breakfast;
- Non-refundable Bed and Breakfast (early bird);
- Bed and Breakfast OTA.
The “non-refundable” rates will be purchasable only with a minimum booking advance; this avoids the sale of a discounted rate but not refundable under the date.
The “overnight only” rate will be the basic rate on which we will define the derivation rules for generating the prices of the other rates.
This allows us to create a tariff model that is derivable with modification rules which can be:
- Fixed supplement per guest;
- Fixed discount per guest;
- Percentage supplement;
- Percentage discount.
This mode allows you to define the prices for the basic rate only (in our example the “overnight only”) and the system will automatically take care of generating the prices for the other rates.
Because the derived rates simplify hotel management
The derived rates simplify the hotel management because if you decide to change the basic room only rate for the double room, bringing it from € 100 (per night) to € 125 (per night), the system will automatically update the rates set as derived.
So the non-refundable overnight room rate, for which we have set a 10% percentage discount, will update automatically and will cost € 112.50.
Same goes for the Bed and Breakfast derived rate which will automatically go up to € 137.
The great strength of having derived rates is that it will avoid going to manually change prices every time we carry out even a small tariff operation. In addition, manual editing is exhausting work and subject to distraction errors.
The PMS of the management software of your facility must offer you the possibility to automatically set the same restrictions in the derived tariff as the basic tariff.
For example, if you want the derivative “Bed and Breakfast non-refundable” rate to have the same restrictions as the base rate, that is, to be sold only on Friday-Saturday-Sunday and to have a minimum stay of two nights, this must be possible.
How to avoid creating confusion with rounding prices
It may happen that going to set prices with discounts or percentage supplements, prices are generated that are not rounded to the euro, but with rather strange decimals that can cause confusion in the customer.
For a question of image and communication, it is important to ensure that the management software is able to round the price down to the euro. The rounding operation must take place automatically for all the derived tariffs.
Tariff derivation as a strategy at the basis of sales policies on OTA portals or agencies
With the abolition of the parity rate, many hoteliers have started offering different rates on the official website compared to those on the OTA channels, perhaps by applying a 10% surcharge on the latter.
Also in this case it is evident how the application of a derived tariff helps to simplify the management and sale process in the OTA channels.
What do we mean?
The rooms of my hotel are on sale on three different OTA channels, where I decide to apply different prices.
Thanks to a derived rate, it will be sufficient to take a basic rate from which to start (in this case the Bed and Breakfast) and go to apply fixed supplements per guest or percentage increases.
If in reading the article there were doubts about how to set rates and prices for your hotel, we refer you to reading this post.
Slope allows you to define the setting of the derived rates in an absolutely flexible way, thanks to an intuitive interface that provides the hotelier with the most appropriate tools to create a hotel tariff model that is easy to manage and absolutely modular.
Request a trial demo of Slope, hotel management software now.