Quick answer: The main types of room rates in hotels are the rack rate (the full published tariff) and a set of special rates offered below it: corporate, commercial or contract, group, package, seasonal and weekend, promotional and advance purchase, travel agent and net rates, airline crew, government, family plan, long-stay and complimentary rates. Each special rate exists to win a particular kind of business while protecting the hotel's average room rate.
These revision notes cover BHA105 (Foundation Course in Rooms Division Operations, NCHMCT B.Sc. HHA, Semester 1), Unit 2, where the syllabus lists types of room rates and special rates after the basis of charging. They follow the NCHMCT syllabus topic and are written for IHM and hotel management students. They are not official NCHMCT material, so read them along with your institute's handouts. The National Council's programme pages are at nchm.gov.in.
Table of contents
- What is a room rate? Meaning and basic terms
- Rack rate: the starting point of all types of room rates
- Special rates in hotels: the main types of room rates below rack
- Types of room rates table for quick revision
- Why hotels use different types of room rates
- Quoting room rates at the front desk
- Exam tips for BHA105 Unit 2
- Front office jobs that use room rate knowledge
- FAQ: types of room rates
What is a room rate? Meaning and basic terms
A room rate (also called room tariff) is the price a hotel charges a guest for the use of a room for one stay period. How that period is counted (check-out time, 24 hours, night or day use) is covered in the notes on the basis of charging room tariff. This post explains the next idea: who pays which price.
Learn these terms before the types of room rates:
- Tariff card: the printed or digital list of published rates for each room type.
- Rate code: a short code in the property management system (PMS) that stores one rate and its rules, for example RACK, CORP or GRP.
- Room type: the rate always depends on the room category, such as standard, deluxe, club or suite. See types of hotel rooms.
- Meal plan: whether the rate includes no meals (EP), breakfast (CP) or more meals (MAP, AP).
- Taxes: rates are quoted either inclusive or exclusive of GST; the front desk must say which.
Rack rate: the starting point of all types of room rates
The rack rate is the full, standard price of a room before any discount. The name comes from the old front office room rack, where each room's card showed its tariff. Today the rack rate sits in the PMS as the highest regular rate for a room type.
- It is the reference price; every special rate is measured as a discount from it.
- Walk-in guests without any tie-up are usually offered rates close to rack, depending on demand.
- Rack rates are revised when the hotel reviews its pricing, often once a year, and the new tariff card is circulated.
Many hotels now also use a best available rate (BAR). BAR is the lowest unrestricted rate available for a given date, and it moves up or down with demand. In a busy week BAR may equal the rack rate; in a slow week it is lower.
Special rates in hotels: the main types of room rates below rack
Special rates are agreed or published discounts for a defined market segment. The syllabus groups them as "special rates", and examiners usually expect at least eight with a line on who gets each one.
1. Corporate rate
Offered to business travellers from companies that send regular room nights. A sales manager signs a yearly agreement fixing the rate, room type and inclusions such as breakfast or Wi-Fi.
2. Commercial or contract rate
A rate fixed by contract for a firm or organisation that books a guaranteed number of rooms, sometimes on an allotment basis. Airlines, shipping companies and project teams use contract rates.
3. Group rate
Given when a minimum number of rooms (often around ten or more, as set by hotel policy) is booked together for a tour, conference, wedding or sports team. One complimentary room for a fixed number of paid rooms may be added under group policy.
4. Package rate
One price that includes the room plus other services: meals, spa, sightseeing, airport transfers or a festive dinner. Honeymoon, weekend and holiday packages are common examples.
5. Seasonal, off-season and weekend rates
Hill and beach hotels charge higher rates in the peak season and lower rates in the off-season. City business hotels are often busy on weekdays, so they sell a lower weekend rate to fill rooms on Friday and Saturday nights.
6. Promotional and advance purchase rates
Short-term offers such as early bird, last-minute or "stay three nights, pay for two". Advance purchase rates are lower but usually non-refundable and need prepayment.
7. Travel agent, tour operator and net rates
Travel agents may receive a commission on the rate they sell. Tour operators and wholesalers buy at a confidential net rate and add their own margin.
8. Airline crew rate
Hotels near airports sign agreements with airlines for crew rooms at a contract price, often with flexible check-in and check-out to match flight schedules.
9. Government and defence rates
Some hotels offer special rates to government officials, defence personnel or public sector units on valid identity, as per hotel policy.
10. Family plan and child policy
Children below an age set by the hotel stay free in the parents' room without an extra bed. An extra bed or extra adult is charged separately.
11. Long-stay rate
Guests staying a week, a month or more pay a reduced nightly rate. Serviced apartments use weekly and monthly rates.
12. Complimentary rate and house use
A complimentary room is free of room charge, given to VIPs, travel writers, group leaders or for service recovery, approved by the general manager or rooms division manager. "House use" means a room used by hotel staff on duty, such as the duty manager.
Types of room rates table for quick revision
| Rate | Who gets it | Main condition |
|---|---|---|
| Rack rate | Walk-in guests, reference price | Full published tariff |
| Best available rate | Any guest, online and offline | Changes with demand by date |
| Corporate | Company executives | Annual agreement with the company |
| Contract / commercial | Airlines, firms, project teams | Guaranteed rooms by contract |
| Group | Tours, conferences, weddings | Minimum number of rooms |
| Package | Leisure guests, couples, families | Room bundled with other services |
| Seasonal / weekend | Leisure guests | Valid only on set dates |
| Promotional / advance purchase | Price-sensitive guests | Prepaid, often non-refundable |
| Net / agent rate | Tour operators, agents | Commission or confidential net price |
| Crew | Airline staff | Contract with the airline |
| Complimentary | VIPs, group leaders | Management approval, no room charge |
Why hotels use different types of room rates
A hotel room is a perishable product: a room not sold tonight can never be sold again. Different types of room rates let the hotel reach several market segments at once and fill rooms that would otherwise stay empty.
- Fill low-demand periods with weekend, seasonal and promotional rates.
- Lock in steady business through corporate, contract and crew agreements.
- Win volume through group and tour rates.
- Sell other departments through packages that include F&B and spa.
- Build loyalty with member rates and complimentary upgrades for regular guests.
The risk is that too many discounts lower the average daily rate (ADR). That is why the front office manager or revenue manager controls which rates are open on busy dates, and closes the lowest ones when demand is high.
Quoting room rates at the front desk
The reservation agent or receptionist applies these rules in practice:
- Ask before you quote: company name, dates, number of guests and purpose of stay decide which rate applies.
- Quote from the top down: offer the better room type first, explain its features, then offer the next option. This is the basis of upselling, studied later in Unit 4.
- State the inclusions: meal plan, taxes, Wi-Fi and the cancellation policy.
- Verify eligibility: corporate ID, government ID or a booking voucher at check-in.
- Never change a rate on your own: discounts outside the rate codes need written approval from the duty manager.
- Record correctly: the right rate code in the PMS keeps billing, commission and reports accurate.
Rate knowledge links to every stage of the guest cycle in front office, from the reservation to the check-out bill.
Exam tips for BHA105 Unit 2
- Start with a one-line definition of room rate and rack rate, then list the special rates.
- For each type of room rate write who gets it and one condition; a table scores well.
- Do not mix up the basis of charging (how time is counted) with types of room rates (who pays what).
- Mention meal plans only briefly; they are a separate topic in the same unit.
- Add one line on why hotels discount: rooms are perishable.
Likely questions
- What is a rack rate? Explain any six special room rates. (10 marks)
- Differentiate between corporate rate and group rate. (5 marks)
- What is a package rate? Give two examples. (3 marks)
- Write short notes on complimentary rate and house use. (3 marks)
Front office jobs that use room rate knowledge
Reservation agents, front desk associates, guest relations executives and sales coordinators quote rates every shift. Freshers who can explain the types of room rates clearly do well in interviews; practise with the front office interview questions and answers.
- Entry roles: front office associate, reservation agent, guest service associate, night auditor trainee.
- Typical pay ranges (indicative only): entry-level front office roles in India often fall roughly between ₹12,000 and ₹25,000 a month; Gulf hotels may add accommodation and meals. Pay varies by hotel and city, so check each job post.
Browse current front office jobs and register free on Hospitality Vacancy so hotels in India, the Gulf and Europe can see your profile.
FAQ: types of room rates
What are the types of room rates in hotels?
The main types are the rack rate and special rates such as corporate, contract, group, package, seasonal, weekend, promotional, travel agent, crew, government, family plan, long-stay and complimentary rates.
What is a rack rate?
The rack rate is the full published price of a room type before any discount. All special rates are set below it.
What is the difference between rack rate and best available rate?
The rack rate is a fixed published tariff, while the best available rate is the lowest unrestricted rate for a date and changes with demand.
Who approves a complimentary room?
A complimentary room is approved by senior management, usually the general manager or rooms division manager, as per hotel policy.
Why do hotels offer special rates?
Rooms are perishable, so special rates help hotels fill rooms in slow periods, secure regular corporate and group business and sell packages.
Read next
- Basis of Charging Room Tariff: 24 Hour, Day Use (BHA105)
- Types of Hotel Rooms Explained: A Front Office Guide
- Hotel Classification by Service Level: Luxury–Budget
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About the author: Sumit Manwal
Sumit Manwal is the founder of Hospitality Vacancy, the job site built for the hotel industry, which he has run since 2017. With more than 20 years of experience in hospitality, he received the Excellence in Hospitality Sector of Uttarakhand award (January 2023) and the Dainik Jagran inext Uttarakhand Ratan award. He is passionate about helping hotel management students and hospitality professionals build successful careers, and connects talented people with hotel jobs across India, the Gulf and Europe. Through these notes he shares practical, easy-to-follow hospitality knowledge so every reader can learn, grow and get hired.