How hotels calculate group booking rates

Written by Paul Aug 02 2014

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Booking large quantities of hotel rooms

A while back we looked at how hotels calculate their room rates, something worth reading beforehand. This blog will look at what to consider when booking multiple hotel rooms for a conference or event.

We often get customers who assume that if they can find a room online for £90 why then is a hotel asking for £130 to block book 150 rooms? An understandable question given the assumption that buying more of something should lower the price, and in this case it does, it just isn’t obvious. As discussed in the earlier blog hotels have set levels of RevPAR (Revenue Per Available Room) which they need to achieve in order to meet targets, based upon previous years figures and those of local competitors.

Taking the example above, say the hotel that has quoted £130 has 250 rooms and in the same period in the previous year their RevPAR was £150 they could reasonably expect the same this year, if not slightly more due to inflation etc. So the client in the example is effectively getting nearly 15% discount on the rate of £150 by being offered £130. Yes they may be able to find ONE room online for £90 but there will only be a few of those available.

Within the block booking of rooms you will find the hotel has effectively broken down the number of rooms offered at various levels i.e;
10 rooms @ £90
40 rooms @ £110
50 rooms @ £130
25 rooms @ £145
15 rooms @ £155
10 rooms @ £175

If the hotel had offered all 150 rooms at £90 (£13,500) they would need to achieve at least £24,000 from the remaining 100 rooms in order to meet the revenue of the previous year (£150x250=£37,500), something they would struggle to do.

Ultimately we encourage customers to look at the bigger picture. If they decided to book all the rooms individually online not only would it be incredibly time consuming but after the first 10-15 had been booked quickly the hotel in question would likely jack the rates up considerably.

To discuss making a group booking then feel free to call us on 0330 223 0081.