What Rate plan means
The same physical room can be sold in many ways. A guest who wants free cancellation pays more than one who prepays a non-refundable booking, and a package with breakfast costs more than room-only. A rate plan is the bundle that ties a price to those conditions, so the hotel can offer a choice without changing the room itself.
Most hotels anchor their plans on the best available rate (BAR), the lowest publicly available, flexible rate for a room type on a given date. Other plans are often set as derived or linked rates, for example a fixed percentage below BAR for a non-refundable rate, so that when the revenue manager changes BAR, every linked plan moves with it.
Common plan types include:
- Flexible BAR: free cancellation up to a deadline, payment at the hotel.
- Non-refundable or advance purchase: lower price, paid upfront, no refund.
- Packages: room plus breakfast, half board, parking or experiences.
- Closed or negotiated rates: corporate, consortia, government, and net rates for wholesalers and tour operators.
Each plan also carries restrictions such as minimum length of stay or closed to arrival. A channel manager sends plans, prices and restrictions to each sales channel as part of ARI updates, so consistent mapping matters.
How Rate plan works
Rate plans are created in the hotel's systems and then mapped to every channel that sells them.
- Define the planThe hotel creates the plan in its PMS or central reservation system with a code, name, inclusions, cancellation and payment rules.
- Set the price logicPrices are entered per date and room type, or derived from BAR using a percentage or fixed amount.
- Add restrictionsMinimum stay, closed to arrival or departure, and booking window limits are attached where needed.
- Map to channelsIn the channel manager, each room and rate plan combination is linked to the matching product on each OTA, GDS or wholesaler connection.
- Sell and reviewBookings arrive tagged with the rate plan code, and revenue managers review which plans sell and adjust or retire weak ones.
Rate plan in practice
Illustrative example: a city hotel in Riyadh sells its Deluxe King room on one date under four rate plans:
| Rate plan | Price (SAR) | Main conditions |
|---|---|---|
| BAR Flex | 800 | Free cancellation until 48 hours before arrival, pay at hotel |
| Non-refundable | 720 | Linked at 10% below BAR, full prepayment |
| BAR + Breakfast | 880 | Same terms as BAR Flex with breakfast for two |
| Wholesale net | 600 | Closed rate for contracted wholesalers, not for public display |
When demand rises and the revenue manager lifts BAR to SAR 900, the non-refundable and breakfast plans update automatically, while the contracted wholesale rate stays fixed. All prices are invented for illustration.
Who uses it
Advantages and limitations
Advantages
- Lets a hotel reach price-sensitive and flexibility-seeking guests with the same room.
- Non-refundable and prepaid plans reduce cancellation risk and bring cash in earlier.
- Linked rates allow one price change to update many plans across all channels.
- Closed rate plans let hotels give negotiated prices to specific partners without changing public prices.
Limitations
- Too many plans confuse guests and make channel mapping harder to maintain.
- A plan mapped with the wrong cancellation rule or inclusions on one channel can lead to disputes and refunds.
- Closed wholesale or package rates can leak into public sale and undercut the hotel's own prices.
- Each additional plan adds testing and reconciliation work for the hotel and its distribution partners.
Frequently asked questions about Rate plan
What is the difference between a rate plan and a room type?
A room type describes the physical product, such as a deluxe king with a city view. A rate plan describes how that room is sold: the price, cancellation terms, payment timing and inclusions. One room type normally has several rate plans, and each combination appears as a separate option to the guest.
What is a derived rate plan?
A derived or linked rate plan takes its price from a parent rate, usually BAR, using a rule such as 10% lower or SAR 50 higher. When the parent rate changes, the derived plan updates automatically, which saves the hotel from editing every plan by hand across all channels.
How many rate plans should a hotel have?
There is no fixed number. Many independent hotels keep a handful of public plans per room type, such as flexible, non-refundable and a breakfast package, plus closed rates for corporate and trade partners. Adding plans beyond what guests can easily compare tends to create mapping errors without adding much revenue.
Why does the same hotel room show different prices on one website?
The prices usually belong to different rate plans for the same room. A lower price may be non-refundable, require full payment now or exclude breakfast, while a higher one may allow free cancellation. Reading the conditions attached to each option shows what the difference pays for.
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