The rack rate is a hotel's full, published price for a room type, before any discount, package or negotiated price. It is the highest price a guest would normally be quoted for that room on a given night.
Where the name comes from
Before computers, front desks kept a card for each room in a rack behind the counter, with the room's standard price written on it. The price on the card was the rack rate.
How it relates to other rates
Most of a hotel's prices are worked out from a reference price. Today that reference is often the best available rate (BAR), which can change by date and season, while the rack rate is the fixed ceiling. Other rates are set as a discount from it:
| Rate | Rule | Price for a 200 rack rate |
|---|---|---|
| Rack rate | Full published price | 200 |
| Non-refundable | 10% off, no refund | 180 |
| Corporate | Agreed 15% off | 170 |
| Long stay, 7+ nights | 20% off | 160 |
Worked example
A double room has a rack rate of 200. In low season the hotel sells it at a seasonal price of 150, which is 25% below rack. A walk-in guest on a full night may pay the rack rate of 200.
Why it matters to a small property
Few guests pay the rack rate today, but it still anchors your prices. If every rate is set as a rule from one reference price, changing that price updates all of them, and nobody edits ten prices by hand. A rack rate that is far above anything guests pay can also look odd on an OTA that shows the "was" price, so keep it realistic.
In LobbyMind, a rate plan can be derived from a base plan, such as a non-refundable plan at 10% below the best available rate, and its prices follow when the base price changes. See rates and seasons.