The real challenge for the hotel is to set the room rates according to the interests of the hotel and the guests. While as a hotelier you want to charge the highest rate for your property to maximize your RevPAR (Revenue per Available Room), as a guest you want to make every penny spent count. In addition, the nearby hotel is always under pressure from the competition, ready to receive future guests.
This requires a pricing mechanism that ensures guest satisfaction without compromising the hotel owner’s income and position in the competitive market. With multiple pricing schemes, the hospitality industry is increasingly struggling to increase revenue. Today, in this article, we will discuss the BAR (Best Available Rate) rate.
What is BAR?
BAR is an acronym for Best Available Rate, also known as BRG (Best Rate Guaranteed). According to the terminology, this is the lowest price per day at which guests can book a room.
It is a pricing mechanism used by the hospitality industry to determine the best room rates to match demand. This system was first used by the airline industry to determine the price of a ticket by forecasting bookings in a given season.
According to Sheryl E. Kimes, the BAR rate is “an attempt to reduce confusion and ensure that the guest is quoted the lowest price for each night of a multi-night stay.” This is the lowest price a guest will pay for a given day of stay, excluding prepayment or cancellation fees or rescheduling fees, other than the normal cancellation fee set by the hotel itself.
What is the purpose of BAR?
The BAR pricing strategy is the hospitality industry’s attempt to eliminate the confusion among guests caused by a complex pricing strategy that includes multiple conditions.
How does BAR work?
In simple words, the BAR rate is a flexible rate that changes every day depending on the demand. The BAR price can be found in two ways: either by setting a fixed price or dynamically, following the concept of a price ceiling and price floor. The price ceiling is the highest room rate, while the floor price is the lowest possible price for the same room.
This is the basis for room pricing and includes only the room rate. This does not include corporate discounts, breakfast charges or anything. This is the exclusive best price guaranteed for a specific room type on a specific date. The best practice to set a BAR is a percentage or fixed markup above/below the floor price and ceiling price.
The price of BAR depends on the following 3 factors:
- Employment
- Season or day of the week
- Events
For example, your hotel has an event for company XYZ on Friday night that runs well behind schedule, and everyone at the event is booking a room at the same hotel. This will increase hotel occupancy. Depending on the demand, the BAR rate will increase at the same time the next day.
Advantages of BAR
- Benefits of BAR to consumers
Feeling like you’re paying more for a room than the actual price is always frustrating and affects your travel experience. BAR’s transparent pricing gives guests clarity on how much and what they are paying for.
The best part about BAR is that this rate is accessible to everyone, and you don’t need to be a member of a high-end hotel/hotel group to take advantage of this room rate.
By being transparent and setting the best possible price, or rather the lowest price possible, for their rooms, hotels earn profits through goodwill and customer loyalty. In addition, income also.
Is BAR rate breakeven rate parity?
Exchange rate parity across all sales channels is a dominant factor in continuing to sell your property across multiple channels such as hotel websites, OTAs, metasearch and GDS. Since OTAs are an indispensable sales platform, you cannot sell rooms at a lower price on your website or reservation system and afford to lose guests here. Therefore, it is advisable not to sell room-only rates to OTAs and maintain parity.
You can book only the room rates on the website and booking system, giving the traveler the option to book a room at a lower price or better say the best possible price and maintain transparency and equality.
About RateTiger
RateTiger by eRevMax is the market leader in hotel technology and provides channel manager, booking engine, rate buyer, website design, digital marketing services, as well as GDS and metasearch distribution solutions to large hotel chains and resorts, mid-sized groups and independent companies. boutique real estate worldwide. RateTiger joins more than 450 distribution and technology partners. It has deep two-way integration with distribution channels including Booking.com, Expedia, Agoda, Airbnb, Google, HRS, Hotelbeds and others. It connects to leading PMS, RMS, CRS, Booking Engine and other hotel technology systems for seamless online distribution. Data security and privacy are at the core of RateTiger, with ISO and PCI certifications and GDPR compliance. RateTiger provides 24×7 multi-lingual support to hotels worldwide to help generate revenue.
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