Glossary / Pricing & strategy Beginner

Rack Rate

Definition

The published, non-discounted price of a room — the “sticker price” before any negotiated, promotional, or channel discount is applied. If a room’s rack rate is €200, that’s the reference price from which discounts are taken.

What it tells you

Rack rate is a reference ceiling, not a rate you expect to sell at. Its practical use today is as the anchor for discount structures and as the fallback rate when no other pricing rule applies.

How to track it

Set per room type in the PMS or rate structure. Under dynamic pricing the sold rate floats well below rack most of the time; rack mainly surfaces in contracts, walk-in pricing, and as a compliance ceiling.

Where it fits

A legacy of static pricing. Modern revenue management replaces the fixed rack rate with dynamic, demand-based rates — but rack still appears in contracts, as walk-in pricing, and as the top of the rate fence.

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