Hotel Pricing Floor
A Pricing Floor is the non-negotiable minimum room rate established by property management, below which inventory will not be sold regardless of low market demand.
Why It Matters for Independent Operators
Selling below your cost floor burns operating capital. The pricing floor must cover variable servicing costs (CPOR), distribution commissions, and brand value positioning.
Practical Scenario & Calculation
[Illustrative Scenario] If a boutique hotel has a CPOR of ₹800 and pays 18% OTA commission, selling a room at ₹900 nets ₹738, resulting in a ₹62 cash loss on every room night occupied.
How Operators Can Apply This Concept
Establish an explicit price floor for each room category calculated as CPOR + Channel Commission + Minimum Target Margin.
Common Misunderstanding to Avoid
Dropping rates below the floor to achieve "some revenue" is destructive if every occupied room incurs more variable cleaning and utility expenses than it generates.
Hotel Break-Even Occupancy Calculator
Calculate the stayed room nights and occupancy needed to cover entered fixed costs after channel fees, servicing cost and net ancillary contribution.