Rack Rate

Hotel Rack Rate: What You Need to Know

Rack rate is the standard price for a hotel room before any discounts or special offers. It's the highest price a guest might pay without any negotiated rates.

In the hospitality industry, understanding the “rack rate” concept is crucial for travel managers, finance leaders, and accountants involved in corporate travel planning and budgeting. 

The rack rate is the standard, undiscounted price for a hotel room. It represents the highest possible rate a guest might pay without any promotional discounts or negotiated rates. 

This rate is typically published by the hotel and serves as the starting point for pricing strategies and negotiations.

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Understanding Rack Rates

Hotels use rack rates as a benchmark to establish their pricing structure. While most guests rarely pay the full rack rate, this price is publicly listed and forms the basis for discounts, promotions, and corporate rates. 

For businesses, understanding rack rates helps evaluate hotel costs and assess potential savings from corporate discounts.

Key Components:

How Rack Rates Affect Corporate Travel

Rack rates are essential for companies, especially those with frequent travel needs, in determining travel budgets and assessing cost-saving opportunities. 

Travel managers and corporate travel management companies often negotiate lower rates with hotels, which can lead to significant savings over time. 

These negotiated rates are typically based on the volume of business a company can bring to the hotel.

Access Thousands of Corporate Negotiated Rates

Negotiating and managing special rates with companies takes a lot of time and effort. And if companies only have special rates with specific hotels or hotel chains, traveling employees may be unable to book their preferred hotels.

Navan leverages its travel volume and relationships with suppliers to negotiate highly competitive prices — up to 15% off the best available rates at thousands of hotels globally.

Benefits of Understanding Rack Rates:

Rack Rate vs. Actual Rates Paid

In practice, the rack rate often differs significantly from what guests pay. Various factors influence the final price, including seasonal demand, occupancy levels, and negotiated corporate rates. 

Understanding this discrepancy is important for travel managers who aim to maximize value while minimizing costs.

Factors Influencing Room Rates:

Understanding rack rates is vital for companies aiming to optimize their travel expenses. Using the rack rate as a benchmark, travel managers can negotiate better deals and manage travel budgets effectively, ensuring that travel spending aligns with corporate financial goals.

Frequently Asked Questions


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A low-cost carrier is an passenger carrier that offers low-fare flights with reduced services.
An itemized receipt is a copy of a proof of purchase that contains detailed and line-item information about that transaction. Itemized receipts mirror typical receipts but will also have each individual service or good listed out and may include various sales taxes attached to some items or the total amount.
Business travel is any travel conducted by employees for business purposes, including but not limited to travel for events and conferences, company offsites, client meetings, trade fairs, and office visits.