Net rate & Rack Rate

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Effective Tours supports two rate models. You can choose them while editing the hotel
Nett Rate - Sometimes called tourist agencies rates, or in a simple words the lowest rate you can give to the OTA. Later on, while sending the actual rates to the channels, or to your direct agentc, you can use the [markups] to make the rate higher. This model is mostly in use by the hotels and tourist agencies.

Rack rate - The final, end user price. Means the price you are selling the rooms to the guests including all charges and interest. This kind of rates are most popular for the small guesthouses, when you don't want to separate agents and channels by the groups. In case of the Rack Rate, markups will work in reverse way, means with markups you can provide the deduction from the Rack Rate price. So let's say the Rack Rate is 100$, and the Markup is 10%, then by applying this markup to the prices for the hotel with Rack Rate , it will reduce the price to 90$. This feature is useful if you want to send Tourist Agents rates for some of your agents.

RackAndNetRates.jpg

For Example: You are selling rooms on your own web-site for 100$. So it's the Rack Rate! Then you decide to start selling your rooms on Agoda. It means you will send them same rate of 100$, your rack rate, and from each sale, they will deduct their interest, let's say 17%.
But in some cases, for the hotel is much convenient not to show the final selling rate (Rack Rate) and instead of they using the Net Rate, so in the scenario above, you have to provide the Net Rate of for example 80$. And when you will send your rates to same Agoda channel, you have to add the [markups] 17% on top of it., and the price for agoda became 80$+17% = 93.60$. Same way for another agency, you can add 20% or 30%.

So as you can see, with Rack rate - it's very easy to manage the prices, but you can't manipulate your rates with the agents. And with Net rates - you can control the interest and the rate for each distribution channels which is some cases are very valuable.