Hotel Revenue Glossary · Pricing

Floor Rate

A documented lower price boundary for a defined room, rate, date, or decision context. Set it from relevant avoidable cost, channel terms, tax, service capacity, contract, displacement, cash, brand, and governance—not a universal CPOR-plus-margin rule.

Why it matters: A governed floor can reduce unreviewed discounting, but a breached threshold does not automatically prove a loss because cost scope, incrementality, cash, contract, and strategic value vary. Record authority, rationale, outcome, and review triggers.

Worked example: Housekeeping, linen, amenities and utilities on one occupied room come to A$31, and an OTA booking carries 15% intermediary cost. A A$150 booking through that channel returns A$127.50 to the hotel and A$96.50 once you strip the A$31. On a night forecast at 61% the room would otherwise sit empty, so A$96.50 is genuine contribution, and the floor for that channel on that night is not your fully allocated cost per occupied room.

Common mistake: Running one floor rate across every channel and every night. A A$150 direct booking and a A$150 booking at 18% intermediary cost are A$27 apart before a single towel is washed, and a floor built for a sold-out Saturday will refuse contribution on a Tuesday heading for 55%. Floors are contextual or they are wrong.

All glossary terms Hurdle Rate CPOR (Cost Per Occupied Room) BAR (Best Available Rate)