Hotel Revenue Glossary · Pricing

Hurdle Rate

The minimum acceptable room rate for a given date, below which a booking should not be accepted. Hurdle rates are set by the revenue management system based on demand forecasts and are raised or lowered dynamically as demand builds or weakens.

Why it matters: Hurdle rates automate the rate-floor decision that protects against selling rooms too cheaply. On high-demand dates the hurdle rate rises, ensuring discounted segments are closed out. On low-demand dates it drops, allowing lower-rated bookings to fill otherwise-empty rooms.

Worked example: Thursday forecasts 88% on a 160-room house, so the hurdle sits at A$249 and a wholesale request at A$168 is closed out. Friday forecasts 54%, the hurdle drops to A$139, and the identical A$168 request clears. Sell Thursday at A$249 and Friday at A$168 and you bank A$417 across the two nights, against A$336 had the hurdle let wholesale through on both.

Common mistake: Setting hurdles once at the start of the booking window and never revisiting them. A hurdle is a forecast in disguise. When pace on that Thursday stalls fourteen days out, a A$249 floor that made sense at an 88% forecast is now refusing the only business still available.

All glossary terms Floor Rate BAR (Best Available Rate) RMS (Revenue Management System)