In the hotel industry, the rack rate is the maximum amount the hotel usually charges for a room, when demand for rooms in the area is highest. The rack rate is akin to the asking price of a house or car, and hotels expect that guests will request and use discounts.

What is a hotel rack rate?

The Rack Rate, is the standard price that the hotel assigns to a room type for the year or season. All other rates that are offered are based on a calculation from the Rack rate. For example, a group of 20 rooms might be offered at a Group rate of 20% off the Rack rate.

Why is it called rack rate?

Years ago, hotels maintained their room control systems using “stock tickets.” Each ticket represented a room, with its number, type of bedding and the “regular” rate. Tickets were placed in a slotted rack along with a slip of paper that showed the name of the guest and the rate that guest was paying.