Originally Posted by peter42
Your assumptions are not correct. The hotel are reimbursed for award stays and FFN by GP (I have seen the amounts a couple of times on the check in forms). This amount is probably around, what they need to cover the vairiable cost of you staying there.
Second wrong assumption is the margin of services, like telephone, room service or minibar charges in the hotel, this is more like 70-80%.
As to make my suggestion workable, it should be fixed around the normal hotel level, and there the reimbursement rate or even more a PLN rate plus 50-100$ will bring you easily in the range of normal rates, if not even higher.
Allow me to clarify and fine tune my assumptions with an example:
Any additional room revenue received above a PL or "free night compensated" rate is 100% margin.
A Hyatt.com rate at $175 provides an additional $100 per night over a typical PL rate of $75. To make up for this $100 in room revenue, even at a 75% margin (which I think is high), you would have to spend $133
per night on incidentals.
On a "GP free night" the hotel is compensated about $30, right? This produces a $145 "shortfall" in revenue, requiring $193 per night to be spent on incidentals to make up the difference.