ebell

Okay, here's a question I bet someone here knows the answer to.

Whenever I'm in a hotel, I notice there's an information sheet on the back of the main door. This lists bits of information about the hotel room. Included among this information is something like a 'maximum allowable charge per day'. Usually this is something hideously high, above even the rack rate for a room. For example, when I stayed at a Holiday Inn at the beach recently, the room charge was $149/night, with the 'maximum allowable charge per day' set to something like $399 or $499.

I'm assuming this maximum allowable charge is put in place to keep hotels from gouging customers when something special comes to town. For example, Salt Lake City hotels can't start deciding to charge $1000/night for rooms that are normally $50/night. Seems reasonable to me.

so who sets the policy on what the maximum allowable rate is? The hotel itself, or is it subject to some other group? And who's the one governing all this in general? Are they really required to post a maximum rate, or is this just something everyone does? Is there some other reason behind such a figure that I haven't thought of?

Just curious.

pynchonesque

The story I heard -- but never verified -- is that they are required by law to post maximum rates, and the purpose of the circa-1970 law was to prevent hotels from quoting higher rates to "undesireable" (read: African-American) customers. And hotels got around it by setting their official maximum rates so ridiculously high that they could continue doing whatever they were doing.

Again, I haven't verified this, but it sounds plausible.

usoftie

I believe the definition of "rack rate" is the maximum allowable amount they can charge for the room, which is what most states require to be on the on the back of the hotel room door.

I always assumed it was so that they couldn't charge extra (gouge) for special events, but it seems reasonable that one motivation could be so that the proprietor couldn't keep away or take advantage of certain people by charging an outrageous amount.

And I believe that the hotel gets to set it to whatever they want.

[This message has been edited by usoftie (edited 06-03-2001).]

SEA-Flyer

I'm not sure how it works in the US, but in Italy I have heard that the maximum rate is set by the government based on how many stars the hotel is rated.

Hotels try to skirt this rate restriction by including breakfast. Not sure how true this all is, but it is what I've heard.

Sheryl

Rack rate is generally the standard (non-discounted) rate of the hotel on any given day. It is not the maximum allowed to be charged.

For example, the rack rate of a hotel room in Las Vegas is significantly higher on New Year's Eve and other special events than it is, say, in the summertime.

The same thing basically applies anywhere during special events.

[This message has been edited by Sheryl (edited 06-03-2001).]

AZ_MISMAN

One of these notices I read recently stated that it excludes special events. I don't remember where.

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Bob

[This message has been edited by AZ_MISMAN (edited 06-04-2001).]