Only a few years ago, the situation was relatively straightforward: companies sought to negotiate a fixed room rate for the entire year. Today, the landscape looks very different. Neither hotels nor corporate clients always benefit from rigid fixed-rate agreements. While hotels want to avoid selling rooms below their market value during periods of high demand, companies still require a predictable pricing structure for business travel. As a result, hybrid approaches that combine fixed and dynamic pricing models are becoming increasingly popular. 

 

How Does It Work?

The hotel and the corporate client initially agree on a fixed corporate rate. However, if the Best Available Rate (BAR) falls below the agreed corporate rate, the client automatically receives the lower rate or a pre-agreed discount based on it.

This creates benefits for both parties:

• Hotels retain pricing flexibility during periods of strong demand.
• Corporate clients benefit from more competitive rates when demand is lower.
• Business travellers are less likely to book outside the preferred corporate programme. 

 

What Does This Mean for Your Hotel?

When responding to corporate RFPs, hotels increasingly need to decide:

• Should we offer a fixed corporate rate?
• Should we provide a discount from the Best Available Rate?
• Or would a combination of both approaches deliver the best outcome? 

The right decision depends on several factors, including local market demand, hotel occupancy levels and anticipated corporate travel volume. If the proposed rate is too low, valuable revenue potential may be lost. If it is too high, the account may be awarded to a competitor. 

 

Our Recommendation

Remain flexible. Rather than automatically offering only fixed corporate rates or declining such requests altogether, it is often worthwhile to evaluate different pricing options. Robust market intelligence and realistic demand forecasts help identify the most effective strategy.

This is where an experienced centralised RFP and Revenue Management team can add significant value, providing market expertise, benchmarking insights and a professional assessment of each corporate opportunity. 

 

Prepare Early for the Next RFP Season

Corporate RFPs become more sophisticated every year. It is therefore essential to review your pricing strategy well in advance and prepare systematically for the next RFP cycle.

Our practical checklist helps you keep track of the most important considerations around rate strategy, corporate tenders and negotiated corporate agreements, enabling you to approach the next steps with confidence and clarity. You can download it here.