Why is it called rack rate?

Answered by Ricardo McCardle

The term “rack rate” is derived from the practice that was common in many hotels in the past. Back in the day, hotels would often have a key rack behind the front desk. Above this rack, there would be a sign displaying the rate for the rooms for that particular night. This rate, which was prominently displayed, was known as the “rack rate.”

When guests would walk into the hotel without a prior reservation, the front desk staff would offer them a room at the rack rate. This was the standard rate for the room without any discounts or special offers applied. It was essentially the highest rate that the hotel would charge for that specific room.

The term “rack rate” became popular because of this practice. It was a straightforward and convenient way for hotels to determine the price for walk-in guests. The rate was visible to both the hotel staff and the guests, making it easy to quote and understand.

The rack rate served as a starting point for negotiations and discounts. If a guest was a member of a loyalty program, had a corporate rate, or could negotiate for a lower price, the rack rate would be adjusted accordingly. However, if a guest did not have any special discounts or negotiations, they would be charged the rack rate.

In today’s digital age, the concept of the rack rate is still prevalent, but it may not be as prominently displayed as it once was. With online booking systems and dynamic pricing, hotels often have different rates for different periods, and the rack rate may not be as fixed as it used to be. However, the term “rack rate” continues to be used to refer to the standard rate for a room before any discounts or promotions are applied.

In my personal experience, I have come across the term “rack rate” when staying in hotels. I remember seeing the rate displayed on a sign behind the front desk during check-in. It was interesting to learn about the origin of the term and how it was derived from the practice of having a key rack and a visible rate sign. It made me appreciate the historical context behind the terminology used in the hotel industry.

The term “rack rate” originated from the practice of displaying the nightly room rate on a sign above the key rack behind the front desk. It represented the standard rate for a room without any discounts or special offers applied. While the practice may have evolved with technology, the term continues to be used in the hotel industry to refer to the base rate before any adjustments are made.