Derived Rates
Derived Rates functionality provides an easy way to create new rate structures (headers) that ‘derive’ their pricing from other rates (Base Rates). This provides several advantages.
- Significantly reduces the amount of time needed to configure and maintain the new rates.
- Enables you to easily create new rates whose pricing is based on an existing (Base) rate and to also apply a percentage discount (or increase).
- Discount percentages can be applied by season (date range), by day-of-week, by length-of-stay and / or by Room Type.
- Since the Derived Rates’ pricing is tied to the Base rate’s pricing, when the Base rate’s pricing changes, any and all Derived rates are automatically adjusted as well.
- Enables you to nest multiple Rates into a new Rate Code.
Configuration
SMS|Host refers to rates as Derived Rates and Base Rates.
- Derived Rate refers to a rate which derives some or all of its pricing (adjusted) from a Base Rate.
- Base Rate refers to a rate from which one or more other rates are derived.
Rate & Package Detail Setting: Subject to Derived Rate Rule
Each Rate & Package Detail item includes a setting that determines whether the particular detail Item is subject to Derived Rate discounting. Base Rate line items that are not "Subject to Derived Rate Rule"; will post in full (no price differential applied) for all rates that are derived from the Base Rate.
Rate & Package Detail for a Base Rate is shown below. You can tell it is a Base Rate by the button / indicator in the top right section of the screen. See Base Rate Indicator (Derived Rates) for more on the indicator.
Rate Detail Items will be typically be Subject to Derived Rate Rules (checkbox enabled). There can be situations where you need to disable the checkbox to indicate that the item is not subject to derived Rate Rules (for example, Resort Fees or per-occupant based pricing).
Guest Transaction Code Configuration
Guest Transaction Code configuration enables you to set the default for the Subject to Derived Rate setting.
Derived Rate Rules
Derived Rates are configured using one or more Derived Rate Rules. A Derived Rate Rule allows you to specify the price derivation rules (+/- pricing adjustment %, the applicable date range etc…).
From the Derived Rate; select the main Pricing Details tab and then select the Derived Rate Settings sub-tab.
To add a new Derived Rate Rule; select the “Add Rate Rule” command button.
The Derived Rate Rule Detail form is opened.
|
Field |
Description |
|---|---|
|
Base Rate Code |
Specifies the Base Rate’s Rate Code. |
|
Price Diff % |
Specifies the price differential percentage that will be applied for this Derived Rate. This can be a discount (negative %) or a price increase (positive %) or neutral (0.00% price difference) |
|
Begin Date |
Specifies the beginning occupancy date when the Derived Rule applies. |
|
End Date |
Specifies the ending occupancy date when the Derived Rule applies. |
When Rate Versioning is enabled, Derived Rate Rules are versioned. This enables you to change the details of the rules without affecting the value of reservations on-the-books.
See Advanced Configuration of Derived Rate Rules for more on using Derived Rate Rules with Day-of-Week, Length of Stay and Rates by Room Types.
Rate Values
In the example above, the “AAA” rate is derived from the “RACKRR-Rack Rate”
Base Rate’s Value (RACKRR)
Derived Rate’s Value (AAA)
The value of the “AAA” Rate is 234.00 which is 10% less than the Base Rate (260.00)
Applying Seasonal Discounting
As mentioned above; by using the Derived Rate Rules’ Beginning and Ending Dates; you can define when the Rule applies.
In the following example, the “AAA” rate will be 10% off RACKRR between 01/01/2016 and 03/31/2016. Between 04/01/2016 and 12/31/2070; the discount will be 15% off RACKRR
Caution: When using Seasonal Discounting; it is critical to ensure that the correct dates are covered (usually without date overlap or gaps). All Rules that are in effect for a given date will apply. So, if the Rules’ dates overlap, then there may be an unintended doubling effect (where the value is more than intended). On the other hand; if there are gaps, then there may be some nights that are not covered by a Derived Rate Rule which could result in inadvertent comping.
Tools for Managing Derived Rates
Several command buttons are available from the Rate Code screen to give you access to tools for managing derived rates.
|
Button |
Description |
|---|---|
|
Derived Version |
Displays a list of the various versions of the Derived Rate Rules |
|
Edit Rate Rule |
Facilitates inline (in the grid) editing of the Derived Rate Rule |
|
Rate Rule Zoom |
Displays the Derived Rate Rule detail for the selected row |
|
Base Rate Value |
Displays the unadjusted value for the selected Derived Rate Rule’s Base Rate . This can be very convenient for checking the Base Rate Values while configuring a Derived Rate |
Base Rate Value
The Base Rate Value command allows you to view the Base Rates’ values directly from the Derived Rates screen (without needing to navigate to the Base Rate itself). This provides a convenient way of verifying the Base Rate value.
Rate/Package Estimator (value) screen. Note that this is being displayed from the derived rate.
Advanced Settings for Derived Rates
Rounding Settings
In certain cases, depending of the Base Rate value and the applied discount percentage, the Derived Rate Price may be an odd amount. For example, 12% off of the RACKRR rate of 260.00 would result in a derived rate price of 228.80
In such cases, you can use the Rounding Settings to ‘round’ out the price (to 229.00 for example)
|
Option |
Description |
|---|---|
|
Final Price Rounding Method |
No Rounding – With this setting no rounding will be applied Round Up – With this setting the price will always be rounded up to the ‘end with’ setting.
Round Down - With this setting the price will always be rounded down to the ‘end with’ setting.
Round to Nearest - With this setting the price will be rounded normally to the ‘end with’ setting.
|
|
Round total Derived Price to end with |
This setting allows you to set the desired ending digits for the Derived Rate. The “#” character indicates the positions that should not be affected. Some examples: #####.00 would round the amount to end in .00 (for example, rounded down to 228.00 or up to 229.00) ####0.00 would round the amount to end in 0.00 (for example, rounded down to 220.00 or up to 230.00) #####.99 would round the amount to end in .99 (for example, rounded down to 228.99 or up to 229.99) ####9.99 would round the amount to end in 9.99 (for example, rounded down to 229.99 or up to 239.99) |
Note: Rounding only applies to the Derived Rates elements. If the rate also uses standard Rate Detail line items, the rounding is only applied to the derived amount.
Caution: Changes to Derived Rates’ Rounding Settings are not versioned. Making changes to these settings will affect the values of on-the-books reservations.
Reservation Discount Policy Settings
The Reservation Discount Policy settings allow you to control whether additional discounting will be applied to the Derived Rate if the Reservation’s Discount% field is used. For example, since the “AAA” Rate is already discounted; you may not want the Reservation’s Discount % field to apply an additional discount (double discounting)
|
Setting |
Description |
|---|---|
|
Not Discountable |
With this setting, the Reservation’s Discount % will never be applied to the Rate (no additional discounting allowed regardless of the Base Rate Details’ Discountable settings) |
|
Observe Base Rate’s Discount Settings |
With this setting, the Reservation’s Discount % will be applied to the Derived Rate. The configuration of the Subject to Reservation Discounts setting on the Base Rate’s elements will determine which items are discountable. |
Caution: Changes to Derived Rates’ Reservation Discount settings are not versioned. Making changes to these settings will affect the values of on-the-books reservations.
Reservation Discounting example
In the following example, the Rate Code “AAA” is derived from the “RACKRR” Base Rate
The Rate Detail on the Base Rate is configured as Subject to Reservation Discounts
The value of the Base Rate is 260.00 (Room Charges)
The Value of the Derived Rate without applying any Reservation Discounts is 234.00 (RACKRR – 10%):
In this example, a reservation is using the “AAA” rate and that reservation also has a Discount % (in Special Billing).
If the “AAA” Rate is configured as “Not Discountable”
Then the Reservation Discount will not apply to this Rate; the value will not be affected:
If the “AAA” Rate is configured to “Observe Base Rates’ Discount Settings”
and because, in this example, the Base Rate’s detail is configured to allow discounting; an additional 10% discount will be applied to the reservation value.
If the Base Rate’s detail were configured with “Subject to Reservation Discounts” as unchecked; then additional discounting would never apply for the Derived Rates regardless of the Discount Policy setting.
Transaction Code Overrides
Some properties use different Transaction Codes for transient, group and corporate revenue tracking. For example, they may use the code “ROOM” for transient lodging and “ROOMGR” for group lodging revenue. These properties can use the Transaction Code Overrides feature to substitute Transaction Codes on some of their Derived Rates.
To access this feature, select the Transaction Code Overrides command button from the Derived Rate Settings subtab.
Use the Add command to add Transaction Code overrides.
A list of the Transaction Codes that are used on the Base Rates will be displayed. Select the code that is to be overridden and then select the substitute Transaction Code.
The following image of the Value Zoom-Zoom screen shows how the override takes place (i.e. ROOMGR is used instead of ROOM which is used on the Base Rate).
The substituted transaction code will be used for all routing evaluations.
Derived Rates and Package Breakage
When a rate is derived from a base rate that includes package breakage items, the Derived Rate will also inherit the base rates’ package entitlement (i.e. Usage Limits). Usage Limits are not discounted by Derived Rates. Package breakage gain/loss will be computed as the difference between the Derived Rates’ package allocation amount (which may be discounted according to how the Derived Rate Rule was configured) and the actual consumption. Breakage always posts with the Breakage Code that is configured on the Base Rate.
Example
For example, if the Base Rate has a FOOD item with a posting amount of 100.00 and allows consumption up to 120.00; if the guest uses 110.00; the breakage would be -10.00 (100.00 – 110.00). If another rate is derived from this Base Rate, and applied a 25% discount; then the FOOD item would post as 75.00. If the guest using the Derived Rate consumes 110.00; the breakage would be -35.00 (75.00 – 110.00).
Derived Rates with Channel Manager
Derived Rates may be used in the Channel Manager. The Channel Manager does not currently support LOS-based rates. This also applies to Derived Rates. This means that in order to be used in the Channel Manager, all rate elements on both the Base Rate and the Derived Rate must be Arrival – Last (no LOS variations). Derived Rates pricing by LOS is not currently compatible with Channel Manager rate distribution.
Derived Rates and Traditional Rate Hybrids
Traditional Rate/Package Detail may also be added to Derived Rates. This can be very useful for adding items to the Derived Rate that are unique to the Derived Rate and not contained in the Base Rates; for example, a group baggage handling fee. This is also useful for adding flat amount discounts; for example, 25.00 off.
Here’s an example of a Flat Amount Discount being applied on top of a derived rate:
The above example uses a flat amount in the Posting Amount field. You may also use Price Plans, Tiers, Rate Calendars and any of the other posting features and controls as necessary.
Value-Zoom-Zoom screen
