Market rate means the current price of a product or service in the market. In hospitality it means the average price of similar accommodations or services in a specific area or among competitors. This changes based on seasonality, local events and overall demand.
Knowing the market rate is crucial for hospitality businesses to stay competitive and make more money. By knowing the going rate for what you offer, you can price your rooms, meals or services correctly. This will attract customers and not leave money on the table. It also allows you to adjust your pricing during peak and off peak seasons to maintain a steady flow of business all year round.
Let’s say you own a trendy café in the city centre. You notice other cafés in your area charge £3.50 for a latte. This is the market rate. You decide to price your latte at £3.75, slightly above the market rate, because you use premium, locally sourced beans and have skilled baristas. By knowing the market rate you’ve positioned your café as a slightly higher end option but still competitive. During slow periods you might offer a happy hour where your lattes match the market rate to attract more customers. This strategy based on your knowledge of market rates helps you balance profit with customer attraction and retention.'