Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
277

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The number of rooms sold usually depends on the rate charged for rooms. However,
the Hubbart formula requires that the number of rooms sold be estimated before
knowing the rate at which rooms will sell.
Despite its limitations, the Hubbart formula remains an important way to view
the necessity of developing a room rate with these characteristics:
•
Provides an adequate return to the hotel’s owner
•
Covers the hotel’s fixed costs
•
Considers the hotel’s operating costs
•
Accounts for all the hotel’s non-room income (or loss)
•
Results in a definite and justifiable rate goal
Hoteliers have used other methods to determine room rate. One of the most
interesting applies the “$1 per $1,000 rule.” Critics and proponents frequently argue