Updating and Reducing the Negotiation Floor Rate

In some cases, the sales representative submits a quote evaluation to the revenue manager to request an override of the established negotiation floor rate. This situation typically occurs when the customer is bringing in a great deal of function space revenue and asks for a discount on sleeping rooms.

The sales representative first attempts to update the standard negotiation rate for the sleeping rooms. If the new rate is less than the established negotiation floor rate, the sales representative is prevented from completing the rate update. The revenue manager can, however, reduce the negotiation floor for the quote.

Revenue managers space and time decide that a profit and revenue advantage exists if the customer is given a rate that is lower than the established negotiation floor for a particular booking or event. By modifying the established negotiation floor rate, the revenue manager can set a new negotiation floor that is not constrained by the established price.

For example, a customer plans to spend a lot of money on catering products for his event and wants a discount on sleeping rooms. The benchmark rate for a sleeping room at a property is $100 and the negotiation floor is set at $100. The sales representative wants to offer the customer a sleeping room rate of $90 dollars as an incentive for future business. The sales representative makes the recommendation in the comments field of the quote, and sends the quote to the revenue manager for evaluation.

After reviewing the quote, if the revenue manager agrees that the $90 rate is justified, the revenue manager changes the negotiation floor rate to $90.