What is derived pricing
A room rate (the combination of a room type with a rate plan) can have manual prices (set directly in inventory) or they can be derived from another room rate.
Here is an example of how a setup of rooms and rates with derivation might look like:
You have a room type called Single Room
You have two rate plans, one called Room Only and one called Bed & Breakfast
You have both rate plans connected to the room type, so you have two room rates: "Single Room / Room Only" and "Single Room / Bed & Breakfast"
You have set "Single Room / Room Only" to be manual, so for every day you can set whichever price you prefer on every day of the calendar
You have set "Single Room / Bed & Breakfast" to be derived from "Single Room / Room Only" so that it's always $20 more than "Single Room / Room Only"
On a certain day, you have set the price for "Single Room / Room Only" to be $100, which means that the price of "Single Room / Bed & Breakfast" will automatically be $120
On a different day, you have set the price for "Single Room / Room Only" to be $150, which means that the price of "Single Room / Bed & Breakfast" will automatically be $170
This way you don't have to manually update the price for both room rates and you can simply update the price of one of them and the other will be automatically showing the right price at all times.
Derivation can be set on different "levels". The rate plans normally control the room rates.
On the rate plan level: A rate plan can be derived from another rate plan. All the room rates in the rate plan are automatically derived from all the room rates in the other rate plan.
On the room rate level: Each room rate can be set to be derived to a different room rate from the one indicated by the rate plan, overriding the rate plan's pricing.
Rate plans and room rates can be set in a number of ways, please see the below step by step guide on how to use derived or manual pricing for rate plans or room rates.
How to use derived or manual pricing for Rate Plans or Room Rates
When you create a rate plan, you are asked whether you want to "Manually input daily rates" or "Derive daily rates".
The below sections explain the next step depending on which option you chose:
Rate Plan set to "Manually input daily rates"
Rate Plan set to "Derive daily rates"
Rate Plan set to "Manually input daily rates"
If you chose "Manually input daily rates" for your rate plan, then when you assign a room type to the rate plan (creating a room rate), you will be asked again whether you want to "Manually input daily rates" or "Derive daily rates from another Room Rate".
The below sections explain the next step depending on which option you chose:
Room Rate set to "Manually input daily rates"
Room Rate set to "Derive daily rates from another Room Rate"
Room Rate set to "Manually input daily rates"
If you set your room rate to "Manually input daily rates", you will have to choose the rates manually for each day in the inventory. Normally this is done using the bulk update function. Alternatively, if you are connected to a PMS/RMS and the rate is mapped to a PMS/RMS, your PMS/RMS can control the pricing directly.
Room Rate set to "Derive daily rates from another Room Rate"
If you set your room rate to "Derive daily rates from another Room Rate", you will have to choose another room rate to derive the pricing from. Daily rates will be taken from the other room rate and you can choose whether you want to keep the same as the other room rate or adjust them in a certain way, like increasing or decreasing by a percentage or set amount.
Rate Plan set to "Derive daily rates"
If you choose to set your rate plan to "Derive daily rates" you will have to choose another rate plan to derive the pricing from.
Daily rates will be taken from the other rate plan and you can choose whether you want to keep the same as the other room rate or adjust them in a certain way, like increasing or decreasing by a percentage or set amount.
When you assign a room type to the rate plan (creating a room rate), if you chose "Derive daily rates" for your rate plan, then you will be asked whether you want to keep the rate plan's derived pricing or "Override Rate Plan pricing".
The below sections explain the next step depending on which option you chose:
Room Rate set to "Override Rate Plan pricing"
Room Rate set to keep the rate plan pricing
Room Rate set to "Override Rate Plan pricing"
If you set your room rate to "Override Rate Plan pricing", then you can choose whether you want to "Manually input daily rates" or "Derive daily rates from another Room Rate".
Essentially, when you "Override Rate Plan pricing" for a specific room rate, it will behave as if the rate plan was set to "Manually input daily rates".
Room Rate set to keep the rate plan pricing
If you set your room rate to keep the rate plan pricing, it will use the rate plan's derived pricing that you have previously set up.
The way this works is that the system will automatically pick the room rate with the same room type as the one you are creating within the rate plan you chose to derive from, and the prices will be derived from that room rate.
For example:
You have the two room types "Double Room" and "Single Room"
You have the rate plan "Standard" which has manual prices
"Double Room" was assigned to "Standard" which created the room rate "Double Room - Standard"
"Single Room" was also assigned to "Standard" which created the room rate "Single Room - Standard"
You create the new rate plan "Long Stay Offer" which you set to be derived from the rate plan "Standard", with a 10% price reduction
You assign the room type "Double Room" to "Long Stay Offer" and choose to keep the rate plan pricing in place. This creates room rate "Double Room - Long Stay Offer"
"Double Room - Long Stay Offer" will have the prices from "Double Room - Standard" (picked by the system because it's the same room type) with a 10% price reduction
Effects of assigning the same room type to a rate plan multiple times
The system allows you to assign the same room type to one rate plan multiple times as long as you add a description to the new room rate to differentiate it from the other room rate with the same room type and rate plan combination.
This is not advised. Part of the reason for this is that the rate plan's derived pricing won't work if you are assigning the same room type to one rate plan multiple times. If the rate plan you are deriving prices from has the same room type multiple times, the system has no way to know which room rate to derive prices from.
To clarify how rate plan derivation works, here is an example of how not to do rate plan derivation:
You have the room types "Double Room" and "Single Room"
You have the rate plan "Standard" which has manual prices
You assign the room type "Double Room" to "Standard" which creates the room rate "Double Room - Standard"
You assign the room type "Double Room" to "Standard" again, which would create the room rate "Double Room - Standard" but it already exists, so the system requires you to specify a description
You set the description to "Special Rate" and this creates the room rate "Double Room - Standard (Special Rate)". Note: it would be better to instead create a separate new rate plan for the Special Rate
You create the new rate plan "Long Stay Offer" which you set to be derived from the rate plan "Standard", with a 10% price reduction
You assign the room type "Double Room" to "Long Stay Offer" and choose to keep the rate plan pricing in place.
The system gives you an error message: "Cannot use rate plan derivation settings when a room type has been assigned to a rate plan more than once". This is because there are two room rates in Standard that have the room type "Double Room" so the system has no way to know which one to pick automatically.
How to change the derivation of rate plans or room types that were already created
The step by step process described in the above section "How to use derived or manual pricing for Rate Plans or Room Rates" explains how to set up the pricing settings when creating a new rate plan or room rate and it has more in-depth information on how the derivation works, but it does not explain how to change the pricing for an existing rate plan or room rate.
To change the rate setup of an existing rate plan:
Open your Channel Manager and click on the Rooms & Rates tab
Click on the Rate Plans tab
Click on the rate plan you want to change
Click Configure from the drop down menu
In the window that opens up, you can change the Rate Setup options and Save
To change the rate configuration of an existing room rate:
Open your Channel Manager and click on the Rooms & Rates tab
Click on the Rate Plans tab
Click on the room rate you want to change
Click Configure from the drop down menu
Click on the Rate Config tab in the window that opens up
You can change the derivation settings from this page and Save
How does derivation work for channel rates
When you map a room rate to a channel, this creates a channel rate. Channel rates are contained within the room rates, similarly to how the room rates are contained within the rate plans.
When a new channel rate is created, it is automatically derived from the room rate to have the same pricing, but it can also be changed to have manual pricing instead.
To change the rate configuration of an existing channel rate:
Open your Channel Manager and click on the Channels tab
Click on the name of the channel for which you want to change the channel rates' derivations.
Click on the channel rate that you want to change.
Click Configure from the drop down menu. This will open the channel rate in the Rate Config tab
You can change the derivation settings from this page and Save
Alternatively you can also do the same action explained above from a different place in the interface instead:
Open your Channel Manager and click on the Rooms & Rates tab
Click on the Rate Plans tab
Click on channels, beside the room rate that contains the channel rate that you want to change. This will open the channel rates for this room rate.
Click on the channel rate that you want to change.
Click Configure from the drop down menu. This will open the channel rate in the Rate Config tab
You can change the derivation settings from this page and Save
The only available options are to derive from the room rate that contains the channel rate or to manually input daily rates. You can change the derivation to be adjusted by a percentage or amount, instead of keeping the rates the same (which is the default option).
How to override the derived pricing for a specific time period
If you need the derivation of a room rate or a channel rate to be different on a certain span of time, you can create a Derived Rate Override.
At the bottom of the Rate Config tab for any specific room rate or channel rate you can find a section called Rate Overrides.
After you reach the Rate Config tab for your room rate or channel rate:
Click Add Override in the bottom right of the window
Complete the following fields:
From Date and To Date - Set the date range for the override
Override By - Select a type of adjustment for the override. Amount, Percent or a combination of both
Select Increase or Decrease then set an adjustment value
Click Save
Your room rates will be adjusted with the override value for the set time period. The settings are also reflected in the inventory grid.