Key points at a glance
- Start with a price floor: what does an occupied night cost you, and what share of the fixed costs does each room have to carry?
- Divide the year into three to five seasons and, where it makes sense, distinguish weekdays and weekends instead of pricing every night on its own.
- Steer with occupancy, ADR and RevPAR: full rooms alone are no success if the average rate is too low.
- Minimum stays, packages and dynamic pricing help fill gaps and make the most of peaks, as long as you use them in moderation.
- Cancellation policies belong in the booking confirmation. Ortstaxe, Kurtaxe or overnight tax are regulated locally: show clearly whether they are included in the price.
This post is general information and does not replace legal or tax advice. Rules change and some differ between federal states: check the details with your chamber of commerce (WKO) or IHK, the competent authority or your tax adviser.
The price floor: what does a night cost?
Before you think about seasons and discounts, you need a number you will not go below: the price floor per room and night. It has two parts. Variable costs only arise when a room is occupied: cleaning, laundry, energy, toiletries, breakfast goods and the commission when a booking came through a booking platform. Fixed costs keep running regardless: rent or loan, staff, insurance, maintenance, software, marketing and your own salary.
Variable costs per occupied night
Add up cleaning, laundry, utilities, amenities and, if included, breakfast per room and night.
Fixed costs per year
List all running costs of the house, including your own pay and reserves for renovations.
Estimate realistic occupancy
How many room nights do you really sell per year? Better to calculate cautiously than with the occupancy you wish for.
Calculate the floor
Divide fixed costs by room nights sold and add the variable costs. On top come VAT and, for platform bookings, the commission. How the Booking.com commission including Genius and Payments adds up is worth a closer look.
This floor is not a selling price but the line below which every night costs you money. In low season a rate just above it can make sense if it fills rooms that would otherwise stay empty. In high season your rate should be well above it, because those weeks help pay for the quiet half of the year. If you also run a restaurant or café in the house, the break-even calculator for restaurants and cafés answers the same question for that part: how many guests per day cover the fixed costs. If you are still planning your house, the legal basics are in the guides Opening a guesthouse in Austria and Opening a guesthouse in Germany.
Understanding occupancy, ADR and RevPAR
Three metrics are enough to steer the pricing of a small house. Any booking or property management system shows them, or you can calculate them in a simple spreadsheet. Work them out monthly and compare them with the same month last year, not with the previous month, otherwise you are comparing high season with low season.
| Metric | Formula | Example |
|---|---|---|
| Occupancy (occupancy rate) | Room nights sold ÷ available room nights | 210 ÷ 300 = 70 % |
| ADR (average daily rate) | Room revenue ÷ room nights sold | €18,900 ÷ 210 = €90 |
| RevPAR (revenue per available room) | Room revenue ÷ available room nights, or ADR × occupancy | €18,900 ÷ 300 = €63 |
RevPAR combines price and occupancy, which makes it the most important of the three. An example: if you lower the rate from €90 to €75 and occupancy rises from 70 % to 80 % as a result, RevPAR falls from €63 to €60. The house is fuller but earns less and has more cleaning and laundry to do. Conversely, a higher rate with slightly lower occupancy can bring more revenue. Count only the room share in room revenue, without breakfast, drinks and Ortstaxe, so the figures stay comparable.
Dividing the year into seasons and weekdays
Most guesthouses and small hotels do well with a season calendar: three to five price levels that you set once a year and adjust when needed. Base it on your booking data from previous years, school holidays in your main markets, public holidays, trade fairs, concerts and sports events in the region. A city hotel has different peaks than a house by a lake or in a ski area.
| Season | Typical periods | Price level |
|---|---|---|
| Low season | Shoulder periods, quiet weeks without holidays or events | Base rate, just above the floor |
| Mid season | Spring, autumn, long weekends | roughly base rate plus 15 to 25 % |
| High season | Summer or winter holidays of your main markets | roughly base rate plus 30 to 50 % |
| Peak dates | New Year's Eve, Easter, major fairs and events | highest level, often with a minimum stay |
The percentages are only a starting point, not an industry rule. Check when your house was booked out early in past years: that is the clearest sign that the rate was too low. A weekday rate is often worthwhile too. City and business hotels are in demand during the week, holiday and day-trip regions at weekends. A surcharge for Friday and Saturday or a lower rate from Sunday to Thursday reflects that.
Minimum stays and arrival days
Every arrival means work: check-in, cleaning, changing linen. A minimum stay makes sure that single nights do not break up the week at busy times. At the same time it can cost bookings if it is too strict. So use it deliberately and relax it as soon as gaps appear.
- Peak dates: a minimum of two or three nights over New Year's Eve, Easter or major events.
- Holiday regions in high season: fixed arrival days or a minimum stay of several nights, if that is common in your region.
- Relax at short notice: if rooms are still free two weeks before the date, remove the minimum stay and sell single nights too.
- Gap fillers: a single free night between two bookings can be released on purpose, even if a minimum stay applies otherwise.
- Surcharge instead of a ban: instead of excluding short stays, you can charge a supplement for a single night.
Dynamic pricing in moderation
Large hotels change their rates daily, often with revenue management software. For a guesthouse with ten rooms that is usually too much effort. A simple middle way: keep your season calendar as the basis and adjust rates at fixed intervals according to your booking pace. If a period is clearly ahead of last year, raise the rate for the remaining rooms. If it lags behind, check rate, minimum stay and photos before you give discounts.
Looking at comparable houses nearby helps you place yourself, but it should not be your only yardstick. Your location, facilities, reviews and breakfast justify rates of your own. If you simply follow the cheapest competitor, you quickly end up in a price war that nobody wins.
How to get it right
- Define fixed price levels and move up one level when demand is high
- Compare booking pace with last year regularly
- Offer regular guests and direct bookers an advantage
- Update rate changes on all channels at the same time
Better not
- Give last-minute discounts so often that guests deliberately wait
- Blindly match the cheapest competitor
- Raise the price of confirmed bookings afterwards
- Go below the price floor just to be full
Packages and extras
Packages sell an experience rather than just a room and make rates harder to compare. Typical examples are a hiking weekend with packed lunch and map, a food package with dinner and wine tasting, a wellness package or a package with tickets for a regional event. Calculate each package from the room rate of the season plus the cost of the services and a margin for the effort. Decide deliberately whether breakfast is included or booked separately: the guide Breakfast in guesthouses and hotels shows how to cost it per guest.
A good package has
- a clear name and a target group, such as hikers, couples or families
- a fixed period in which it can be booked
- a list of services that shows every item
- a total price including VAT and a note on Ortstaxe or Kurtaxe
- its own cancellation terms if partner services such as tickets are non-refundable
Writing fair and clear cancellation policies
Many guests assume they can withdraw from an online booking within 14 days. For accommodation on specific dates, however, the statutory right of withdrawal for distance contracts does not apply, in Germany for example under § 312g Abs. 2 Nr. 9 BGB. That makes it all the more important to set your own cancellation policy and communicate it clearly before booking. In Austria the WKO (Austrian Economic Chamber) provides a model with the Allgemeine Geschäftsbedingungen für die Hotellerie (AGBH), the general terms for the hotel industry; according to the WKO it is currently under legal revision, so check the latest status. In Germany the IHK (chamber of commerce) and DEHOGA (hotel and restaurant association) advise on model accommodation contracts.
| Rate | Cancellation | For whom |
|---|---|---|
| Flexible | free until a few days before arrival, then a graduated fee | Guests who are not yet sure |
| Standard | free until a few weeks before arrival, then graduated | High season and peak dates |
| Non-refundable | no free cancellation, but cheaper | Guests with fixed plans who want to save |
Put deadlines, fees as a percentage of the total price and how a deposit is handled in writing, and send the terms with the booking confirmation. A deposit for longer stays or groups lowers the risk of last-minute cancellations. How reminders and guarantees reduce no-shows is covered in the guide on no-shows, which transfers well to rooms. For disputes or your own terms and conditions, it is worth getting advice from the WKO, IHK or a lawyer.
Showing rates transparently online
The best rate only works if guests understand it. On your website, show every room category with a real photo, size and a "from" price per night, and say whether it is per room or per person, whether breakfast is included and whether the Ortstaxe (Austria) or Kurtaxe, Gästebeitrag or Übernachtungsteuer (Germany), local tourist and overnight taxes, comes on top. In Austria these levies are set by the federal states, in Germany by the municipalities. Amount, exemptions and payment therefore differ from place to place: ask your municipality or tourism board.
Displaying prices is mandatory too: in Germany § 13 of the Preisangabenverordnung (Price Indication Ordinance) requires the prices of the main rooms and of breakfast at the entrance or reception; in Austria the rules of the Preisauszeichnungsgesetz apply, see Price display in Austria. Under § 7 PrAG, Austrian businesses set their room rates freely, including towards booking platforms. How to get more guests to book directly instead of through portals is explained in the guide Direct bookings instead of OTA commission.
Rooms and rates on a website of your own
See in a free preview how your guesthouse or hotel could look online with room categories, seasonal rates and a booking request.
A free preview of your venue website, designed by us.
Room rate checklist
- Price floor per room and night calculated
- Season calendar with three to five levels for the coming year
- Weekday and weekend rates checked
- Minimum stays for peak dates set, with a rule for relaxing them
- Occupancy, ADR and RevPAR compared monthly with last year
- Packages with a clear list of services and a total price
- Cancellation policy in writing and in every confirmation
- Ortstaxe or Kurtaxe and breakfast shown transparently
