How to Set Wholesale and Tour Operator Room Rates
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Introduction
Establishing wholesale and tour operator (TO) room rates is critical for maximizing revenue, maintaining market competitiveness, and ensuring consistent pricing across all customer segments. As distribution channels evolve, your pricing strategy must adapt to reflect the needs of each partner while remaining rational, market-based, and customer-focused.
This guide outlines a structured approach to setting wholesale rates, from evaluating your property strategy to analyzing competition and determining optimal discount levels.
See Understanding RevPAR and Benchmark Rates for more on benchmark rates.
Step 1: Review Your Total Hotel Strategy
What to Do
Market Overview: Analyze your market health and create a preliminary outlook for the coming year.
Hotel Performance Review: Examine key property metrics and expected growth in rate and/or occupancy.
Segment Forecast: Evaluate demand, competition, and resource allocation for each major market segment, including wholesale. Record expected changes in volume and price for the next year.
RevPAR Goals: Determine your overall RevPAR objectives and adjust benchmark rates accordingly.
Calculate Standard Net Wholesale Rates: Use your projected benchmark rates to calculate standard net rates. Consider simplifying with a blended rate instead of multiple weekday/weekend or seasonal rates. Approval & Submission: Review rates with your revenue strategy team and submit using your internal rate submission tool or platform
Resources
Most recent business plan and budget
Market revenue outlook reports
Competitive benchmarking reports
Wholesale pricing worksheets
Step 2: Conduct Competitive Assessment
What to Do
Identify competitors who compete for wholesale business.
Analyze travel agent brochures or wholesalers’ websites for pricing information. Derive net room rates by adjusting for typical markups.
Plot competitors on a Rate-Value Matrix to visualize positioning.
Decide on your pricing strategy relative to competition: higher rates for upscale positioning, lower rates may not always result in higher bookings.
Resources Competitive assessment tools or templates
Travel agent and wholesaler brochures
Online research for competitor pricing
Link to How to Conduct a Competitive Market Analysis for Hotels for more guidance.
Step 3: Review Performance and Contribution Data
What to Do Compare current year production (room nights, ADR, revenue) with previous years for each wholesaler.
Assess how each wholesaler’s bookings fit into your seasonal demand and high-occupancy periods.
Analyze contribution and profitability to your property. Consider volume relative to discount levels.
For new accounts, estimate profitability by referencing similar existing accounts.
Use available worksheets to record and interpret data, guiding your rate decisions.
Resources Property performance reports
Wholesale contribution analysis tools
Internal pricing worksheets
Link to Hotel Segmentation Strategies for Maximizing Revenue for segment-specific insights.
Step 4–6: Additional Considerations (Optional for High-Volume Wholesale Properties)
For properties with significant wholesale business, further steps include:
What to Do Negotiating rates with high-volume accounts
Reviewing seasonal allocations and discount tiers
Finalizing wholesale packages while maintaining revenue integrity
Link to Advanced Wholesale Rate Negotiation Strategies for multi-account management.
What to Do:
Negotiation Variables
When setting wholesale and tour operator (TO) rates, several variables typically influence your negotiation. Use the table below to guide your pricing decisions and document your agreements.
Allotments play a key role since wholesalers generally do not have direct access to your property’s inventory.
Consistency: Price “like” wholesalers similarly, but use value-adds to reward higher-producing or more valuable partners without upsetting others. Documentation: Enter key negotiated items for each wholesaler on your Wholesale/TO Pricing Worksheet. This helps evaluate at a glance each wholesaler’s value and contribution to your property.
Negotiable Items Table
Wholesale/TO May Want
You May Offer / Consider
Allotments
Volume commitments
Value-adds (GM welcome letter, welcome cocktails, children eat free, breakfast, free recreation)
Limited room types/view types
3 or 7 day cutoffs
Blackout dates
No black-outs
Retail trade show support
Quantities of brochures
Participation in wholesale promotions (low season)
Marketing funds
Feature advertisement / additional exposure in brochure (may involve cost)
Buy 5 nights Get 1 Free
Weekly activity report from wholesalers
30-day cutoffs
Ability to pull allotments with advance notice for sold-out nights
Additional Negotiation Notes
Marketing Contributions: Contributions to marketing funds (including costs for additional exposure in wholesaler brochures) can materially affect a wholesaler’s profitability. Worksheet Entry: Record your annual marketing contribution for each wholesaler on the Wholesale/TO Pricing Worksheet. Subtract this from the wholesaler’s contribution to your property to evaluate profitability accurately.
Available Resources
Current contracts with wholesalers
Director of Marketing and/or Director of Travel Industry Sales
Key TakeawaysWholesale rates must align with your total revenue strategy.
Simplicity is essential: standard net rates should be easy to distribute and understand.
Competitive analysis ensures your pricing is market-based and properly positioned.
Contribution analysis helps maximize profitability while maintaining strong relationships with wholesalers