A rack rate is a term used in the travel industry to describe the often inflated prices that a person would pay at a hotel if he or she deals directly with the hotel when booking a room, instead of with a travel agent or one of the many discount online travel agencies like Hotels.com, Expedia or Travelocity. Essentially, if you walked into a hotel and asked for a room for the night, you might pay two to three times the price you’d be able to get if you pre-booked through a travel agent. The price you pay may depend on if you’re willing to bargain, and how late at night it is—if a hotel sees an opportunity to rent a room for the night that would otherwise be unoccupied, you may be able to bargain and get less than the rack rate.

With so many people pre-booking trips, few people actually pay the rack rate, which could also be called the retail price, walk-up rate, or actual price. Part of the skill in offering one, is to make consumers feel they’re getting a very good value for their money by paying a lower than rack rate price. You’ll often find hotels list a pricing guide in their rooms, and post high rack rates, making the hotel guest feel they’ve really gotten a deal if they note a difference of several hundred US Dollars (USD) between the price they could have been charged and the price they actually paid.

It’s fairly simple to avoid the rack rate for hotels, even if you’re looking for same day accommodations. If you’re in a town and need to stay the night you can use Internet access if you have a computer to at the least look up the prices at the various online travel agencies. Chose the best price, and if possible print that out. Many hotels offer free wireless access, so if you’re in a hotel where the rack rate seems ridiculously high, you may actually be able to show the hotel the price offered at the cheapest online agency and merely be able to receive that price.

Alternately, if you’re not traveling with a computer, you can step into a travel agency and ask them to book you a hotel room for the night. Even if you pay $20 USD in fees for such a booking, you still will probably save about $80 USD on a hotel booked by an agency. If it’s too late at night to find an open travel agency, it’s a good idea to bear in mind that the hotel wants to rent you a room for the night, so you can dicker over price. Offer them a reasonable price, usually about $100-120 USD for better hotels in smaller towns, and maybe $150 USD for three to four star hotels in bigger cities. You may find a hotel is authorized to take a lower amount, since they do rent rooms at those prices to people who have pre-booked their trips.