Some Thoughts on European Hotel Rates

A year or so ago, using Michelin’s Main Cities of Europe Red Guide, Gemütlichkeit, The Travel Letter for Germany, Austria & Switzerland, compared hotel rates in a dozen major European cities, including Paris, Rome, London, Prague, and Berlin. Not surprisingly, Berlin came out with the lowest prices and London the highest. The London average for leading three-star hotels was $419; Berlin’s was $164. The shocker, however, was Prague, whose top six three-star hotels (as rated by Michelin) averaged a whopping $342 per night. The Czech Tourist Office sent angry emails to dispute our numbers, and they were probably correct, the average price for a double room in a Prague three-star hotel is very likely not $342. The goal, however, wasn't to determine the average price, it was to compare costs of similar hotels among the 12 cities. The number 342, while interesting, is somewhat irrelevant.

To create the price “index,” we used the top six three-star hotels (roughly equivalent to Michelin’s double roof peak symbol) listed by Michelin in each of the cities. We threw out the highest and lowest price and averaged the remaining four. Using this formula, Prague was higher in price than every city except London. It must be taken into consideration that Michelin publishes rack rates—the non-discounted price one may have to pay when a hotel expects to be 100 percent occupied. Perhaps Prague hotels set very high rack rates in order to guarantee maximum income during times of peak occupancy.

That would seem to be the case as the Hotel Josef, a stylish boutique, has a double room rack rate of about $570 at the same time its website is quoting a mid-June price of less than half that, EUR 174 ($273). For the same June dates, the Hotel Maximilian’s website offers EUR 119 ($187) vs. a published rate of $475. Much the same thing happens in Berlin, where the too, too, cool Q! (see its pretentious website) shows a Michelin rack rate of EUR 235 but offers a price of EUR 129 online.

The moral in all this is that rack rates are somewhat like full-fare airline prices in that they are part of a smoke-and-mirrors marketing culture—and not many people pay them. A major exception, of course, is the tens of thousands of family-operated hotels in Europe that don’t even have “rack” rates, just plain old rates. Thus a big-city hotel price listed your Michelin Red Guide is not much more than a guideline, while the rate shown for a small country hotel is probably right-on.