Net Rate Meanings in Event Planning Contracts

Learn what both terms mean in the context of event planning

Businesswoman in hotel room
Alistair Berg/ GettyImages

When dealing with hotels (and potentially other vendors), you're likely to hear the terms "net rate" and "net net rate." Both are critical terms to understand to negotiate the most favorable contracts.

Here's what "net rate" and "net net rate" mean in the context of event planning and event management.

What Does 'Net Rate' Mean?

Put simply, a "net rate" is the rate the event organizer or hotel room reseller pays for services without any commission included.

Net rate is most frequently applicable to housing costs for guest rooms at hotels/resorts for meetings and events, as well as food and beverage/catering costs.

Here's an example: A hotel's rack room rate is $200 per night. That hotel offers a 10% commission to travel agents, which means a room at rack rate booked through a travel agent would net that agent $20.

However, a hotel room consolidator or reseller books a block of hotel rooms for $160 each at a net rate (in other words, a rate without any commission included). If it resells those rooms for $200 each, it will earn $40 per room — twice the profit, assuming it sells all the rooms it books (which, of course, can't necessarily be guaranteed).

Be aware that the hotel room reseller will need to take taxes into account. In the example that involves a commission, the hotel tacks on any tax due to the price, and still pays a commission $20.

In the net rate example, if the reseller offers customers a flat rate that includes tax, then any hotel or sales tax will come out of the reseller's profit.

The concept of net rate can apply to event managers, as well. For example, if you're organizing an event for a client, you can purchase a block of rooms at a net rate for the client and then resell those rooms.

Most event planners who contract directly with a hotel and/or another venue will request a net rate for their program.

What Is a 'Net-Net Rate'?

A "net net rate" is the cost of a meeting or event excluding commissionable elements to a third party and/or other markup fees. Typically corporate and association event planners will want to calculate their costs so they know the cost excluding those additional fees.

More Net Rate and Net-Net Rate Examples

Here are two more examples:

  • By working directly with the hotel conference services manager to schedule a two-day conference at a hotel, the association planner contracted a net rate to reduce the cost of the program by 12%.
  • When calculating the overall cost for the conference, the event planner did not rely on any third party suppliers to source related services and was able to calculate a net-net rate for the program.