What is the meaning / definition of Local Company Rate in the hospitality industry?
LCR is short for Local Company Rate.
Hotels sometimes agree a special rate with a local company, as that can be good for business in both the short and long term.
When making available a local corporate contract, a hotel should take several factors into account, and not simply have a single LCR for all firms.
The key to getting an LCR rate right is to negotiate the rate with each company separately. Also, involving corporate clients in the rate-setting process shows respect and also recognition of the previous revenue each client has generated at the hotel (where applicable).
Let’s take an example scenario now…
A large hotel in Rome, that is one of several hotels belonging to a chain across Italy, often accepts group bookings from a Rome-based IT company. That company announces in the Press that it will soon be opening new offices in five other Italian cities. For the hotel chain, this could mean a lot of increased business from all corners of the country! Setting an LCR for this particular client makes good business sense, as it could serve as an incentive for the them to always hold conferences, annual general meetings and other corporate get-togethers at hotels belonging to that single chain in different regions of Italy at various times of the year. By offering a discounted LCR to the IT company, the hotel is wisely thinking ahead.
This, of course, may be an exceptional circumstance, a rare opportunity, but it may still occur. That is why hotels should always adopt a flexible mindset when setting LCRs. Generally speaking, LCRs are usually kept relatively similar for different clients, and are valid for one year.