Anything above the IC Factor and a sales commission, is profit. Therefore, we can structure deals that are compelling to the buyer and highly profitable to the seller.   

In the B2B sector, knowledge of the IC Factor can be used to make decisions about how to use a portion of the unused and unsold capacity to positively affect the bottom line, by marketing it to the corporate sector.  

The sales model calls for making additional sales, within certain limits, providing a discount large enough to compel the corporate client to come to terms with the hotel. 

Copyright 2018 © Hawk Group, LLC

All rights reserved. 

A typical, OTA-generated, sale might consist of a $200 rack rate room netting the hotel $50.

The hotel costs might be $40, or less, or 20% of the rack rate. The hotel makes the deal because there is, at least, a $10 profit in the sale. The room sells at an 80% discount. The IC Factor for meeting/events space and other services are similar. 

The I.C. Factor (Incremental Cost) 

In this context, the IC Factor refers to the actual cost of selling hotel product that would go unsold. In the hotel industry it is in the 20% range, of rack rate.