1. Compare what a booking leaves after distribution and acquisition costs, not its commission percentage alone.
2. Start from the actual discounted room amount; do not subtract the same discount again.
3. Keep this management measure separate from bank payout, operating profit, and allocated fixed costs.
OTA commission rates tell you one part of the cost of winning a reservation. An online travel agency charging a lower percentage can still leave less money if the booking carries a larger hotel-funded discount or additional marketing cost. A direct booking can also be expensive to acquire.
For channel decisions, calculate room revenue retained after the costs of that booking. The calculation below is a management comparison, not a replacement for your accountant's revenue presentation or a measure of hotel profit.
Define the Room Revenue and Costs You Are Comparing
Use the final room amount before channel costs are deducted, after any hotel-funded discount already reflected in that amount. If a report shows a figure with commission already removed, identify the original room amount first; do not subtract that commission twice. Keep guest taxes collected for others, separate add-ons, and other non-room amounts outside the comparison unless you deliberately include them on the same basis for every channel.
Then identify the costs attributable to acquiring and collecting that reservation. These can include contracted OTA commission, a separate transaction charge, booking-engine transaction fees, and attributable advertising or referral spend. Count only costs the hotel actually bears, and count each once.
Retained room revenue = actual room revenue minus commission minus separate collection costs minus attributable acquisition spending.
The commission itself must use the contracted commissionable base. That base is not automatically the tax-exclusive room amount used in your management comparison. Calculate the actual commission first, then include the resulting cost. An advertised percentage cannot resolve the property's contractual inclusions, promotion funding, or payment arrangement.
Keep the original room revenue and expense records separate in hotel reporting and analysis. In Smart Order, use reservation source and recorded room amounts as the starting point, then check contracted charges and campaign evidence for the comparison. That avoids treating a net bank payout as either the guest's room price or the hotel's profit.
Start the Channel Comparison From the Actual Booking
Review room revenue and booking source together before adding verified commission, payment, and marketing costs to your channel decision.
Work Through Two Ways to Sell the Same Stay
These hypothetical examples compare the same three-night stay and room, with no tax or add-on amounts in the stated room revenue. The percentages and costs are illustrations, not current rates for any named OTA or payment provider.
OTA Booking: Higher Room Revenue, With Commission
The actual room amount is $300. Assume the hotel's agreement produces a $54 commission cost, calculated as 18% of a $300 commissionable base. Assume this hotel also pays a separate 3% collection cost of $9 that is not included in the commission.
The retained room revenue is $300 minus $54 minus $9 = $237, or $79 per occupied room night. Its counted acquisition and collection costs total $63, equivalent to 21% of the $300 room revenue.
Do not copy that additional $9 into every OTA comparison. Under a different collection model, the hotel may not bear it separately, or it may already be included elsewhere. The cost record, not a general rule about OTAs, decides.
Direct Booking: No OTA Commission, but Not Cost-Free
Suppose the hotel offers the same stay at a 10% discount, so actual room revenue is $270. Assume separate payment processing of 3%, or $8.10, and $20 of attributable advertising cost. For simplicity, this example has no other variable booking-engine fee.
Retained room revenue is $270 minus $8.10 minus $20 = $241.90, or approximately $80.63 per occupied room night. That is only $4.90 more for the whole stay than the example OTA booking, not a $54 saving in money retained.
The $30 discount is already reflected in the $270 starting revenue. Subtracting it again would understate the result. You can display the discount separately to explain the gap from the reference price, but do not count it twice in the retained-revenue formula.
If advertising cost rises to $30, the direct result becomes $231.90, below the OTA example's $237. A commission-free hotel booking engine removes OTA commission from those direct reservations; it does not remove the hotel's payment, marketing, or website costs.
Add the Costs That Change the Decision, Not Every Expense
Attribute Marketing With an Honest Basis
Where a campaign can be tied to reservations, use its verified booking attribution and the same outcome basis. For a practical estimate, a $200 campaign associated with ten completed bookings has a $20 average campaign cost per completed booking. Label that as an allocated estimate, not a known cost for each individual guest.
Do not divide spend by inquiries for one channel and completed stays for another. Cancellations can change the eventual cost per stayed booking. Keep early forecasts separate from the final review, and acknowledge uncertain attribution rather than assigning all untracked marketing to direct reservations.
Keep Fixed Costs in a Separate View
Website subscriptions and fixed software fees matter to the overall budget. They may not increase when one extra reservation arrives. Separate the immediate booking comparison from a fully allocated channel-cost review.
If you allocate a monthly cost across bookings, state the period, the relevant booking group, and the allocation rule. Apply a consistent approach to channels that share the tool. Do not assign the entire PMS bill to direct bookings while ignoring its OTA and front-desk use.
Preserve Final Outcomes and Currency
Refresh the calculation after a cancellation, shortened stay, waiver, or refund. Use the final supported room amount and the actual nonrecoverable acquisition or collection costs. Do not treat returned money as an additional expense if you have already reduced revenue by the same amount.
Calculate in one stated currency using a consistent conversion basis where necessary. Keep source amounts and provider conversion or fee evidence traceable. A difference caused by settlement exchange rates should not silently become an invented commission charge.
Turn the Booking Calculation Into a Channel Choice
Review comparable stays by room type, dates, lead time, length of stay, and outcome. Per-booking retained revenue alone favors longer stays; retained revenue per room night helps compare them more fairly. Neither figure includes all costs of servicing the room or operating the hotel.
Use the calculation to identify a specific change: stop an unproductive paid placement, narrow an excessive direct discount, adjust a campaign budget, or protect availability on a channel that fills genuinely weak dates. A hotel channel manager supports the resulting rate and availability changes; it does not determine which acquisition costs are economically justified.
Do not remove a channel just because its commission percentage is higher. It may bring a reservation the hotel would otherwise miss, while a cheaper-looking booking may replace demand you could have won without a large discount. Review both retained revenue and the likelihood that the booking adds business rather than simply shifting its source.
Keep a short calculation record for the bookings sampled: final room amount, commission cost and base, other counted costs, attribution assumptions, retained revenue, room nights, and the action tested. Recheck the result after the stay and settlement records are available instead of treating a booking-date estimate as final profit.
