Hotel Revenue Glossary · Distribution

Commission Structure

The compensation arrangement between a hotel and a distribution partner. It may be percentage-based, flat, tiered, merchant-margin, media-linked, or combined; use the current contract and booking statement to calculate total cost.

Why it matters: Commission structure directly impacts NRevPAR. A hotel selling most rooms through high-commission OTAs may show strong gross RevPAR but weak net revenue. Understanding commission structures across channels is essential for optimizing distribution mix and profitability.

Worked example: Same A$220 room night, three channels. Channel A takes 15% — A$33, net A$187. Channel B is merchant: you supply a net rate of A$176 and it retails at A$220, a A$44 gap, effectively 20%. Channel C charges 12% plus A$3.50 a booking: A$26.40 + A$3.50 = A$29.90, net A$190.10. Ranked by what reaches your bank: C at A$190.10, A at A$187, B at A$176, an order the headline percentages never showed you.

Common mistake: Reading the rate card and stopping there. The amount you are charged on is not always the amount the guest paid — some agreements bill against the gross including extras, some apply a lower tier only above a volume threshold you never reach. Reconcile a month of remittance statements against your own PMS revenue.

All glossary terms NRevPAR (Net Revenue Per Available Room) OTA (Online Travel Agency) Distribution Channel