Hotel Revenue Glossary · Pricing

Net Rate

The wholesale rate a hotel provides to a third party (tour operator, wholesaler, or OTA) who then marks it up to sell to the end consumer. The hotel receives the net rate regardless of the final selling price, and the intermediary keeps the markup.

Why it matters: Net rate agreements shift pricing control from the hotel to the intermediary. Revenue managers must monitor how net rates are being resold to prevent undercutting of the hotel's own public rates, which can create rate-parity violations.

Worked example: You give a wholesaler A$126 net on a room you sell direct at A$210. They mark it to A$189 on their own site, 10% under your price, and keep A$63. You receive A$126 either way. If forty nights a month move from direct to that channel, you take 40 x A$126 = A$5,040 instead of 40 x A$210 = A$8,400, transferring A$3,360 of margin for volume you may already have had.

Common mistake: Negotiating the net rate and never checking the resale price. The contract fixes what you receive, not what the guest sees. A A$126 net resold at A$168 undercuts your own A$210 by 20% and trains the market to book around you. Shop the wholesaler's downstream sites monthly and write a minimum-sell clause into the agreement.

All glossary terms Rate Parity OTA (Online Travel Agency) Distribution Channel