Hotel Revenue Glossary · Distribution

Net Rates vs Gross Rates

Two models for pricing hotel rooms through intermediaries. Gross rates are the published rate from which the intermediary deducts their commission after the guest pays. Net rates are wholesale prices the hotel provides, and the intermediary adds their own markup before selling to the guest.

Why it matters: The choice between net and gross rate models affects pricing control. With gross rates, the hotel sets the retail price. With net rates, the intermediary controls what the guest pays, which can lead to rate undercutting or parity violations if not managed carefully.

Worked example: You contract a wholesaler at a net A$140 on a room you retail at A$219. They mark it to A$185, so a shopper sees A$185 beside your A$219 on metasearch — a A$34 gap that reads as your own site being dear. Sell the same night gross at 18% and you bank A$179.58 while keeping the shelf price. A$39.58 a night is what that net contract is costing you.

Common mistake: Signing a net rate without a resale condition and then policing parity. Once the price is theirs to set, an undercut is not a breach — it is the deal you wrote. Put the permitted resale floor, the eligible markets and the audit right into the contract, or expect to meet A$185 on metasearch.

All glossary terms Net Rate Commission Structure Rate Parity