Hotel distribution costs: compare channels by the night that was actually stayed

A hotel distribution decision needs more than the room rate shown when a reservation is made. The final economics depend on whether the guest stays, the amount retained, the cost of obtaining and collecting the booking, and whether another guest would have occupied the room. Start with completed stays for the same stay dates and room categories.

Keep reservation creation date, stay date and settlement date as separate fields. Marketing costs incurred in one month can produce stays much later, while a commission invoice may arrive after checkout. Comparing this month's advertising bill with this month's unrelated arrivals can make a growing direct channel look unnecessarily expensive or an earlier campaign look free.

Booking.com's payment documentation illustrates the information available in a reservation-level payment record: payout amounts and status, commissions and charges, price detail, and amounts to collect at the property. Availability varies with the payment arrangement. Use the property's actual statements and contracts; a net bank receipt by itself cannot show all acquisition costs.

For each stayed reservation, begin with the room revenue on a consistently defined basis. Keep taxes collected for others and refundable deposits outside the room-revenue comparison. Identify rate discounts, loyalty benefits, commissions, reservation charges, payment processing and any channel-specific service expense. Do not subtract an included discount again after starting with the discounted room amount.

Some costs follow a booking, some a room night, and some an entire campaign. Keep those units visible. A $10 reservation fee costs $10 per night for a one-night stay and $2 per night for a five-night stay. A comparison that ignores length of stay can mistake the guest mix for a channel-pricing difference.

Use two views for shared costs. The incremental view supports a decision about the next booking or campaign. A broader view includes the resources needed to sustain the channel, such as the booking engine and staff. State the scope rather than hiding a fixed website cost inside one channel while treating another channel solely at its variable commission.

Suppose an intermediary produces 100 completed room nights at $180 per night. Assume a hypothetical 15% commission on the $18,000 room amount and $200 in other attributable payment charges. Revenue after those distribution costs is $15,100. With an illustrative $35 of variable room servicing cost per night, contribution is $11,600 before standing property expenses.

Now suppose a direct campaign produces 100 comparable completed nights at a discounted $171. Room revenue is $17,100. Assume $1,200 of attributable advertising, $513 of payment processing and $100 of variable booking charges. After distribution costs, $15,287 remains, and after $3,500 of room servicing, contribution is $11,787. Under these assumptions, the direct group contributes only $187 more.

These figures are constructed examples, not commission benchmarks or evidence that one channel is generally superior. The comparison changes if the direct guests would have booked without the campaign, the intermediary fills otherwise empty dates, the cancellation mix differs or the direct rate concession becomes larger. Calculate the difference using the property's own records before setting a policy.

Keep canceled bookings and no-shows in the acquisition analysis, but distinguish them from occupied room nights. A campaign can produce many reservations and few stays. Any retained cancellation fee has its own associated charges and accounting treatment. It should not turn into an occupied room night merely to improve the cost-per-night result.

Allocate campaign spending to a defined booking cohort and allow enough time for its stays and cancellations to mature. If $1,200 generates 120 booked nights but only 100 are stayed, acquisition spending is $12 per stayed night, not $10. Show the reservation-to-stay difference so the marketing and revenue teams can see whether the problem is acquisition or conversion into a completed stay.

Investigate modified reservations against both the property system and channel records. A reduced stay, waived charge or unresolved refund can leave a commission statement inconsistent with the final folio. Follow the applicable correction process and deadline in the current agreement. Do not assume every cancellation removes every channel charge.

On a nearly full date, an extra low-contribution booking can displace another guest. On an otherwise empty date, it may contribute toward property costs even after a substantial distribution charge. Segment the decision by demand conditions instead of applying an annual average contribution to every arrival date.

Direct attribution is also uncertain. A guest may first discover the hotel on an intermediary, later click an advertisement, and finally book through the website. A last-click report identifies a recorded touchpoint; it does not establish what would have happened without the advertising. Use a suitably designed comparison when the budget decision depends on incremental demand.

Consider later stays carefully. A first visit may lead to profitable repeat business, but projected lifetime value should not erase the measured cost of the initial booking. Show actual repeat stays separately from assumed future behavior, using a lawful and reliable customer-identification method. Keep the claim no stronger than the observed evidence.

Decide which rate plans, dates and campaign budgets the evidence supports. Preserve access and pricing commitments in the applicable agreements. The practical change might be a smaller discount, tighter advertising targeting, a different minimum stay or more availability on weak dates, subject to the hotel's approved commercial rules.

Review the result after the relevant stay cohort has completed and settled. Reconcile room-night counts to the night audit, charges to channel and payment statements, and campaign spending to the approved budget. Keep the initial assumptions next to actuals so a favorable result can be traced to rate, occupancy, acquisition efficiency or a changed guest mix.