Revenue Management
Commission
The cut an intermediary takes per booking — typically 15 to 25 percent for OTAs.
Academic definition
Commission is the fee a hotel pays an intermediary, such as an online travel agency or travel agent, for generating a booking, calculated as a percentage of the room revenue produced. OTA commissions typically range from fifteen to twenty-five percent, varying by platform, market, and any visibility or loyalty programmes the hotel participates in. Commission is recognised as a distribution cost: in the agency model the hotel pays it after the stay, while in the merchant model the OTA retains it by remitting only the net rate. Commission is a primary component of the gap between gross and net room revenue and a key input to net-rate metrics such as Net ADR and Net RevPAR. Because it scales directly with room revenue, commission rises with both rate and volume on the channels that charge it, making channel mix a significant determinant of how much of a hotel's revenue it ultimately retains.
OTA Room Revenue = revenue booked through the commissioned channel · Commission % = the intermediary's rate
Worked example
On ₹10,00,000 of OTA room revenue at 18% commission, the hotel pays ₹1,80,000 — money that converts directly into profit for every rupee of that revenue shifted to a direct channel.
The ProfitPAR™ lens
Commission is the single largest and most visible of the six leaks, and the one hotels most readily accept as a cost of doing business. It should be the least accepted. A 18% commission on a ₹4,500 room is ₹810 gone before housekeeping has touched the door — and unlike most costs, it scales with success, taking more as you sell more through the channel. ProfitPAR™ puts commission at the centre of the channel-mix decision because every booking shifted from a commissioned channel to a direct one converts that ₹810 straight into retained profit. Commission is not a fixed tax on the business; it is a variable the hotel controls through where its bookings come from.
Commission is the one major cost that grows every time you succeed through the wrong channel.
Measure what each room actually keeps.
ProfitPAR is offered as a private revenue practice, by invitation. Tell us about your hotel to begin.
Request an InvitationWorked examples use illustrative figures in Indian Rupee (₹) with lakh/crore conventions. They are composite and representative, not drawn from any single property. ProfitPAR™ is a trademark of Sibasish Misra.