In hotel distribution we work with many rate levels. Room inventory is sold via some third party distributors at prices that are subject to commission. Others negotiate a (sometimes lower) price with the hotel that does not include a commissions. Such a rate is called a Net Rate.
The Net Rate is the price without the commission of the travel agent. The distributor can mark-up this price with the margin he wishes to make, or an amount which is contractually agreed. Hotel distribution partners which typically work with net room rates are:
- Merchant Model OTA
- Tour Operators
- FIT companies (aka Foreign Incoming Travel)
- DMC’s – Destination Management Companies
- Group bookers
From a hotel revenue management perspective you can also calculate a NetRate when subtracting the commission from a gross or sell rate. For instance if the rate paid was $100 (excl VAT) and the commission is 25%, the Net Rate would be $75. And with a commission opf 15% the Net Rate would be $85.