{"id":22623,"date":"2020-04-10T16:56:15","date_gmt":"2020-04-10T16:56:15","guid":{"rendered":"https:\/\/www.xotels.com\/uncategorized\/markup\/"},"modified":"2024-12-23T09:21:19","modified_gmt":"2024-12-23T09:21:19","slug":"markup","status":"publish","type":"post","link":"https:\/\/www.xotels.com\/en\/glossary\/markup","title":{"rendered":"Markup"},"content":{"rendered":"

What is the meaning \/ definition of Markup in the hospitality industry<\/a>?<\/p>\n

Within revenue management in the hotel industry<\/a> Markup is used to refer to the amount an OTA increases your net room rate, to set the sell rate<\/a>.<\/p>\n

OTA<\/a> that work with a merchant model<\/a> work with hotels on the basis of Net Rate<\/a>. This means a hotel<\/a> gives the OTA a rate, and the OTA will mark it up (increase) to set a sell rate.<\/p>\n

For instance the hotel gives the OTA a rate of \u20ac80, and the OTA marks it up with \u20ac20, to sell at \u20ac100. In this case the mark-up<\/a> % is 25%.<\/p>\n

So the formula of Markup is:<\/strong><\/p>\n

Markup = Selling Price \u2013 Net Room Rate<\/p>\n

Markup % = Markup \/ Net Room Rate<\/p>\n

A common mistake made in the hotel industry is to confuse markup with margin. This is because OTA working with a net rate model also use a commission<\/a> in the contract or distribution agreement with hotels. If we take the example above with a markup of \u20ac20 and a final sell rate of \u20ac100, the margin in this case would be 20% (while the markup is 25%).<\/p>\n

Here some more formulas to put this in perspective:<\/p>\n