Consumed room revenue − channel-specific acquisition and servicing costs = net room revenue contribution.

1. Define channel families consistently

Begin with a clean source map. Separate website direct, telephone and email direct, OTAs, GDS, wholesale or bedbank, corporate negotiated, consortia, groups and owner-generated business. Within OTAs, distinguish merchant and agency models when their economics or payment processes differ.

Do not rely solely on a free-text source field. Standardize source and market codes in the PMS, then reconcile them with the booking engine, channel manager and payment records. KHR’s approach to hotel distribution and rate mapping starts with this alignment because an inaccurate source map produces an inaccurate channel strategy.

2. Build the complete cost ledger

For each channel, capture the costs that genuinely vary with the booking:

• commission, transaction fees or wholesale margin;
• metasearch, paid-search and campaign acquisition cost;
• payment-processing, merchant and virtual-card charges;
• channel-funded discounts, loyalty participation and promotional contributions;
• reservation, call-centre or administrative handling that is specific to the channel; and
• technology fees that can reasonably be allocated per booking or per room night.

Avoid loading the calculation with every fixed hotel expense. The purpose is to compare distribution choices, so focus first on costs that change when channel mix changes. Fixed system fees can be shown separately for a fully loaded view.

3. Measure both booked and consumed business

Booking-date reporting explains current production and pace. Stay-date reporting shows the revenue that was actually consumed. Owners need both.

A booked-revenue view is useful for forward demand decisions, but it should include expected cancellations based on the hotel’s own historical results by channel, lead time, rate plan and season. A consumed-stay view should be the final reference for net contribution. This prevents a high-cancellation channel from appearing more productive simply because it creates more reservations before arrival.

4. Compare net ADR and net RevPAR

Calculate net ADR as net room revenue divided by consumed rooms sold. Calculate net RevPAR as net room revenue divided by available rooms. These measures reveal whether a higher gross rate survives its acquisition cost and whether a lower-cost channel produces enough volume to matter.

A hotel business-intelligence dashboard should show gross and net measures side by side, with filters for property, channel, room type, rate plan, market segment, booking window and stay date. The goal is not another static report. It is a repeatable commercial decision process.

5. Make decisions by date and demand condition

There is no universally “best” channel. A commissionable booking may be highly valuable on a low-demand Sunday and unnecessarily expensive on a compression Saturday. A wholesale allocation may build base occupancy in one season and displace stronger demand in another.

Use hotel revenue management to connect channel profitability with forecast demand. Open broader distribution during need periods. Tighten discounts, allocations and last-room availability when pace strengthens. Protect high-value room types and longer stays when demand is likely to compress.

What are hotel distribution costs?

Hotel distribution costs are the expenses incurred to acquire and service bookings through a sales channel. They can include commission, wholesale margin, advertising, transaction and payment charges, technology fees, discounts and channel-specific handling.

What is net RevPAR?

Net RevPAR applies the RevPAR concept after deducting defined distribution costs from room revenue. Hotels should document exactly which costs are included so comparisons remain consistent over time.

Should an independent hotel try to eliminate OTA bookings?

No. OTAs can provide reach, conversion and demand that a hotel may not acquire efficiently on its own. The commercial objective is a profitable, diversified channel mix—not a blanket preference for or against one channel.

How often should channel profitability be reviewed?

Operational results should be reviewed monthly, with a deeper quarterly review of cost assumptions, contracts and channel strategy. High-demand and need periods may require weekly monitoring.