This article offers a practical way to examine this issue in a hotel. learn about Feathers Hospitality’s approach, explore the platform and contact the team to learn how Feathers Hospitality approaches these topics.
Adapt the examples to the property’s actual conditions, data and agreements. Confirm legal, financial, technical, safety or accessibility decisions with qualified professionals before changing procedures.
In brief
- Define the objective and assumptions before choosing a solution.
- Coordinate the responsible people and decision boundaries.
- Record results and review the process using property data.
Establish the current baseline
For each partner, record the contractual commission, booking volume, cancellations, payment fees, promotions and any optional visibility cost. Check invoices and settlement reports instead of relying on a headline rate. Define the period and currency and reconcile the room revenue against the finance system.
Keep agency and merchant arrangements distinct where they affect the amount received, timing and tax treatment. Confirm the contractual definition with the channel and finance adviser. A single “cost per booking” can hide different inclusions and settlement rules across partners.
Separate rate from total acquisition cost
Add costs that are attributable to each channel: commission, payment processing, channel-manager fees where applicable, promotions and staff effort if measured consistently. Estimate direct channel costs too, including marketing, booking handling and payment. The European Commission’s hotel distribution study notes that channel costs can be difficult to compare because not all costs map directly to a room sale.
Do not add fixed platform fees to one channel’s per-booking cost without allocating them consistently. Show assumptions for cost allocation and distinguish observed invoices from estimates. A lower commission may still accompany fewer bookings or other costs, so do not treat the percentage as a full profitability measure.
Compare like-for-like bookings
Match dates, room types, cancellation terms, guest segments and booking windows where possible. Use a period with comparable demand and explain any events, closures or pricing changes. A channel receiving more high-season bookings may appear more profitable even if the change itself had no effect.
Analyse displacement and incrementality. Some partner bookings may replace direct demand; others may reach guests the hotel would not otherwise attract. Use referral and booking data carefully and avoid attributing a guest’s channel choice to one campaign without evidence.
Model alternatives before renegotiating
Build scenarios for the proposed commission, likely booking volume, price, cancellations and visibility. Calculate contribution under a conservative, expected and optimistic case. Include the possibility that reduced exposure changes demand, but label it as a hypothesis until the property has evidence from a controlled change or comparable period.
Check rate and offer restrictions in every agreement and applicable market rules. Do not copy a competitor’s contract or assume a parity clause has the same legal status everywhere. Ask qualified legal counsel to review proposed terms, termination notice, payment and data access.
Run a bounded test if feasible
If the partner and contract allow, test the change on selected dates, room types or a limited period. Protect important inventory and define a stop condition before launch. Ensure the booking engine, distribution system and front desk all show the intended terms, and capture the original state for rollback.
Monitor booking pace, net contribution, cancellations, ranking or visibility, support requests and guest conversion. A short test can be distorted by seasonality and small samples. Do not claim a channel change caused a result unless the design supports that conclusion.
Document the decision and review date
Summarise the baseline, assumptions, scenarios, legal review, test results and decision owner. State when the agreement or cost structure will be checked again. Keep source documents and approved calculations in a controlled place so a future manager can reconstruct the comparison.
If the change is not financially clear, identify the missing data and ask the partner for a transparent breakdown. A reasonable decision may be to keep the current structure temporarily while collecting evidence, provided there is an owner and deadline for the unresolved question.
Frequently asked questions
Should we choose the partner with the lowest commission?
Not on that figure alone. Compare total cost, booking contribution, demand, contract terms and the channel’s role in reaching guests.
How often should channel economics be reviewed?
After contract changes or major distribution shifts and on a regular cadence that fits booking volume and agreement terms.