The season is over, and the numbers are in.
Revenue is final. Occupancy is final. ADR is final. The report that goes to the owner will have those three, and probably a fourth: direct booking share.
There is a number that almost never makes it onto that page, though. It is the one that explains why a good season and a profitable season are not always the same thing.
What it cost to fill the rooms.
The invoice you never receive
Most costs arrive as invoices. Payroll, utilities, linen, maintenance. Somebody opens them, somebody pays them, and they show up in the accounts.
Distribution costs don't arrive that way. They are taken out before the money reaches you, or hidden inside a rate, or booked under marketing, or described as "the cost of being visible."
In Issue #35 we looked at how a strong direct booking share can hide the wrong story. This is the same problem from the other side. A good-looking revenue line can hide how much of it was handed back on the way in.
Nobody sends you the bill, so nobody adds it up. Let's add it up, and be careful about which parts are really a bill.
Two things you paid, two things you decided
What you paid
1. Commissions.
Most OTA bookings carry a commission, and the actual rate varies by platform, agreement, property and promotional programme. Don't rely on headline rates. Take the revenue booked through each channel, apply the commission actually paid, and add it up. Pull the real figures.
2. Paid search on your own name.
This is the one that surprises people. If a guest searches for your hotel by name and clicks a paid ad to arrive, the booking shows up as direct. It wasn't free. You paid for it, and the person was already looking for you.
What you decided
3. The revenue impact of tactical discounting.
The September offer. The last-minute rate. The week when occupancy needed a push. These decisions affect realised ADR, but the difference from the published rate is not automatically lost revenue. Some of those bookings may not have happened without the discount. Measure the room nights sold, the realised rate and the realistic alternative, not simply the gap from the highest advertised price.
4. The gap between public and net rates.
Tour operators and wholesalers buy below your public rate. Whether that gap is a cost depends on a question only you can answer: would those rooms have sold anyway, and at what price?
And a fifth, which has no number.
The guest data you didn't get. A booking through an intermediary often comes with a relay email address and no history. You paid for the room night and received a stranger. That cost is real. It simply can't be put in a column.
Distribution costs don't arrive as an invoice. They arrive as a smaller number than you expected.
What it looks like on one page
Here is a simplified, hypothetical example. The figures are illustrative round numbers, not benchmarks. Use your own.
A hotel closes the season with €1,000,000 in room revenue.
What was paid
- €400,000 of revenue came through OTAs at an average 18% commission: €72,000
- Paid search that captured guests searching for the hotel's own name: €18,000
- Identifiable acquisition spend: €90,000, or 9% of revenue
What was decided, and needs its own assessment
- Rate given away in September to fill the gaps: €25,000
- Gap between public and net rates on packages: €30,000
- Price differentials: €55,000
These two blocks should not be added together. The first is money that left the business. The second is a set of pricing decisions, and each needs its own question: would that room have sold otherwise?
Nobody at this hotel would say the season cost 9%. They would say it had a 40% OTA share and a decent direct number. Both are true. Only the first tells you what happened to the money, and the second still leaves €55,000 of questions open.
Why it matters now
Because of what happens in the next few weeks.
Budgets for next year are being drafted. The usual starting point is last year's marketing spend, plus or minus a few percent. That works only if last year's spend was the whole cost of getting guests, and it never is.
The marketing line is a small part of it. The real acquisition cost sits across four or five other places, and none of them is labelled marketing.
Once the paid figures are on one page, the conversation about next year changes. Moving five percentage points of bookings from an intermediary to a direct channel becomes a measurable commercial scenario, not simply a marketing ambition. The potential benefit depends on the commission avoided, the cost of acquiring those bookings directly, and whether the hotel could have generated that demand independently.
A direct booking is not free. It is a different cost, and one you can see.
What it doesn't tell you
One caution, so this doesn't become a crusade.
Intermediaries do real work. They reach guests you could not reach alone, in markets you don't have a presence in. Some of what you pay buys demand that would not otherwise exist.
The point is not that the number should be zero. The point is that you should be able to say how much of it bought something you couldn't have got any other way, and how much of it bought a guest who would have come to you anyway.
Those two groups sit inside the same commission line. Separating them is the most valuable hour of the autumn.
The exercise
It takes about an hour, and you need the final season figures.
Actual spend
- 1. Revenue by channel, with the actual commission paid on each.
- 2. Total paid search spend, and an honest estimate of how much was brand terms.
Estimated differentials (keep these separate)
- 3. The discounted rates, with room nights sold at each, and your realistic view of what would have sold without them.
- 4. Net-rate bookings from packages and wholesale, against the public rate.
The one with no number
- 5. How many guests this season you actually hold an email address for.
Add lines one and two. Divide by revenue.
Then put lines three and four next to it, as questions.
Then look at line five.
💬 Worth asking yourself this week
If someone asked what this season cost to fill, could you separate what you paid from what you gave up, and show where each figure came from?
If not, that is the first thing to fix before the budget meeting.