Reimagining the $9 trillion tourism economy—what will it take?
Hey everyone, I recently read an article that McKinsey published on the future or the tourism industry following this
The calculation used to include the OTA commissions for each channel is simple, but you’re probably doing it wrong.
MyAllocator gives you the option of adding a percentage to your base rate during the setup process for each channel. The explanation they give for this process is as follows:
Here you can enter a specific rate difference. For example, if this channel charges 5% more fees than other channels you can set "+ (%)" in the dropdown list and "5.00" in the text field. Upon update our system will automatically add 5% to the room's rate when uploading the availability.
This is not quite right though. Simply adding the commission on top of your base rate (for example, Base Rate + 5%) will not give you the correct selling price for the OTA. Why not? When the booking site takes their 5% commission they take it from their final selling price rather than from your base rate. Ultimately the balance due on arrival will be less than your base rate for each reservation.
But you don’t have to sacrifice this money.
The fine folks at MyAllocator walked me through setting the correct markups for each channel. HW, for example charges a 12% commission. The correct adjustment is +13.636% to include that commission in the final selling price on HW.
For a 15% commission the correct adjustment is +17.647%
I have attached an Excel spreadsheet with the correct markups for commissions between 8% and 20%.
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