Net Rate refers to the non-commissionable rate a hotel sells to an intermediary, such as a tour operator, a wholesaler or an online travel agency working on the merchant model. The intermediary adds its own markup and resells the room to the guest at a higher price, so the hotel receives the net rate and pays no further commission. Net rates are agreed in a contract and are confidential. Every room sold direct, by contrast, earns the hotel the full rate, which is why many hotels use chatlyn to answer guest questions quickly and guide guests to the hotel's own booking engine.
What is a net rate in the hospitality industry?
A net rate in the hospitality industry is the rate at which a hotel sells rooms, without commission, to an intermediary such as a tour operator, a wholesaler or an OTA. The intermediary then adds a markup to set the price the guest pays.
How is the net rate calculated in hotel bookings?
The net rate is either agreed directly in the contract or derived from the public rate by deducting the intermediary's commission or discount. The intermediary then adds its markup: with a net rate of €100 and a 20% markup, the guest pays €120 and the hotel receives €100.
