Why commission rates don't compare across OTAs

Ask a hotel which OTA is cheapest and the answer usually comes from the contracts: Booking.com at 15%, Agoda at 18%, Goibibo / MakeMyTrip at 20%. Each OTA applies its own rate exactly. The trouble is that the three percentages are not measured against the same thing, so putting them side by side tells you less than it seems.

The same word, two different bases

On Booking.com, the payout's "Amount" for a booking includes the guest's taxes. The reservation statement's "Room Sales" for the same booking excludes them. Both are correct, and they differ by exactly the tax rate.

Divide the commission by the wrong one and the rate moves. Divide it by a figure from another OTA that states its prices with tax included, and you are comparing different things.

There is a useful side effect: the guest tax on a booking is the difference between those two figures. You don't need to know which tax rate applied — which matters where rates vary by room price, and one rate applied to everything is wrong on some bookings.

A statement total that includes cancellations

A reservation statement's headline "original amount" is every reservation written in the period — including the ones that were cancelled. At one property, more than half of that total had cancelled.

Commission is charged only on the stays that happened. Put the headline total beside "commission (15%)" and the effective rate looks like 7%. Nothing was wrong with the commission; the base was.

Tax on commission depends on where the OTA bills from

In India, an OTA that invoices from inside the country adds GST to its commission. OTAs that bill from abroad add none on their invoice, and the tax is accounted for differently at your end — a question for your accountant, not for a comparison table.

The effect on a comparison is large. Add 18% GST to a 20% commission and it reads 23.6%. Next to a 15% or 18% commission with no tax on the invoice, that OTA looks far more expensive than its contract says. Keep tax on commission as its own line, and compare commission with commission.

Advertising that lives inside the rate

A visibility programme can be charged as a higher commission on the bookings it promoted. Your contract says 18%; the bookings that came through the programme carry 27%. Nothing else on the screen marks the difference.

If you average the commission across all bookings, the programme disappears into a slightly higher average. If you compare each booking with your contract rate, it shows up as exactly the rows you paid extra for.

What to compare instead

• Per OTA, what reached you for every 100 a guest paid — with each OTA's figures on its own basis, stated as such.
• Commission against your contract, row by row, so a higher rate is a named programme rather than a drifting average.
• Tax on commission, separately. It is real money, but it is not commission.
• No grand total across OTAs unless it is marked as a figure you calculated. Adding numbers measured on different bases gives you a figure that exists nowhere.