Hotel
Channel cost reduces the rate a hotel actually keeps from every room sold. When acquisition expense rises faster than ADR, the gap between gross revenue and net room contribution widens in ways that occupancy growth alone cannot close. Learn more about our Hotel GOP Improvement practice.
Updated August 3, 2026 · Readout
Channel Economics
Select a channel and move the ADR control to see how acquisition cost changes the net rate the hotel retains.
↔ Select a channel, then drag the ADR control.
Direct booking cost: loyalty program, website, and direct-booking incentives. Illustrative range: 4–8% of rooms revenue.
Channel Mix
Adjust the share of bookings from each channel to see how the mix changes the blended acquisition cost and net revenue per available room.
↔ Drag the four channel-share controls. Shares rebalance to 100%.
A mix weighted toward OTA and GDS raises the blended cost rate even when individual channel ADRs hold steady. Shifting share toward direct reduces the blended cost, though direct bookings carry their own loyalty and marketing expense that must be weighed against the OTA commission saved.
Cost Growth
Select a period to see how acquisition cost growth compared with ADR growth, and how the gap affected net room contribution.
From 2019 to 2024, agency commissions at full-service U.S. hotels rose 6.0% in 2024 alone, while rooms department revenue grew 2.2% in the same year. Over the five-year period, the gap between cost recovery and revenue recovery widened the net contribution gap.
Channel cost assumptions. The net rate and channel mix simulators use City Shift Finance illustrative cost ranges: Direct 4–8% of rooms revenue; OTA 15–25%; GDS 18–22%; Voice 8–14%. These represent the combined effect of commissions, transaction fees, loyalty charges, and direct-booking incentives. Actual costs vary by property, contract terms, chain scale, and negotiated rates.
Blended cost calculation. Blended cost rate equals the sum of each channel's share multiplied by its midpoint cost rate. Net revenue per available room equals ADR multiplied by one minus the blended cost rate, at 68% illustrative occupancy.
ADR and cost growth data. CBRE Hotels Research, Trends in the Hotel Industry, preliminary sample of 2,600 U.S. hotels. Rooms Department revenue increased 2.2% from 2023 to 2024. Agency commissions increased 6.0% in 2024. Complimentary food and beverage increased 3.9% in 2024. The 2019 to 2024 comparison uses the same-store sample of 1,343 U.S. full-service hotels reporting in both years.
Net contribution context. Net room contribution equals rooms department revenue less all direct rooms costs including acquisition, labor, guest service, and fixed rooms expense. This Readout isolates the acquisition cost component. The Hotel Rooms Revenue and Department Profit Readout covers the full cost structure.
Reporting standard. The Uniform System of Accounts for the Lodging Industry, 12th Revised Edition, adopted January 1, 2026, is the lodging industry reporting standard. Actual property results depend on market, chain scale, service level, union status, channel mix, loyalty economics, and cost allocation.
