What is the meaning / definition of in the hospitality industry?

In we work with many rate levels. Room is sold via some third party distributors at prices that are subject to commission. Others negotiate a (sometimes lower) price with the hotel that does not include a commissions. Such a rate is called a Net Rate.

The Net Rate is the price without the commission of the travel agent. The distributor can mark-up this price with the he wishes to make, or an amount which is contractually agreed. Hotel distribution partners which typically work with net room rates are:

  •  OTA
  • Wholesalers
  • Tour Operators
  • FIT companies (aka Foreign Incoming Travel)
  • DMC’s – Destination Management Companies
  • Group bookers

From a hotel perspective you can also calculate a NetRate when subtracting the commission from a gross or sell rate. For instance if the rate paid was $100 (excl VAT) and the commission is 25%, the Net Rate would be $75. And with a commission opf 15% the Net Rate would be $85.

These kind of calculations are used to determine the real contribution distribution . As well as a useful called NREVPAR.

See also:

  • Negotiated Rate
  • Fenced Rate
  • Rack Rate

Synonyms

  • Net Rate

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