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How do I measure the true cost of each booking channel?
Channel cost is the commissions and fees paid on bookings from that channel, divided by the revenue those bookings produce, giving an acquisition cost percentage. For true cost, add other costs such as payment fees, marketing and staff time, then compare with net revenue.
Formula in words: (commission + fees + channel-related costs) divided by booking revenue from the channel.
It matters because the headline room rate on each channel can look the same while the amount you keep differs.
Commonly misread:
- Comparing gross revenue by channel instead of net revenue after commission.
- Overlooking cancellations and no-shows, which differ by channel.
- Ignoring repeat guests that a channel introduced who later book direct.
Report net ADR by channel, plus cancellation rates and length of stay, to see which channels are profitable.
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