Hotel Markup & Margin

Feb 21, 2020

What does hotel margin or hotel markup mean?

Hotel markup and margin are terms used to calculate how much a sales website collects as their fee from booking one of your hotel’s room nights.

These two can be a little tricky in the hospitality industry as they are fundamentally different – and are commonly confused. Here is an example scenario and a description of how hotel markup and margin would be calculated.

Example Scenario:
The double room sells for $100 per night, and a guest books a one night stay on a wholesaler’s website you work with. The total amount collected from the guest is $100.00.

The wholesaler takes $25 as their fee, leaving your hotel with $75 to collect as your net rate.

Hotel Markup
The wholesaler’s take is equal to 1/3 the amount your hotel takes – $25 to your $75.
This means the markup is 33.33% (1/3 = .3333 x 100 = 33.33%) for your hotel’s sales on this wholesalers website. The wholesaler’s take will always be equal to 33.33% of the amount your hotel takes.

Hotel Margin
The wholesaler’s take is equal to 1/4 of the total amount collected – $25 of $100.
This means the margin is 25.00% for your hotel’s sales on this wholesaler’s website. The wholesaler’s take is equal to 25% of the total amount collected from the guest.

So yes – a 33.33% Markup equals a 25.00% Margin for your hotel. These two principles are just two common ways of calculating how much your hotel’s net rate will be for room nights sold on a wholesaler’s website.

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