Hotel Markup & Margin

Feb 14, 2024

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.

SEARCH

RECENT POSTS

How To Choose a Website Template?

Having a professional website is important, whether you are running a business, displaying your portfolio, or blogging. With so many options, web page template selection can be overwhelming. The right template will ensure that your site looks great, is user-friendly,...

read more

Central Reservation Systems for Hotels: What is CRS?

Central Reservation Systems (CRS) enhance the functionalities of the hotel by simplifying processes that, over time, have become a bore to deal with manually and coordinate. To hotel owners, a computerized reservation system is no longer merely a choice but a...

read more
NEWSLETTER SIGNUP
Get blog posts, product updates, musings, and more sent straight to your inbox!