What Happens to Revenue After the Booking?

Hotels are very good at measuring how revenue is generated.

ADR, RevPAR, and channel production appear in almost every revenue conversation. But these metrics no longer tell the full story. 

Because between the moment the guest pays and the moment that revenue reaches your hotel’s bottom line, something significant happens.

A portion of that revenue disappears. Not because of pricing decisions or demand patterns, but because of how the booking was acquired.

Which raises a more revealing question:

What actually happens to revenue after the booking is made?

This question was at the center of our latest <Decoded/> session, where we explored how distribution and acquisition costs reshape the revenue that actually reaches the bottom line.

The Revenue Journey No One Tracks

In most commercial reports, revenue appears as a single number. But in reality, revenue moves through several economic layers before it becomes profit.

Between the moment a guest pays and the moment that revenue reaches your hotel’s bottom line, several adjustments take place: markups are removed, commissions are deducted, and acquisition costs are applied.

The result is that the revenue reported isn’t always the revenue you actually keep.

Let’s put it in numbers:

At first glance, this hotel appears to have generated €1.28M in revenue.

But once acquisition costs are applied, the picture changes. From the €1.3M guests initially paid, roughly €270,000 disappears before reaching net revenue.

This means that, for every €1 the guest paid, the hotel kept roughly €0.79.

This is what some analytics teams call the sell-to-net funnel: the economic journey revenue takes from the moment a guest pays to the moment it reaches the hotel’s bottom line.

As Kristin Gusho, role,  pointed out:

“Once we start deducting the distribution costs, we can truly see the commercial value of a channel.”

Juyo Analytics helps hotels visualise this funnel by connecting distribution, marketing, and financial data to show how revenue compresses between guest payment and net contribution.

Once these costs are applied, revenue streams that initially look strong can compress significantly.

And this compression is rarely visible in traditional reporting — leading to many hotels still making decisions based on the top of the funnel rather than the bottom.

The Distribution Cost Conversation Is Too Narrow

When we hear hoteliers talking about distribution cost, the discussion usually starts (and ends) with OTA commissions.

But commissions are only one layer of the funnel.

In reality, distribution costs accumulate across multiple parts of the commercial system.

Some costs are directly tied to the booking itself:

• OTA commissions
• GDS fees
• transaction costs
• loyalty program charges

While others sit further upstream, in the way demand is generated:

• CRM platforms
• Website maintenance/build
• marketing campaigns
• metasearch investments
• distribution technology

Once these layers are combined, the economics of demand start to look very different.

A channel that appears expensive at first glance may actually generate high-value demand. Another may look efficient on the surface while relying on costly marketing investments behind the scenes.

This is why distribution cost should be analyzed as a system of investments that shape how demand reaches the hotel, not as a single metric.

Channel Performance Looks Different in Net Terms

When distribution costs are modeled correctly, channel comparisons and conversations change.

For example:

• Direct bookings retain roughly 89% of revenue.
• GDS bookings retain about 76%.
• Other channels dropped further depending on cost structure.

But the insight isn’t simply knowing that some channels cost more. The real value comes from making channels comparable.

Take two bookings: a Booking.com reservation where the commission is deducted later, and an Expedia merchant booking where the commission is deducted upfront.

In gross metrics, these bookings can look very different.

Economically, however, they may be identical.

Without net metrics, hotels often end up scaling the wrong demand simply because the accounting presentation is different.

The Real Optimization Problem: Channel Yield vs Marketing Efficiency

Once costs are visible, a deeper question emerges.

Distribution economics are not governed by a single metric, but around two interconnected levers: channel yield and sales and marketing efficiency.

Channel yield measures the margin left after direct distribution costs such as commissions or transaction fees.

Improving channel yield typically involves:

• adjusting channel mix,
• renegotiating contracts, and
• shifting inventory allocation.

But channel yield is only half the equation. 

Demand itself requires investment.

Marketing campaigns, CRM tools, loyalty programs, and brand partnerships all carry costs.

These investments may reduce margin in the short term but can increase the share of lower-cost bookings over time.

For example, a hotel investing in CRM technology might increase marketing costs initially. But if that investment shifts demand toward direct bookings, overall profitability improves.

As Karin van Rhee, role, mentioned:

“It’s not just about reducing cost, it’s about understanding where to invest to drive the most profitable demand.”

The Surprising Results from Pandox: OTAs Are Not Always the Problem

A property within Pandox’s portfolio illustrates why distribution economics can be counterintuitive.

As Jens Egemalm, Director of Distribution at Pandox, puts it: 

“One of the biggest misconceptions is that OTAs are the reason we pay high distribution costs. That view often changes once you open the books.”

The hotel, operating under a global franchise, initially showed:

• Strong revenue performance
• Average market share
• Distribution costs of roughly 26%
• Net capture rate of 74%

The distribution structure looked typical. Corporate demand, loyalty bookings, GDS, and OTA channels all contributed to the mix.

But when the property shifted from a complex, brand-driven distribution model to a simplified setup — removing brand costs and focusing on performance marketing with strict ROAS targets — something unexpected happened.

The property’s net capture rate increased to 81%, becoming one of the most profitable in the portfolio.

From the outside, the distribution mix looked more expensive. From a net perspective, it was significantly more profitable.

As Jens Egemalm concludes:

“We wouldn’t have been able to make this decision or have this level of insight without the data. With it, we doubled net revenue in a couple of years.”

The Hardest Part of Net Revenue Isn’t the Math

Calculating distribution costs is rarely the biggest obstacle.

Most hotels already know:

• their commission levels,
• marketing budgets,
• technology investments, and
• loyalty costs.

The real challenge lies in implementing net revenue metrics, as this requires:

• Alignment between finance and commercial teams.
• Standardizing how costs are defined.
• Integrating net KPIs into reporting.
• Shifting organizational incentives.

The most difficult step isn’t analytics, it’s the mindset shift. Revenue teams, finance teams, marketing departments, and front office staff all need to understand how distribution decisions affect profitability.

Until that happens, net revenue remains just another dashboard rather than a commercial decision tool.

The Next Evolution of Commercial Strategy

For the past decade, hotel analytics has focused primarily on optimizing revenue.

Over that time:

• Pricing algorithms improved.
• Forecasting models matured.
• Demand signals became more precise.

Now, the next frontier lies elsewhere: understanding the cost of acquiring revenue.

In the coming years, commercial teams will increasingly focus on:

• Acquisition economics
• Marketing allocation
• Channel profitability
• Total demand cost structures