Beyond channel mix management: Building within online travel agencies (OTA) metrics and strategies

This article uses a simple scenario in the hotel industry to illustrate how the mix of online travel agencies (OTAs) based on a merchant (net) versus a retail (gross) pricing model will impact and distort the reporting of traditional top‐line performance metrics such as gross rooms revenue and average daily rate, along with the costs of commissions in the profit and loss statement. We show how overstating and understating may result from failing to fully account for the pricing model. To assure that operators and senior decision makers fully understand the revenues and costs within the OTA channel, we advise augmenting aggregate channel contribution with additional statistical analysis. In particular, we encourage practitioners to ‘gross up’ their merchant top‐line sales and commission costs when making across channel analyses, and further to map within channel performance by OTA pricing model.