Gross, net, or net of commission: why channel reports lie

Your channel report, or source report as Explorer calls it, has one revenue column. Every source gets a number, and you rank them on it.

Revenue at which stage, though? A booking has three values: what the guest paid, what your property management system (PMS) recorded, and what you kept after commission.

Most reports show the middle one, and whether commission has already come out of it depends on how each source bills you. On a typical booking from an OTA, an online travel agency, that’s 15% of your revenue. So the one question a source report exists to answer, which source performs better, is the one it can’t.

What’s the difference between gross and net revenue for hotels?

Gross revenue is what the guest paid, including tax. Net revenue is what remains once tax is stripped out, and it’s the figure most hotel reports show. Net of commission goes one step further and removes the source’s cut, leaving what your hotel kept.

• Gross (inc. tax). The guest’s side of the deal. Use it to compare what people pay for your rooms, source against source.
• Net (ex. tax). The accounting view. Tax was never your money, so reporting strips it out. This is the number sitting in your PMS.
• Net (ex. tax & com). Your side of the deal. Tax gone, commission gone. The only number that reaches your bank account.

The trouble starts when a report shows one number and you let it answer every question.

Rule of thumb: gross measures guests, net of commission measures sources. Plain net measures neither cleanly.

Why does the same booking record differently by source?

Because sources don’t bill you the same way. Four models cover almost every third-party booking a European hotel takes.

Agency, or commission invoiced after the stay. The guest pays you. The OTA invoices its commission later, usually monthly, for the guests who checked out the month before. The booking sits in your PMS at full value, indistinguishable from a direct one.

Merchant, or commission deducted at source. The OTA collects the guest’s money at booking, keeps its share, and pays you the remainder after the stay, usually by virtual card, a one-off card number the OTA issues for you to charge, or by bank transfer. What reaches you is the room price minus commission, plus the taxes the guest paid. Several channel managers, the tools that pass rates and bookings between OTAs and your PMS, pass only that net figure on. This is where the biggest OTAs have moved: Booking Holdings’ annual report puts merchant transactions at 70% of its gross bookings in 2025, up from 63% the year before.

Facilitated payments. The OTA collects from the guest on your behalf, but the booking is still contractually yours. Depending on how you’re paid, commission is either deducted from each payout or invoiced monthly as before. The same OTA can leave you with a net payout statement and a gross commission invoice for the same booking. Two documents, two numbers.

Wholesale. Bed banks, the wholesalers that resell your rooms to tour operators and other agents, buy at a contracted net rate, add their own margin, and pay the net after you invoice them for each checkout. Your PMS only ever sees the net.

One more thing to check in any OTA contract: whether commission is calculated on the room price including tax or before it. On a £100 booking that is £80 net of tax, 15% commission is £15 one way and £12 the other, and no source report shows that as a difference in rate. The commission line in Explorer does, and the example below shows it.

So your PMS records different stages of the same journey depending on who sent the booking. Your source report then lines those stages up side by side and invites you to compare them.

Rule of thumb: if two sources bill you differently, their revenue columns aren’t comparable.

What does that look like in real numbers?

Take one room night at £100 including tax, sold three ways, with three kinds of commission: none, 15% on the net price, and 15% on the gross price. Tax on the room is £20 whichever source sold it, so every booking is worth £80 before commission. Tax on the commission invoice itself is left out: for most hotels it’s recoverable and nets to nothing.

Now read the report. The PMS column says £80, £68, £80. The gross-commission source looks identical to direct, and better than the net-commission one. It’s the most expensive of the three.

How does this skew your source decisions?

Every decision ranked on the recorded column inherits the distortion, starting with ADR, your average daily rate: room revenue divided by rooms sold. Compare ADR by source on recorded numbers and every gap above flows straight in. A source showing £68 against a direct £80 might be selling the identical rate. Meanwhile the source that bills you later looks every bit as good as direct, at £15 a night less in the bank.

That column decides which source gets more availability, where the marketing budget goes, and which OTA contract deserves a renegotiation. Rank sources on a column where commission is missing from some rows and deducted from others, and you’ll back the wrong ones.

It reaches rate decisions too. Whether matching a competitor’s rate drop can ever pay back depends on what a room leaves you after commission, and that answer changes by source.

How do you make source comparisons honest?

Measure every source at the same stage, and pick the stage that matches the question. To compare guest demand, use gross. To compare what a source is worth, use net of tax and commission. That takes reporting that can show all three without rebuilding the month in a spreadsheet.

This is what Explorer does. It connects to your PMS, updates in real time, and switches every revenue figure between Gross (inc. tax), Net (ex. tax) and Net (ex. tax & com), so every source sits at the same stage however it billed you. Commission gets its own line by source.

Measured that way, the order can change. The source that topped the report on recorded revenue can slip below one that bills you later. That’s the ranking that should move availability and marketing spend.

There’s a second thing no PMS records. The promotions OTAs sell to buy visibility work by adding a percentage on top of your base commission for the bookings they influence. If the commission on a statement is higher than your contract rate, one of these is probably switched on. Your PMS has no field for it. On an agency booking the uplift only shows on the reservation statement. On a merchant booking it simply arrives as a smaller payout. Explorer lets you record when you enable a booster, so the bookings inside that window carry the commission you paid. The source’s true cost stays honest, and the invoice, when it lands, has something to be checked against.

Commission isn’t the only quiet cost in your booking data, either. The Sources page shows cancellation loss beside commission, and cancellations hit sources unevenly too.