The same room, sold two ways, is two different businesses

A room sold direct and the same room sold through an OTA are not the same sale — one keeps its margin, the other gives much of it away. The figure the industry runs on cannot see the difference, which is how the margin leaked while the dashboards stayed green.

Here is an uncomfortable arithmetic. A hotel can grow its revenue, hit its targets, and post a strong year — and keep less money than the year before. It has been happening across the industry for the better part of a decade, and the figure everyone watches gives no warning.

The reason sits in the channel. The same room earns very different profit depending on how it was sold. Booked direct, the hotel keeps most of the rate. Booked through a high-cost channel — commission paid, paid-search spend burned to win the click — a chunk of that rate is gone before the guest checks in. CoStar puts the leverage at 1.5 to 2 times: a small move in revenue swings profit by far more, in either direction. The channel mix decides which way.

RevPAR cannot see any of this. It measures the rate and the heads in beds. It was built in an era when the channel was simple and the cost of filling a room was stable, so it has no column for the thing that now decides whether a strong revenue year is a strong profit year. A hotel chasing revenue through expensive channels is rewarded on the scorecard for the exact behavior that thins its margin.

That is the deeper problem. It is not that the figure is incomplete. It is that the figure is blind to the one variable — distribution cost — that has quietly become the largest lever on hotel profitability. And what a measurement cannot see, an operator cannot defend. The margin did not vanish in plain view. It left through a channel the scorecard was never built to watch.

by Markus Busch, Editor and Publisher of Hospitality.today

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