How to account for Booking.com and OTA commissions.
How to record online travel agency bookings and commissions correctly: pay-at-hotel vs prepaid, a worked example and the checks that catch errors.
By the Tivuzo team · Updated
Record OTA bookings at the gross room rate the guest pays, and record the OTA's commission as a separate cost, not as a discount on revenue. For pay-at-hotel bookings the guest pays you and the OTA invoices you its commission; for prepaid (virtual card or payout) bookings the OTA collects, deducts its commission and pays you the net, which you match against the guest's folio and the commission. Keep the OTA's booking reference on every reservation so payouts and invoices can be matched.
Two ways OTAs get paid
| Pay at the hotel | Prepaid by the OTA | |
|---|---|---|
| Who pays the hotel | The guest, at check-in or check-out | The OTA, by payout or virtual card |
| Commission | Invoiced by the OTA, usually monthly | Deducted before the payout |
| Folio | Settled by the guest's payment | Settled by the OTA payout (or the virtual card charge) |
| Risk | No-shows and unpaid commissions | Payout timing and fees |
Worked example
A guest books 3 nights at KSh 9,000 a night through an OTA with 15% commission.
| Step | Pay at hotel | Prepaid |
|---|---|---|
| Room revenue (gross) | KSh 27,000 | KSh 27,000 |
| Guest pays the hotel | KSh 27,000 | — |
| OTA pays the hotel | — | KSh 22,950 (27,000 − 4,050) |
| Commission cost | KSh 4,050 on the OTA's monthly invoice | KSh 4,050 deducted from the payout |
In both cases revenue is KSh 27,000 and commission cost KSh 4,050. Recording only the net KSh 22,950 as revenue understates ADR and hides what the channel costs.
How to record it
- On bookingEnter the reservation with source (the OTA), the OTA's reference and the gross rate.
- During the stayNights post at the gross rate; extras go to the guest as normal.
- At check-out (pay at hotel)The guest pays the folio; the OTA's commission will arrive on its invoice.
- At check-out (prepaid)Bill the room to the OTA (as a company); the guest pays only extras.
- On payoutMatch the OTA's payout to its open invoices; post the deducted commission and any fees.
- Month-endCheck every OTA booking of the month has its commission recorded.
Checks worth doing
- Every OTA booking has its reference in the reservation
- Commission recorded per booking or per month, never netted against revenue
- No-shows and cancellations checked against the OTA's commission invoice
- Payouts matched to bookings, with fees and currency differences posted
- Commission cost by channel compared with direct bookings
In Tivuzo
Tivuzo doesn't sync live with Booking.com, Expedia or other OTAs yet. Each OTA booking is recorded with its source and reference; prepaid bookings can bill the room to the OTA like a company, and payouts are matched in the accounts. See guest folios and billing and the month-end checklist.
OTA accounting questions
Should OTA commission be deducted from revenue?
No. Record revenue at the gross rate and commission as a cost of sales, so ADR is accurate and channel costs are visible.
What is a virtual credit card from an OTA?
A single-use card number the OTA gives the hotel for a prepaid booking; the hotel charges it for the amount due.
Is VAT charged on OTA commission?
Commission invoices from foreign OTAs may fall under reverse-charge or other rules depending on your country. Check with your accountant.
How do I compare OTA and direct bookings?
Compare the net after commission and fees per night with the net of a direct booking, and the cost of winning that direct booking.
Last updated by the Tivuzo team.