What Is a Net Rate?
A net rate is the price a hotel gives a travel agent, wholesaler or online travel agency for a room, excluding commission and taxes. The channel adds its own markup to that figure before advertising the room to guests (HSMAI Academy glossary).
Last updated: October 2026
How a net rate works
A net rate fixes the hotel's side of the price and leaves the guest's side to the channel, whether that is an online travel agency (OTA), a travel wholesaler or a travel agent (HSMAI Academy glossary). Booking.com offers both arrangements in its connectivity API: under its net-rate model the property supplies a net rate and Booking.com adds its own margin, while under its commission model Booking.com keeps a percentage of the booking value as commission (Managing business models (Booking.com Connectivity docs)).
The net rate can also travel past the first channel. An eligible Booking.com resale partner may receive the net rate and pass it on to its own customers (Managing business models (Booking.com Connectivity docs)). Working back from the price the guest sees gives a simple formula: net rate = sell rate / (1 + markup %). The last question in the FAQ below works through it with an example (Mews, hotel net rate guide).
The term also appears in US court records. In hotel-tax cases decided in Tennessee and Pennsylvania in 2012, the discounted rate that online travel companies negotiated for each hotel room was commonly termed the net rate (GT Grant Thornton via Mondaq, 2012).
Why net rate matters for hotel distribution
Net rates sit underneath the merchant model. In 2005 the merchant model was described as a simple wholesale arrangement of net rates and room allotments with cut-off dates, earning margins of 18% to 30% that the author called a temporary anomaly (HeBS via Hospitality Net, 2005). Under its merchant model, Expedia Group is the merchant of record for hotel bookings, and travelers pay Expedia before they travel (Expedia Group 2025 Form 10-K).
Net rates also need watching once they leave the hotel. Rate leakage happens when net rates appear publicly at or below the hotel's best available rate, which undermines the hotel's pricing integrity (Mews, hotel net rate guide). Booking.com limits that risk on its own platform by distributing net-rate room rates through its resale partner network, away from public guest-facing search, while the property receives the net rate it configured (Managing business models (Booking.com Connectivity docs)). Keeping one room priced consistently across every channel is a wider topic, covered in our post on rate parity in hotels.
Net rate compared with commissionable and sell rates
The three rates describe one room from three sides of the same sale: what the hotel receives, what the channel earns, and what the guest finally pays.
| Rate | What it is | How the channel earns |
|---|---|---|
| Net rate | The amount the hotel sets and receives for the room, excluding commission and taxes (HSMAI Academy glossary) | Adds its own margin on top of the net rate |
| Commissionable rate | The hotel's price to the guest, from which the channel keeps a percentage of the booking value as commission | Earns a commission per sale (About TPI rates (Booking.com Demand API docs)) |
| Sell (retail) rate | The price the guest pays; in the 2012 US court cases, the net rate plus the online travel company's service fee (GT Grant Thornton via Mondaq, 2012) | Keeps the difference between the sell rate and the net rate (GT Grant Thornton via Mondaq, 2012) |
Frequently asked questions
What is net rate, and what does it mean for a hotel?
What does net non-commissionable rate mean?
Does a net rate include tax?
How do you calculate a net rate?
Related terms
See all termsWhere Jetstream fits
A net rate only works if every channel receives the right figure, and the hotel's public rates stay where they should be. Jetstream builds an AI channel manager that keeps a property's rooms, rates and availability accurate on every channel it sells through, managed from one place.