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“In the digital market, what the hotel reports on their PNL doesn’t necessarily tell the whole story,” Cindy Estis Green, CEO and co-founder of Kalibri Labs LLC, said in her opening remarks on The Numbers: What Are We Dealing With and Where Are We Headed panel at ALIS. In her opening presentation, Green illuminated the gap between guest-paid hotel rates and net hotel rates, the amount that the hotel actually gets after commission fees.

“In the old days, which I would call the analogue market, the hotel collected almost all of the revenue that they got directly. In the digital market, guests actually pay a lot of money to third-parties, and the hotel only gets a portion of that. The real rates that the guests are paying are not reflected in what is reported industry wide,” she said on the panel. This is called guest-paid revenue. “By guest-paid revenue, I mean the price that is recorded on the hotel’s PNL plus the wholesale commissions that are paid to the third-parties,” adds Green

Currently, guest-paid revenue is on an upswing. Green predicts that guest-paid revenue in 2018 will reach $161.6 billion, which would be a 4% increase from 2017. That translates to significantly increased per-night room rates. “The good news is that guest-paid revenue has actually grown at a pretty strong pace,” says Green. “We can look at guest-paid revenue and see that it will grow about 4% from 2017 to what we predict in 2018, which is a pretty strong growth. When we look at all of the costs associated with that, it is about $4 billion in wholesale commissions. That $4 billion equates to about $3 per night on the average rate across the US. That means that the actual rate that the guest paid is actually $3 more than what the guest reported.” In certain metropolitans, the bump is even more dramatic. In New York City, the average room rate is $8 more per night that what is reported, and in San Diego, it is $5 more per night. “The average rates are not reflecting what is actually happening in the market,” said Green.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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