Distributing your vacation rental has a number of layers of distribution & they all share in the commissions for a booking. Theses systems include Online Travel Agencies, Channel Managers, Property Management Systems, Revenue Management Systems, & Merchant Processors. Here is a summary of the most common charges.
Online Travel Agencies (OTA’s)
Companies such as Expedia, Airbnb, and Booking.com are known as online travel agents. They give consumers tons of options to book travel and in turn take a cut of the transaction of properties that are booked on their site.
OTA’s can either act as the merchant or pass that on to the supplier
Property Management System (PMS) + Channel Manager
Most technology Channel Managers have a 4% transaction fee for each reservation on top of the PMS connectivity fee of 1%-2%.
Make sure to ask your pms and channel manager partners because sometimes the channel manager has a rev share with the channel manager as well as charging the property manager either a flat monthly fee or a % of revenue
PMS with direct connects can be cheaper depending on how they are bundled, but many PMS’s claim to have direct connects but only have one or two and partner with channel manager’s for the rest of the channels.
Merchant Processor
In channels where the supplier is expected to charge the card, the property manager will have to bear the cost of merchant processing. This is normally around 2.5%-3% + 30 cents transaction fees for Mastercard & Visa’s with and additional .5% American Express. There is also additional charges for international credit cards.
This cost can be greatly reduced as property managers grow in size.
Revenue Management Systems (RMS)
Anybody that is using a revenue management system to recommend & set prices will normally also have to share .75%-1% of revenue with their RMS provider.
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