Recipe 2 - The Channel-Cost Audit: Find Out Which Channels Are Quietly Costing You the Most

Find Out Which Channels Are Quietly Costing You the Most

From The Spiral Sales Office Recipe Vault | By Paul Woodley

Revenue is not the same as net revenue. A room sold through an OTA at 22% commission produces materially less than the same room sold direct — and most month-end packages present the gross number without ever surfacing the cost underneath it.

Recipe 2 fixes that. It takes your source-of-business data and converts it into an honest picture of what each channel is actually producing after the cost of acquiring the business is accounted for. Then it gives you a specific shift target and three actions to get there in the next thirty days.

What This Recipe Makes

An honest, channel-by-channel view of net revenue after typical acquisition costs, with a specific, achievable shift target to improve that number by two percent in the next month.

• Head Chef: Revenue Manager and DOSM together
• When to Cook It: Monthly at close; again before any conversation about increasing paid distribution spend
• Ingredients: Source of business report, monthly and year-to-date, current year vs prior year, showing room nights, revenue, average rate, and percentage of revenue by channel

What the Prompt Calculates

The AI prompt uses standard industry cost-of-acquisition reference ranges to build a net revenue picture by channel. These are applied as labelled assumptions, not hard facts, which keeps the output honest and reminds you where to verify against your actual contract terms.

Reference ranges used:

• Direct property and central reservations: near zero
• Brand website: approximately three to six percent program fee
• GDS: approximately ten to twelve percent fee
• OTA and e-commerce: approximately fifteen to twenty-five percent commission
• Hotel-to-hotel referral: near zero

Every one of these is labelled as an assumption in the output. Your actual agreements may differ, and the prompt tells you which numbers to verify before acting on the analysis.

The Four Outputs This Prompt Returns

1. Estimated Net Revenue by Channel - Revenue after typical acquisition cost, not just gross revenue. This is the number that tells you what the channel is actually worth to the hotel
2. The Channel That Grew the Most Year-Over-Year - And critically, whether that growth is helping or hurting net revenue. Volume growth in a high-cost channel is not a win
3. A Specific Channel-Shift Target - How many room nights you would need to move from your highest-cost channel to your lowest-cost channel to improve net revenue by two percent. A number, not a general direction
4. Three Concrete Actions for the Next Thirty Days - Not recommendations to consider. Actions to take, with enough specificity to assign to a person and a deadline

Why This Matters More Than Most DOSMs Realise

In a typical month-end package, channel performance is reported as room nights and gross revenue by source. Those numbers describe volume. They do not describe value.

A hotel filling thirty percent of its rooms through high-commission OTA channels is not in the same position as a hotel filling thirty percent through direct and brand channels, even if the occupancy and ADR look identical on the page. The difference shows up in net revenue and in the margin conversation with ownership.

Recipe 2 is how you make that conversation concrete instead of theoretical.

Where the Output Goes

The source-of-business narrative field in your month-end workbook. The weekly revenue strategy meeting, where distribution decisions get made. The marketing budget conversation, where the cost of paid channels needs to be weighed against the cost of demand generation that feeds cheaper channels.

The Mirror

When you last told your GM that OTA production was up this month, did you also tell them what that growth cost? If not, you reported activity without telling the full story. This prompt helps you tell both halves.

A Note on Data Handling

Confirm what your employer, owner, brand, and management company permit before pasting property data into any AI platform. Source-of-business data by channel may be commercially sensitive. When in doubt, aggregate, anonymise, or ask. Every output is a starting position. The judgment and the decisions still belong to you.

Your Next Step

Pull your source-of-business report this month before you write the narrative. Run Recipe 2. Find out what your channels actually cost. Then decide whether the channel mix you have is the one you want, or the one that simply grew while nobody was watching the acquisition cost.

The spiral moves upward when every dollar of revenue is working as hard as it can. Recipe 2 is how you check.

Paul Woodley | The Spiral Sales Office