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First, understand each input and output variable of this calculator.
Room Revenue ($) (Before Guest Tax): This is the base room revenue of the hotel generated through OTA in a particular period, like a week or a month. Yes, this is the value on which commission is to be calculated. And therefore, should be before or excluding guest tax. This is the hotel’s revenue. Guest tax belongs to the government and should not be included in revenue or in commission’s calculation. You can get this value easily from the statement of OTA.
Example: If the guests pay the OTA $234 total, which includes a guest tax of 17%, that means the room revenue before guest tax is $200.
Guest Tax (%): This is the tax which includes HST and local taxes like MAT (Municipal Accommodation Tax). Yes, paid by guests to the OTA on the base room revenue.
Example: Let’s say OTA has listed a hotel room for a base revenue of $200. The HST is $26, and the MAT is $8. So, here the guest tax total is $34. The guest has to pay $234 ($200 + $34) at the time of booking.
OTA Commission (%): This is the commission percentage that the OTA charges on the room revenue before guest tax.
Example: At 20%, the commission on $200 room revenue is $40. This OTA commission is an expense for the hotel.
HST Rate on Commission: This is the tax applied to OTA commission. This is separate from the guest tax. Why’s this applied? Well, OTA provides service to the hotel, right? It’s like selling services to hotels. And any sale of services attracts HST in Canada. By the way, HST is a harmonized combination of GST of 5% (applied uniformly across Canada) and PST (Provincial Sales Tax) that varies from province to provide.
This HST is to be paid by the hotel to the OTA (unlike guest tax that’s paid by the guest to the OTA).
Example: a HST of 13% on $40 commission is $5.20. So, the OTA will not only deduct the base commission of $40 but also $5.20 from the room revenue before paying out to the hotel.
Commission Paid: This is the commission the hotel paid to the OTA for providing service (of course, the OTA helped bring guests). This includes the base commission plus the HST tax.
In our aforesaid example, the commission paid by the hotel to the OTA is $45.20
Net Payout (if the hotel is GST/HST registered): This is the final payout the hotel receives from the OTA. Yes, after deducting the commission from the room revenue. But here’s where things get interesting. If the hotel is GST/HST registered, the payout includes the guest tax. That means it’s the duty of the hotel to pay the guest tax collected by the OTA to the government.
Net Payout (if the hotel is not GST/HST registered): This is also the final payout the hotel receives from the OTA. But here, the payout doesn’t include guest tax. That means it’s the duty of the OTA to remit the guest tax collected from the guests to the government.
Step 1: Calculate the commission paid, including HST
Commission paid = Room revenue (before guest tax) x (1 + HST / 100)
Commission paid = $200 x (1 + 13 / 100) = $45.20
Step 2: Calculate the net payout, including guest tax (if the hotel is GST/HST registered)
Net payout (including guest tax) = [Room revenue (before guest tax) x (1 + guest tax rate / 100)] - Commission paid (including HST)
Net payout (including guest tax) = [$200 x (1 + 17 / 100)] - $45.20 = $188.80
Step 3: Calculate the net payout, excluding guest tax (if the hotel is not GST/HST registered)
Net payout (excluding guest tax) = Room revenue (before guest tax) - Commission paid (including HST)
Net payout (including guest tax) = $200 - $45.20 = $154.80