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All about price, commission and binding prices

How to manage multiple price scenarios at TravelgateX

If you need some light to understand multiple price scenarios and the criteria applied to identify commissions and mandatory prices, you are in the right place!

Overview: Price information in TravelgateX API response 💡

As quick introduction, let’s consider that in each API Search response, we return the options available, detailing the following information, among other fields:

"code": "5683",

"description": "Double Suite Deluxe",

"refundable": false,

"roomPrice": {

"price": {

“currency” : “USD”,

“binding” : true,

“net” : 150

“gross” : 170,

“exchange” : {

“currency” : “USD”,

“rate” : 1

},

“minimumSellingPrice” : 160,

“markups” : null

}

What information will you receive in the "price" of an option?

Every option has a price and every price indicates:

Currency
Amount (net and gross in Hotel-X API)
Binding
In the case of TravelgateX Legacy API, we also provide the commission.
Markup applied over the Supplier price, whenever provided.
Minimum Selling Price (if specified by the Supplier)

What is a Binding price? ⚠️

When a price is tagged as "binding", it means it’s mandatory to sell over the amount indicated, gross or Minimum Selling Price if informed. It’s also called as mandatory price or PVP in Spain.

How does "binding" information work?

If binding is set as true: it means that the Buyer must sell the hotel at least at the price provided by the Seller, not less.
If binding is set as false: the Buyer can sell the product for a lower price than the one returned by the Seller.

How should I interpret the value in the field "minimumSellingPrice"?🔎

What does minimumSellingPrice (MSP) mean?

The minimumSellingPrice (MSP) represents the lowest price at which the Buyer can sell the Supplier's product to their Customers. This feature was introduced in TravelgateX in 2022, as mentioned in the implementation update. Previously, we relied on the binding tag to identify mandatory gross amounts that served as minimum selling prices.

What Information does MSP return?

MSP field informs the amount to be set as mandatory price and allows Buyers to get a competitive pricing reference, especially valuable when we have have in place 3 different pricing amounts:

Gross price: gross amount to be subject to commission subtracting.
Net price: net amount with no commission included, amount payable to the Seller.
Minimum Selling Price: lowest price allowed to be marked up by the Buyer when selling to their own Customers.

Every time that a Supplier confirms that they return a MinimumSellingPrice in their response, we will take that MinimumSellingPrice and we will show it on our own MinimumSellingPrice node, and we will also return the Binding=true*.

* This may not apply in some instances for Legacy users that haven't implemented the MSP. Remember to implement the MSP so that you are able to read this information on your side.

This parameter holds significant value since it helps us determine the exact amount we should use as a reference for pricing. Before, we could only use the gross amount as the minimum price and couldn't take other factors into account. But now, with this parameter, we have the awesome opportunity to set prices based on the exact amount needed to be competitive. It's a game-changer for making sure our prices are accurate and give us an edge in the market.

Taking our previous example from Search:

“binding” : true

“net” : 150

“gross” : 170,

“currency” : “USD”,

“minimumSellingPrice” : 160,

In this case, we cannot sell lower than 160; and if we had no MSP field, we would need to inform gross as the binding minimum amount and will not be so competitive.

In regards to the Net and Gross Prices: If the Supplier returns exactly a net and gross node from their side, we will return those values that same way. If they just return one “totalprice” node additional to the Minimum Selling Price, we will ask them if that “total” is a gross or if it's a net in order to confirm the value to be return in both net and gross nodes.

If a Supplier does not send a Minimum Selling Price, we will ask them if we need to specify any of the prices returned in their response as a Minimum Selling Price, e.g. MSP = net or MSP = gross (or any specific treatment requested on their side). In case they confirm that we do not have to set any Minimum Selling Price, we will just treat the net, gross, or both (if returned) and the binding will be “false” unless the Supplier specifies in otherwise in a node of their response.

Could a Minimum Selling Price be lower than the gross amount?

It's not something that happens often, but it's important to be aware that it can occur. When reselling hotel products, the final price is determined by the business rules agreed upon by all parties involved. So, if the Minimum Selling Price (MSP) is communicated and followed, a wholesaler might sell to a B2B Partner at a rate higher than the MSP in order to apply a larger markup. This strategy can still lead to sales due to is a high demand for the product.

For instance:

1. Hotel chain sells to a Bedbank with rates 10% commissionable:

“binding” : true

“net” : 180

“gross” : 200,

“currency” : “USD”,

“minimumSellingPrice” : 200

2. Bedbank sells to a B2B wholesaler and applies 9% markup, selling with net rates:

“binding”: true

“net”: 196.2

“gross”: 196.2

“currency” : “USD”,

“minimumSellingPrice” : 200

3. B2B wholesaler sells to an OTA with 3% markup and net rates:

“binding”: true

“net”: 202.08

“gross”: 202.08

“currency” : “USD”,

“minimumSellingPrice” : 200

As you can see, we always provide and maintain the minimum selling price as a reference. However, when multiple parties sell the same product, it's possible for the gross price to exceed the MSP initially set by the hotel chain.

But does this mean the product is not competitive? Not necessarily. While the rate may be higher than what the hotel chain offers on their website, there are situations where high demand and limited inventory make selling a room, even at a slightly higher price than the direct channel, a fantastic opportunity for our distributors.

Can I obtain the Minimum Selling Price from all Sellers?

Since this field is relatively new, not all Sellers will have implemented this feature in their own API, which is integrated into our Marketplace. However, we will make sure to inform our Buyers about the Minimum Selling Price (MSP) whenever they utilize this field.

Minimum Selling Price values:

“minimumSellingPrice” = amount:

the lowest possible amount that can be sold commercially
“minimumSellingPrice” = 0: no minimum selling price is provided.
“minimumSellingPrice” = -1: we have no information about MSP from the Seller (only applicable to Legacy Pull Buyers API).

Should I ignore the binding field when using Minimum Selling Price?

Since we are handling highly sensitive information that can have a significant impact on your business, we strongly recommend that you always make proper use of both fields.

Binding field: used in order to determine whether the amount is mandatory or not.
Minimum Selling Price field: used in order to build your prices based on price restrictions and competitiveness.

What should I do if I haven't implemented the Minimum Selling Price yet as a Buyer and I receive NET=Gross?

If you receive binding = true and the Seller returns the Minimum Selling Price (MSP):
Minimum Selling Price = Gross

If you receive binding = false and the Seller does not return the Minimum Selling Price (MSP):
There is pricing freedom

How should I interpret the value in the field "commission" in Hotel Buyers API (Legacy)?✔️

In Hotel-X, we provide both the "Net" and "Gross" prices for each rate to help with calculations. However, in our legacy API, we only provide the amount, commission, and binding information. For instance:

<Room id = "4145" roomCandidateRefId = "1" code = "DBL#STAND" description = "Doble Standard" nonRefundable = "false" numberOfUnits = "5">

<Price currency = "EUR" amount = "36.20" binding = "false" commission = "-1"/>

Commission values:

Commission = 0: the price returned is a net price.
Commission = -1: the Seller has not provided the Selling price nor the commission. In case it exists, commission has been agreed at a contractual level with the Seller and it is not traveling via TravelgateX.
Commission is greater than 0: X = % of the commission that is applied to the amount.

How can I check the commission amount in Hotel-X Buyers API?

There is no commission field in Hotel-X API, as we simplify the process by calculating net amount.If you need to know the specific amount deducted as commission, you just need to subtract the net from the gross amount: Gross - net = commission

Please, keep in mind that if you don't follow these rules, you may put at risk your commercial agreement with the Seller.

Don't forget to check our Documentation and Hotel-X Schema for further information. Any additional questions? Just contact us!