Key takeaways
- Recognise revenue when the room service is provided, not on the booking date, and assess principal/agent status from the actual contract.
- For foreign OTAs, check VAT reverse charge via PP 36 and WHT via PND 54 separately.
- VAT at 7% has been extended to 30 September 2027, but input VAT from PP 36 can be credited only in the period in which the return is filed, so there is a short-term cash flow effect.
1. Introduction
Recording OTA revenue and expenses must comply with TFRS 15 and Thai tax law. This article explains business models, accounting entries, taxes, P&L presentation, the chart of accounts, month-end closing and channel analysis. The figures are hypothetical examples.
2. OTA business models
2.1 Merchant Model
The OTA collects payment from the customer at booking and transfers it to the hotel after check-out, net of commission.
2.2 Agency Model
The customer pays the hotel directly at check-in or check-out, and the OTA then sends the hotel a commission invoice.
| OTA | Commission (approx.) | Main model |
|---|---|---|
| Booking.com | 15–18% | Mainly agency |
| Agoda | 18–25% | Mainly merchant |
| Expedia | 18–22% | Merchant |
| Trip.com | 15–20% | Mixed |
| Short-term accommodation platforms | Varies by platform | Merchant |
Actual rates depend on each hotel's contract and programme
3. Merchant model accounting
A room costs THB 8,000 per night including VAT, booked through a foreign OTA with 20% commission = THB 1,600. Net amount: THB 6,400.
Step 1: Customer books
Record as a memo in the reservation system/PMS, as no service has yet been provided.
Step 2: Customer checks out
| Account | Dr. | Cr. |
|---|---|---|
| Trade receivables – OTA | 8,000.00 | |
| Room revenue | 7,476.64 | |
| Output VAT | 523.36 | |
| OTA commission | 1,600.00 | |
| Trade receivables – OTA | 1,600.00 |
The remaining receivable is THB 6,400. The same transaction is presented on a gross basis.
Step 3: Receive payment
Dr. Cash/bank 6,400.00, Cr. Trade receivables – OTA 6,400.00
Payment in a foreign currency
Record the receivable of USD 176 at 36.3636 = THB 6,400. The actual receipt at 36.50 = THB 6,424. Dr. Bank 6,424, Cr. Receivable 6,400, Cr. Foreign exchange gain 24
4. Agency model accounting
The customer pays the hotel THB 8,000 including VAT, and a domestic OTA issues a commission invoice of THB 1,600.
| Steps | Dr. | Cr. |
|---|---|---|
| Check-out | Cash/card 8,000.00 | Room revenue 7,476.64; Output VAT 523.36 |
| Receive invoice | OTA commission 1,600.00 | Payables – OTA 1,600.00 |
| Payment | Payables – OTA 1,600.00 | WHT payable 48.00; Bank 1,552.00 |
WHT at 3% applies when paying service fees to a juristic person in Thailand, and is filed on PND 53. If the OTA issues a tax invoice, separate the VAT on the commission according to the actual documents.
5. Related taxes
Tax treatment varies with each OTA's contract and facts. Review the counterparty's documents and seek advice from a tax specialist before setting the procedure.
5.1 Output VAT
Room revenue of THB 8,000 including VAT is split into revenue of THB 7,476.64 and output VAT of THB 523.36. File it on PP 30 by the due date. VAT at 7% has been extended to 30 September 2027 under Royal Decree No. 807; check the rate again as the expiry date approaches.
5.2 Input VAT and reverse charge
- Domestic OTA issuing a tax invoice: claim input VAT under the normal conditions.
- Foreign OTA: where the hotel is VAT-registered, it must self-assess 7% VAT on the commission and remit it under Section 83/6 via PP 36 by the 7th of the month following the month of payment, or by the 15th if filed online.
- Tax paid via PP 36 can be used as input VAT in the month it is filed, so it is not always offset within a single period, and a temporary cash outflow arises.
- If the OTA deducts its fee from the amount transferred, make clear when the payment date is and keep the statement as evidence.
- The e-Service law applies to recipients who are not VAT-registered; a VAT-registered hotel must self-assess the tax.
5.3 Withholding tax
For a domestic OTA, withhold 3% and file on PND 53. For payments to a foreign OTA, check WHT under the Revenue Code, PND 54 and the double tax treaty. The domestic rate is generally 15%, but if the income qualifies as business profits and the recipient has no permanent establishment in Thailand, it may be exempt under the treaty, provided a certificate of residence and supporting documents are held.
Failing to withhold or remit exposes the hotel to joint liability for the unremitted tax, penalties under the Revenue Code and a surcharge of 1.5% per month, as applicable. Check the calculation basis with a tax adviser.
5.4 Corporate income tax
Net taxable profit is taxed at the standard rate of 20%.
6. Presentation in the P&L
TFRS 15 requires the hotel to assess whether it is a principal or an agent in each arrangement. In many cases where the hotel controls the room service and bears the risk towards the guest, revenue is recognised on a gross basis and the commission is shown as an expense. However, if a net rate contract makes the OTA the party that sets the selling price and the hotel's customer is the OTA, revenue may be the net rate amount. Read the actual contract before concluding.
| Item (merchant example) | THB |
|---|---|
| Room revenue (gross) | 7,476.64 |
| Less: OTA commission | (1,600.00) |
| Less: credit card fees | (200.00) |
| Less: channel manager fee | (50.00) |
| Profit after channel costs | 5,626.64 |
7. Recommended chart of accounts
7.1 Revenue
| Code | Account name |
|---|---|
| 4101 | Room revenue – direct booking |
| 4102–4106 | Room revenue by OTA |
| 4107 | Room revenue – corporate / travel agent |
| 4108 | Room revenue – walk-in |
| 4109 | Room revenue – other OTAs |
7.2 Expenses
| Code | Account name |
|---|---|
| 5201–5205 | Commission by OTA |
| 5210 | Channel manager fee |
| 5211 | Booking engine fee |
| 5212 | Credit card fees |
7.3 Receivables and payables
| Code | Account name |
|---|---|
| 1131–1133 | Trade receivables by OTA |
| 2121 | Trade payables – OTA |
| 2129 | Reverse charge VAT payable (PP 36) |
8. Monthly closing example
| Channel | Bookings | Gross Revenue | Commission | Net to Hotel |
|---|---|---|---|---|
| Direct Website | 50 | 400,000 | 0 | 400,000 |
| OTA A (Agency) | 80 | 640,000 | 102,400 (16%) | 537,600 |
| OTA B (Merchant) | 60 | 480,000 | 96,000 (20%) | 384,000 |
| OTA C (Merchant) | 25 | 200,000 | 44,000 (22%) | 156,000 |
| OTA D (Merchant) | 35 | 280,000 | 50,400 (18%) | 229,600 |
| Total | 250 | 2,000,000 | 292,800 | 1,707,200 |
Summary of entries. Assume all OTAs are foreign service providers and the period is one in which payment is treated as made.
| Account | Dr. | Cr. |
|---|---|---|
| Cash/trade receivables | 2,000,000.00 | |
| Room revenue | 1,869,158.88 | |
| Output VAT | 130,841.12 | |
| Total OTA commission | 292,800.00 | |
| Payables – OTA A | 102,400.00 | |
| Receivables – OTA B, C and D | 190,400.00 | |
| Input VAT awaiting credit from PP 36 | 20,496.00 | |
| Reverse charge VAT payable (PP 36) | 20,496.00 |
9. Cost analysis by channel
| Channel | Commission | Card Fee | Channel Manager | True Cost |
|---|---|---|---|---|
| Direct Website | 0% | 2.5% | 0.3% | 2.8% |
| Walk-in | 0% | 2.0% | 0% | 2.0% |
| Agency-model OTA where the hotel takes the card payment itself | 16% | 2.5% | 0.3% | 18.8% |
| Merchant-model OTA at 20% | 20% | 0% | 0.3% | 20.3% |
| Merchant-model OTA at 22% | 22% | 0% | 0.3% | 22.3% |
| Merchant-model OTA at 18% | 18% | 0% | 0.3% | 18.3% |
| Corporate Direct | 0–5% | 2.5% | 0% | 2.5–7.5% |
| Travel Agent | 10–15% | 2.5% | 0.3% | 12.8–17.8% |
Example channel mix for a mid-sized hotel: direct 25–30%, several OTAs combined according to target, corporate/MICE 10–15% and walk-in around 5%. A cap on concentration by platform should also be set.
10. Common errors and good practice
| Problem | Impact |
|---|---|
| Concluding on principal/agent status without reading the contract | Risk of misstating revenue and commission |
| Forgetting to check WHT on foreign OTAs | Risk of back taxes, surcharges and penalties |
| Not applying reverse charge VAT | Risk of unpaid VAT and disallowed input VAT |
| Recognising revenue at booking | Overstated financial statements |
| Not separating channels in the chart of accounts | Unable to analyse profitability |
| Not managing FX gains/losses | Misstated financial statements |
- Reconcile the channel manager, PMS and GL at every month-end
- Keep separate accounts for no-shows and cancellations
- Perform OTA statement reconciliations
- Track ADR by channel
- Build a channel profitability dashboard
- Use a best rate guarantee on the website, within the terms of the OTA contracts
11. Cash flow impact
| Channel | Payment cycle | Cash Lag |
|---|---|---|
| Direct / Walk-in | Credit card settlement | 1–3 days |
| Agency | Hotel collects the money itself and pays commission monthly | 7–30 days |
| Merchant OTA | Bi-weekly or monthly | 15–45 days |
If monthly OTA revenue is THB 12 million and the average payment lag is 30 days, average outstanding receivables will be around THB 12 million. Plan the cash buffer and working capital accordingly.
12. KPI
| KPI | Formula | Example target |
|---|---|---|
| OTA Cost Ratio | OTA Commission ÷ Total Room Revenue | Less than 12% |
| Direct Booking % | Direct Bookings ÷ Total Bookings | More than 30% |
| Average Commission Rate | Total Commission ÷ OTA Revenue | Less than 18% |
| OTA Days in AR | Average AR Days | Less than 35 days |
| Channel Profitability | Revenue − All Costs | Track by channel |
| No-Show Rate | No-Shows ÷ Total Bookings | Less than 5% |
13. Action plan
- Install a channel manager
- Connect the PMS to the GL
- Set up a chart of accounts that separates channels from the start
- Negotiate commission when performance stays strong
- Use a best rate guarantee within the contract terms
- Develop a loyalty programme to draw direct bookings
- Perform monthly OTA reconciliations and update the dashboard regularly
Conclusion
Good OTA accounting starts with reading the contract and separating roles correctly, setting up the chart of accounts by channel, handling VAT reverse charge and WHT completely, and reconciling monthly. Management can then decide on channel mix and commission negotiations using reliable data.