The new accounting standards require the entity designated as the principal in the sales transaction to record the revenue on a gross basis. The principal controls the good or service before that good or service is transferred to the customer. In the current hotel – OTA relationship, the hotel is the principal, since it is the entity responsible for providing accommodations to the guest. The price of the hotel room sold by the OTAs is determined and enforced by the hotel via rate parity clauses in the agreements with the OTAs, so that the OTAs do not take any inventory risks. Get the full story at HEBS Digital