What a room actually costs

abhilaksh · JUNE 2026 · 5 MIN READ

The single most useful thing I can do for a new client is also the least romantic: tell them, before they fall in love with a trip, what it will actually cost — not the headline rate, but the real, all-in, landed-in-your-account number, with every layer that sits between the price on the website and the figure that leaves your bank. Most people have never seen those layers laid out. For Indian travellers in particular, there are more of them than you’d think, and a couple of them are routinely misunderstood in ways that cause real anxiety over what is, in the end, recoverable money.

So let me take a hotel rate apart. All of it.

Layer one: the rate, and who pays the commission

Start with the number on the screen. At the hotels we book, that number — the Best Available Rate — is what’s called a commissionable rate: the hotel pays an advisor a commission, usually around ten per cent, out of its margin, for bringing the booking. The commission is not added to your bill. You pay the same rate you’d pay booking direct, and the hotel pays us from money it would otherwise have paid a booking site.

This is the part that surprises people most, so it’s worth saying plainly: booking through us does not make the room cost more. On a normal booking it costs exactly the same, with breakfast, a credit and an upgrade attached. We’ve written separately about why the same hotel costs the same through us, and about the eight different prices a single room can carry. For this article, the only thing that matters is the foundation: the rate is the rate, and the commission lives inside it, invisible to you.

Layer two: the gap between the rate and the folio

The headline rate is rarely the final rate, and the difference is a set of charges that vary by country and are often quoted separately or not at all until checkout.

There is tax — VAT or its local equivalent, which in parts of Europe runs into double digits. There is a city or tourist tax, a small per-person, per-night charge levied by the municipality, common across Europe and increasingly elsewhere. There are resort fees at some properties, a daily charge bundling wifi, gym and the like. And there is service charge, added in many countries as standard. None of these is hidden exactly, but they are easy to miss when you’re comparing headline rates, and they can move the real cost of a stay by ten or fifteen per cent.

The headline rate is rarely the final rate. Tax, city levies, resort fees and service charge can move the real cost of a stay by ten or fifteen per cent before you’ve spent a rupee on dinner.

Part of what we do when we quote a trip is quote the landed number — rate plus taxes plus fees — rather than the seductive headline, precisely so the figure you approve is the figure you pay. A quote that leaves the taxes off is not a kindness. It is a surprise deferred to checkout.

Layer three: the part that’s specific to you

Here is where an Indian traveller’s rate diverges from everyone else’s, and where the most confusion lives. Three things sit on top: the tax collected at source, the tax on the advisory service, and the quiet cost of how you move your money abroad.

### The tax collected at source, demystified

If we book your trip as a package — broadly, two or more components together, such as flights and hotels — it falls under India’s Tax Collected at Source rules, and this is the single most misunderstood number in outbound travel. Let me give you the current position and then the part nobody tells you.

As of 2026, following the Union Budget earlier this year, the TCS on an overseas tour package is a flat two per cent of the package value, with no threshold — a meaningful reduction from the earlier structure, which charged five per cent up to ₹10 lakh and twenty per cent above it. Two per cent, collected at the time you pay.

And now the part that turns anxiety into arithmetic: this is not a cost. It is not a fee, a charge, or money you have lost. Tax collected at source is exactly what it says — tax, collected early, against your name. It appears in your Form 26AS and your annual tax statement, and it is fully adjustable against your income-tax liability or refundable when you file your return. For most of our clients, who pay advance tax anyway, it simply reduces what’s owed elsewhere. It is your own money, parked with the government for a few months, and then either credited or returned. The twenty-per-cent figure that frightened people for a couple of years was always recoverable, and the current two per cent is both smaller and equally recoverable.

Tax collected at source is not a cost. It is your own money, parked with the government for a few months, then credited back or refunded. The number that frightened everyone was always recoverable.

There is also a structural point worth knowing, and it is the kind of thing an advisor earns their keep on. The TCS package rules apply to packages. A standalone hotel booking, or a standalone flight, is not a package. And spending on an international credit card while abroad sits outside the Liberalised Remittance Scheme entirely, and so outside TCS, until the rules say otherwise. None of this is a trick — it is simply that how a trip is structured and paid for changes its tax treatment, and we structure and pay in the way that is cleanest and most efficient for your specific situation, rather than the way that happens to be easiest for a booking engine.

One honest caveat, because this is your money and not a place for breeziness: tax rules change, sometimes yearly, and your circumstances are your own. We will always show you the current numbers as they apply to your trip, and for anything intricate your chartered accountant is the right final word. What we can promise is that you will never be surprised by a tax line you weren’t told about in advance.

### The tax on our service

Separately, the advisory service itself carries Indian GST, charged on the service or planning fee where one applies — not on the whole trip, but on the fee for the work. It is a normal, transparent line, and it appears on our invoices as exactly what it is. Our full schedule of charges is published rather than negotiated case by case, because a service fee you can read in advance is the only kind worth charging.

### The cost of how you pay

The last layer is the one travellers lose the most money to without ever noticing: foreign exchange. A standard Indian credit card used abroad typically carries a foreign-currency markup of around three to three-and-a-half per cent, and then GST is charged on top of that markup — so the real cost of every overseas swipe is closer to four per cent than zero. On a large trip, that is a meaningful, entirely avoidable number.

The alternatives are straightforward once someone points them out. A prepaid forex card locks your exchange rate at loading and avoids the markup on every transaction. A growing set of zero-forex-markup credit cards now matches that while adding rewards. And one specific habit saves more than any card choice: at a foreign payment terminal or ATM, always choose to be charged in the local currency, never in rupees. The “would you like to pay in INR” option — dynamic currency conversion — quietly adds several per cent for the convenience of a number you recognise. Decline it every time.

We don’t earn anything from this advice; it’s simply part of making sure the trip costs what it should and not a few per cent more through friction nobody flagged.

Putting the rate back together

So what does the room actually cost? It is the rate, plus the taxes and fees that the headline leaves off, plus — if booked as a package — a two-per-cent tax-at-source that you get back, minus the few per cent you’d have quietly lost to card markups and bad airport exchange rates if no one had steered you around them. The commission that pays for the advice is already inside the rate, costing you nothing extra. And the breakfast, credit and upgrade that come with a preferred booking sit on the other side of the ledger, pulling real value back the other way.

When we quote you a trip, that is the number we try to give you: the honest, landed, all-in figure, with the recoverable parts marked as recoverable and the avoidable parts already avoided. It is less exciting than a glossy rate and far more useful, because the worst moment in any trip is the one where the cost turns out to be larger than the one you agreed to. We would rather have the uncomfortable conversation about the real number at the start than the worse one at checkout.

A hotel room, properly understood, is never a single number. It is a stack of layers — most of them invisible, a couple recoverable, one or two avoidable entirely — and knowing which is which is the difference between a price you’re quoted and a cost you actually understand.

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