What OTA commission actually costs an independent hotel
The headline rate is the part you can see. Here is how to work out what distribution actually costs you per year.
6 min read
Ask a hotelier what they pay Booking.com and you usually get one number, somewhere between 15 and 18 percent. Ask what distribution costs the property per year and the answer is much less certain, because the headline rate is only the visible part.
The layers above the headline rate
- Base commission, typically 15 to 18 percent depending on market and contract.
- Visibility programmes. Preferred partner and similar schemes raise the effective rate in exchange for placement, often by several points.
- Payment processing, when the OTA collects and remits.
- Cancellation churn. Flexible rates convert better on OTAs and cancel more, so gross bookings overstate what you keep.
Stacked, an effective rate in the low twenties is common for properties leaning on visibility programmes. That is the number to use in any comparison, not the contract rate.
The cost that never appears on an invoice
A guest acquired through an OTA is, from the platform's perspective, the platform's guest. You get the stay. The relationship, the email address in many cases, and the next booking default sit with the intermediary.
So the honest way to price an OTA booking is across the guest lifetime rather than the single stay. A guest who would have returned twice, booking through the same channel each time, costs you commission three times over.
This is why share of direct bookings matters more than any single month of cost per acquisition. Direct is the only channel where the second booking is free.
Working out your own number
- Take twelve months of room revenue, split by channel.
- Apply the effective rate for each OTA, including visibility programme costs, not the contract rate.
- Subtract cancelled and no-show revenue that you never collected but which appeared in gross figures.
- Divide the total by room nights sold to get commission per room night. That is your comparison figure.
- Compare it against cost per direct booking from your own campaigns.
Most independents who do this arithmetic find their commission per room night is higher than what direct acquisition would cost, sometimes considerably. The reason they keep the OTA mix anyway is usually risk: OTA demand is reliable, and direct demand has to be built.
What not to conclude
None of this makes OTAs a mistake. They fill rooms you would not otherwise fill, they reach markets you cannot reach alone, and the billboard effect is real: guests find you there and book direct afterwards, which shows up as branded search rather than OTA referral.
The goal is a mix you chose rather than one you inherited. A property at 80 percent OTA has no negotiating position and no defence if the algorithm changes. At 50 percent it has both.
Our calculator lets you compare commission per room night against the cost of acquiring the same booking directly, at your own rate and room count.
Run the comparisonCommon questions
Can I just undercut the OTA price on my own site?
Rate parity clauses restrict this, and their enforceability varies by jurisdiction. The workable route for most properties is value rather than price: a package, a room upgrade, a flexible cancellation, or a perk that does not breach parity on the room rate itself.
What direct share is realistic?
It depends heavily on location and brand recognition. A well-known boutique property in a destination people search by name can run high. A property competing on a generic search in a crowded area will find the OTA harder to displace. Track the trend rather than the absolute.