How Much OTA Commission Is Costing Your Hotel

For many independent hotels, OTA commissions are simply viewed as a cost of doing business.

A booking comes in through Expedia, Booking.com, Airbnb, or another online travel agency. A percentage goes to the platform, and the hotel collects the rest.

Simple.

Or at least it appears that way.

The reality is that OTA commissions cost hotels far more than the percentage shown on the invoice.

The real cost isn't just what you pay today.

It's what you continue paying tomorrow.

And next year.

And every time a guest returns through an OTA instead of booking directly.

What Expedia and Booking.com Really Cost

More than the high commission fees, often ranging from 15% to 30%, Expedia, Booking.com, Airbnb, and other online travel agencies cost independent hotels something even more valuable:

Control.

Control over the guest relationship.

Control over the booking experience.

Control over future reservations.

OTAs have become incredibly effective at helping travelers discover accommodations. But every booking that flows through an OTA also reinforces the platform's relationship with the guest.

Over time, this creates a dangerous dependency.

One where the hotel becomes increasingly reliant on platforms it doesn't own while sacrificing revenue that could otherwise be reinvested into growth.

Understanding Your True Acquisition Cost

Most hotels calculate OTA costs using a simple formula:

Booking Revenue × OTA Commission Rate

But that's only part of the picture.

The true acquisition cost should include:

• OTA commissions

• Lost opportunities for repeat bookings

• Reduced access to guest data

• Increased reliance on third-party platforms

• Margin lost to competing on price

A guest who books directly costs less to acquire over time because the relationship belongs to the hotel.

A guest who repeatedly books through an OTA continues generating commission expenses indefinitely.

That's where the math starts to become uncomfortable.

The OTA Revenue Leak Most Hotels Ignore

People are creatures of habit.

We like the easy button.

If someone books through Expedia or Booking.com and has a good experience, there's a good chance they'll return to that same platform the next time they travel.

Not necessarily because they're loyal to the hotel.

Because they're loyal to the booking behaviour.

And unless the hotel provides a compelling reason to book directly, most guests will continue following the same pattern.

For many travelers, this isn't a major issue.

Someone passing through your city on vacation may never return.

But frequent travelers, business travelers, repeat vacationers, and guests who visit the same destination every year are different.

These are the guests who have the potential to become long-term customers.

And every time they return through an OTA, another commission payment leaves the hotel.

The revenue leak isn't the first booking.

It's the second, third, and fourth booking that didn't need to happen through the platform.

How To Calculate Your Annual OTA Cost

Many hotel owners underestimate just how much they're paying OTAs each year.

A simple way to estimate the cost is:

Number of Booked Room Nights × Percentage of OTA Bookings × Average Nightly Rate × Average OTA Commission

For these examples, we'll assume:

• 64% of bookings come through OTAs

• Average OTA commission is 20%

OTA Commission Calculator

Want to estimate how much you're paying Expedia, Booking.com, Airbnb, and other OTAs each year?

Enter the following:

• Number of Rooms

• Average Occupancy Rate (%)

• Average Nightly Rate (ADR)

• Percentage of Bookings Through OTAs (%)

• Average OTA Commission Rate (%)

Formula:

(Number of Rooms × 365 × Occupancy Rate)

× OTA Booking Percentage

× Average Nightly Rate

× OTA Commission Rate

The result is your estimated annual OTA commission expense.

But that's only part of the story.

To understand the true opportunity, ask yourself:

• What if we reduced OTA bookings by 10%?

• What if we reduced OTA bookings by 20%?

• What if we reduced OTA bookings by 30%?

Every percentage point shifted from OTAs to direct bookings represents revenue that stays within the business and can be reinvested into marketing, guest experience, and future growth.

The examples below illustrate how quickly those numbers can add up.

Example: 20 Rooms

Let's assume:

• 20 rooms

• Average Nightly Rate (ADR): $300

• Occupancy Rate: 80%

Total available room nights:
20 × 365 = 7,300

Total booked room nights:
7,300 × 80% = 5,840

OTA room nights:
5,840 × 64% = 3,738
*average % of independent hotels bookings OTAs are responsible for

Revenue generated through OTAs:
3,738 × $300 = $1,121,400

OTA commission paid:
$1,121,400 × 20% = $224,280

Annual OTA Commission Cost: $224,280

Example: 50 Rooms

Let's assume:

• 50 rooms

• Average Nightly Rate (ADR): $300

• Occupancy Rate: 60%

Total available room nights:
50 × 365 = 18,250

Total booked room nights:
18,250 × 60% = 10,950

OTA room nights:
10,950 × 64% = 7,008
*average % of independent hotels bookings OTAs are responsible for

Revenue generated through OTAs:
7,008 × $300 = $2,102,400

OTA commission paid:
$2,102,400 × 20% = $420,480

Annual OTA Commission Cost: $420,480

Example: Boutique Resort

Now imagine a boutique resort with:

• 80 rooms

• Average Nightly Rate: $450

• Occupancy Rate: 70%

Total available room nights:
80 × 365 = 29,200

Total booked room nights:
29,200 × 70% = 20,440

OTA room nights:
20,440 × 64%* = 13,082
*average % of independent hotels bookings OTAs are responsible for

Revenue generated through OTAs:
13,082 × $450 = $5,886,900

OTA commission paid:
$5,886,900 × 20% = $1,177,380

Annual OTA Commission Cost: $1.18 Million

That's not a marketing budget.

That's an entire growth strategy leaving the building.

What Happens If You Reduce OTA Dependence?

Using the 50-room example above:

Reduction in OTA Bookings » Revenue Retained

10% Reduction » $42,048

20% Reduction » $84,096

30% Reduction » $126,144

For the boutique resort example:

Reduction in OTA Bookings » Revenue Retained

10% Reduction » $117,738

20% Reduction » $235,476

30% Reduction » $353,214

The goal isn't to eliminate OTAs.

The goal is to gradually shift more bookings into channels you own.

Even modest improvements can create significant revenue that can be reinvested back into the business.

The Cost of Losing Repeat Guests

This is where things get interesting.

Most hotels think:

"OTA took 20%."

But the real calculation looks more like:

"OTA took 20% today and the next booking tomorrow."

And the one after that.

The first booking may have required the OTA.

The second booking often doesn't.

If a guest had a positive experience, received exceptional service, and plans to return, why should Expedia or Booking.com continue earning a commission on that relationship?

The answer is simple.

Because the hotel failed to create a reason to book directly.

That's where the real cost lives.

Not in the first commission.

In the commissions that follow.

What You Could Do With That Revenue Instead

Imagine redirecting a portion of your OTA commissions toward assets you actually own.

That money could fund:

• Website improvements

• Content marketing

• Search engine optimization

• Paid advertising

• Email marketing

• Loyalty programs

• Guest experience enhancements

• Photography and videography

• Brand development

Unlike OTA commissions, these investments compound.

Every improvement makes future bookings easier to generate.

Every relationship becomes more valuable.

Every repeat guest becomes more profitable.

The goal isn't simply reducing commission expenses.

It's redirecting those dollars into long-term growth.

Reducing OTA Spend Without Sacrificing Occupancy

Many hotel owners assume reducing OTA dependence means sacrificing occupancy.

It doesn't. The goal isn't to eliminate OTAs. It's to rely on them less over time.

Consider Ritzy Room in Dallas, Texas.

When we began working together, approximately 90% of their bookings originated through Airbnb.

Over the following year, we increased direct booking volume from 10% to 30%.

The result was a swing of approximately $220,000 in revenue retained by the business rather than paid to third-party platforms.

That revenue was reinvested.

Into content marketing.
Into guest experience.
Into direct booking initiatives.
Into assets the hotel actually owned.

And that's the opportunity most independent hotels miss.

The question isn't:

"How much are OTAs costing us?"

The better question is:

"What could we build if we kept more of that revenue ourselves?"