Direct Bookings vs OTA Commission: The Real Maths

Quick answer: OTA commission runs roughly 15 to 25 percent of the room rate, so the same guest booked direct is worth that much more with no change in occupancy or rate. Work the figure on your own ADR rather than a benchmark, because the honest number is usually smaller than vendors quote and still worth chasing.

Every independent hotelier knows OTAs cost money. Fewer have sat down and worked out what a percentage point of channel shift is actually worth to their property, which makes it hard to decide how much effort direct booking deserves.

What the commission actually is

Published rates, as of 2026:

• Booking.com: around 15 percent, with a common range of 10 to 25 percent depending on market and programme
• Expedia Group: typically 18 to 22 percent
• Preferred placement, sponsored listings and other add-ons push the effective rate higher

So a $220 room night booked through an OTA nets roughly $33 to $55 less than the same night booked direct.

Do the arithmetic on your own numbers

This is the part worth doing yourself rather than accepting a vendor's figure.

additional direct bookings per month
  x  your average nightly rate
  x  your effective commission rate
  x  12
  =  annual value of the shift

A worked example. Say you believe better visibility could move 8 to 14 bookings a month from OTA to direct, your ADR is $220, and your effective commission is 15 to 25 percent:

• Per booking saved: $220 x 15% = $33, up to $220 x 25% = $55
• Per month: 8 x $33 = $264, up to 14 x $55 = $770
• Per year: roughly $3,200 to $9,200

That is a real number, and it is deliberately unglamorous. Be sceptical of anyone quoting six figures from a channel shift at an independent property, because arriving at that usually requires assuming the whole room rate is the saving rather than the commission on it. We have seen exactly that error produce a figure inflated by eight times.

Why "just take it direct" is harder than it sounds

OTAs are not winning on price. They win on three things independents struggle to match:

Conversion. OTA booking flows convert at roughly 12 to 15 percent. A typical hotel website converts between 2 and 4 percent. If your own booking path is slow, buried, or breaks on a phone, you are losing guests who had already chosen you.

The billboard effect. Many guests find a property on an OTA, then look for the hotel's own site. If your site does not immediately confirm it is the same property with the same rooms and a comparable rate, they go back to the OTA.

Trust and cancellation clarity. Guests know what Booking.com's cancellation terms mean. If yours are unclear, that uncertainty costs you the booking.

Where to start

1. Fix the booking path on mobile. More than half your traffic, and the place most direct bookings are lost. Time it yourself with a phone, on cellular data.

2. Achieve rate parity, and say so. If a guest cannot tell whether booking direct costs more, they will assume it does. A visible "best rate, booked direct" message removes that doubt.

3. Give a small reason to book direct. Late checkout, a drink on arrival, a modest discount. It does not have to beat the commission to be worth it, it only has to tip the decision.

4. Make your property readable. If the richest description of your hotel lives on Expedia rather than on your own site, that is where both travellers and AI assistants will send people. Room detail, amenities, location specifics, in text.

5. Do not try to leave the OTAs. They are a customer acquisition channel with a known cost. The goal is shifting share at the margin, not abandoning distribution.

A realistic target

Industry benchmarks put most independents at 25 to 35 percent direct, with a mature programme reaching 40 to 60 percent. Moving ten points is a genuine achievement over a year, not a quarter.

Ten points on a 50-room property at 70 percent occupancy and a $200 ADR is meaningful money. It is also a year of consistent work on conversion, content and profile quality, not a switch.

FAQ

How much commission do hotels pay OTAs?

Roughly 15 to 25 percent of the room rate. Booking.com is commonly around 15 percent and Expedia typically 18 to 22 percent, with add-ons such as sponsored placement raising the effective rate.

What is a good direct booking percentage?

Most independent hotels sit at 25 to 35 percent direct. A mature direct programme targets 40 to 60 percent. Where you should aim depends on your market and how much of your demand is discovery versus intent.

Should I offer a discount for booking direct?

A small incentive usually works better than a discount, because a perk costs less than the commission and does not undercut your rate parity commitments. Late checkout and room upgrades are common.

Why is my website conversion so much lower than the OTAs?

OTAs convert at 12 to 15 percent because their booking flow is heavily optimised and the guest arrives ready to buy. Hotel sites average 2 to 4 percent. The gap is mostly friction: slow mobile flows, unclear rates, and cancellation terms that are hard to find.

Is it worth leaving the OTAs entirely?

Almost never. They deliver guests who would not otherwise find you, at a known cost. The economics favour shifting some share to direct while keeping distribution.

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