What Hotels Actually Pay in OTA Commissions (and What to Do About It)

Every hotelier knows the feeling: a guest walks in, compliments the property, says they loved the photos online, and pays — but 20% of that payment isn't yours. It went to Expedia or Booking.com or MakeMyTrip. The guest chose you, and the OTA took a cut of a relationship it didn't build.

This isn't an indictment of OTAs. They provide discovery, distribution, and booking infrastructure that independent hotels can rarely replicate alone. But the question most properties never stop to calculate is: what is this arrangement actually costing you?

The answer, for most hotels, is more than you think.

The Real Cost of OTA Dependency

OTA commission structures vary by property, region, and contract. Industry-standard rates fall in the 15-30% range per booking. In India's competitive hospitality market, commissions on platforms like MakeMyTrip and Goibibo typically land between 18-25%, with luxury properties often negotiating lower rates and smaller hotels paying closer to the ceiling.

But the percentage alone understates the cost.

Some properties report effective rates exceeding 30% after factoring in promotional fees, loyalty program contributions, and listing optimization costs that OTAs layer on top of base commissions. Expedia's One Key loyalty program, launched in July 2023, and Booking.com's Genius program both push properties to contribute additional margin in exchange for visibility within the platform.

What You're Actually Losing (Beyond Money)

The commission check is visible. The other costs are not.

Guest data. Most OTAs share only what the property needs to fulfill the reservation — name, contact, dates. The guest's preferences, booking history, lifetime value, and marketing responsiveness stay with the platform. When that guest returns for a second stay, you may recognize them, but you cannot reach them directly. You have to buy them again through the same OTA, at the same commission.

Pricing control. OTAs enforce rate parity clauses. You cannot undercut their price on your own website without risking delisting. Your direct booking channel — which should be your most profitable — is legally forced to match the OTA price.

Brand equity. When a guest books through an OTA, the OTA owns that transaction. The guest's loyalty accrues to the platform, not to you. Every five-star review lives on the OTA's profile. Over years of operation, the OTA builds a brand moat using your product.

The Alternative: Own Your Booking Infrastructure

None of this means hotels should abandon OTAs. They remain a valuable discovery channel, especially for new properties. But the dependency can be reduced to what it should be: a distribution channel rather than a business model.

The shift is straightforward: build a direct booking system that captures the same quality of experience the OTAs provide — instant availability, secure payments, automated confirmations — but runs on your infrastructure with your data.

The cost to build a custom booking engine is a fixed investment, typically ₹3-12 lakh depending on complexity. Compare that to the recurring commission drain.

How Do You Get Guests to Book Directly?

The most common objection is valid: guests default to OTAs because that's where they search. The fix isn't technical; it's structural.

Price advantage. Even small direct-only perks — a complimentary breakfast, a late checkout, a room upgrade — shift the value calculation. Rate parity restricts your base price, not your package offers.

Book direct widgets. Embed a live booking widget on your website, Google Business Profile, Instagram, and WhatsApp. Every channel where a guest might discover you should offer a direct book path.

Retargeting. With your own booking system, you own the guest's contact information. Automated email sequences for repeat visits, anniversary stays, and local event reminders cost pennies and generate bookings that would otherwise flow through OTAs at full commission.

Pre-arrival upsells. A direct booking lets you offer airport transfers, spa packages, or meal plans before the guest arrives — revenue that OTAs don't touch.

Is Custom-Built Better Than a Booking SaaS?

Off-the-shelf booking SaaS platforms like Cloudbeds, Hotelogix, and Stayflexi reduce upfront cost and technical complexity. They work well for many properties. The trade-offs are similar to the OTA problem: monthly subscription fees, limited customization, data that lives on someone else's infrastructure.

A custom system costs more upfront but eliminates recurring platform fees, adapts exactly to your workflow, and keeps your data entirely under your control. For hotels with unique offerings — a specific booking flow, a hybrid restaurant-hotel operation, complex package pricing — off-the-shelf solutions often require compromises that erode the guest experience.

The right answer depends on the property's scale, complexity, and growth trajectory. A 10-room homestay with straightforward operations may not justify a custom build. A 50-room hotel with restaurants, events, and a spa almost certainly does.

Conclusion

OTAs solved a real problem: they made hotel booking accessible and reliable for consumers and gave small properties global distribution. But the cost of that solution has become a structural drag on hotel profitability. Commissions that made sense as a distribution expense have become a margin-consuming addiction.

The properties that will thrive in the next decade are the ones that treat OTAs as a marketing channel rather than a business model. They maintain OTA presence for discovery while building a direct booking infrastructure that captures the full value of every guest relationship.

The technology to do this is mature and well-understood. The investment is modest compared to the recurring cost it replaces. The question isn't whether you can afford to build it. It's whether you can afford not to.

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Written by KRAFFT Studios. We build Digital Presence, Solutions, Operations Dashboards, and AI automation for hotels, restaurants, and service businesses that want to own their infrastructure.