Beyond the Percentage: How to Calculate the Real Cost of OTA Commissions on Hotel Profitability

In the commercial management of accommodations, the conversation about online distribution usually centers on a simplistic metric: the commission percentage charged by each platform. However, this partial view hides a more complex financial reality. For companies in the sector, the real question is not how much a booking costs in terms of commission, but how much it costs to generate that booking sustainably and what impact it has on the long-term customer retention capacity.

The Myth of Linear Comparison

For years, the industry has framed distribution as a binary battle: direct bookings versus agencies and OTAs. This approach is obsolete. OTAs, led by players such as Booking.com and Expedia Group, remain essential tools for filling base demand, reaching international markets, and supporting low seasons. Their value lies in the visibility and conversion capacity they offer through massive investments in technology and marketing.

The problem is not the existence of these platforms, but the structural dependence they generate. When a hotel delegates demand generation to third parties, it assumes a variable cost that scales linearly with revenue. Each additional booking implies the same commission percentage, which limits gross margin and, crucially, erodes the establishment's pricing power.

Customer Acquisition Cost (CAC): The Metric That Matters

To correctly evaluate profitability, managers must abandon the exclusive obsession with occupancy, ADR (Average Daily Rate), or RevPAR (Revenue Per Available Room). These metrics are incomplete if not contrasted with the Customer Acquisition Cost (CAC).

CAC answers an uncomfortable but necessary question: What part of my revenue am I giving away just to get the booking? Profitability lives in the gap between what the guest pays and what the hotel retains. A hotel can increase its revenue year after year and yet become less profitable if its acquisition costs grow faster than its rates.

Cost Comparison: Direct vs. OTA

Available data suggest a significant disparity between channels:

• Direct Channel: The average cost of a direct online booking, including website amortization, maintenance, hosting, analytics, consulting services, and digital marketing (SEO, SEM, CRM, metasearch), has historically been around 4.25% - 4.5% of the booking value. This figure represents an investment in own assets (data and technology) that generates recurring value.
• OTA Channel: Standard commissions usually range between 15% and 25%, potentially reaching 30% or more if preference programs, platform loyalty member discounts, or exclusive mobile rates are included.

This difference of 10 to 20 percentage points is not just a lost margin; it is a transfer of value from the property to the platform.

The Hidden Costs of OTA Dependence

The visible commission is only the clearest line on the invoice. The true cost of OTA dependence includes intangible elements that, when summed, can exceed the impact of the commission itself:

1. Price Erosion (Undercutting): OTAs can reduce rates set by the hotel through exclusive discounts, prices for members of their loyalty program, or wholesale rate leaks. A European study by HOTREC (2024) defined undercutting as the practice of cutting the price set by the hotel by waiving part of its own commission, and found that it affects 4 out of 10 hotels in Europe. In more than half of the affected cases, the cut ranges between 6% and 10%. This trains the consumer to expect lower prices on the OTA, making the direct channel less competitive even when rates are at parity.
2. Loss of Data and Customer Relationship: Each OTA booking is a customer relationship that the hotel does not own. The platform controls the guest's email, phone, and preferences. The hotel receives, at best, a masked email address. This prevents loyalty building, direct marketing, and personalization, forcing the hotel to pay again for the acquisition of that same customer in their next stay.
3. Brand Dilution and Negotiating Power: Visibility on OTAs depends on algorithms and paid programs. Participation in "preferred partner" programs is often associated with higher commissions in exchange for better positioning. In April 2026, the Italian competition authority opened a preliminary investigation into whether the selection for Booking.com's preferred partner program favored suppliers that paid higher commissions. Although the investigation has not concluded, it illustrates the structural tension between visibility and cost.

Methodology for Auditing Profitability by Channel

To make informed decisions about the allocation of marketing and technology budgets, hotels must implement a total cost per channel model. This process requires auditing one's own booking data and not relying on assumptions.

Steps to Calculate Real CAC

1. Segment bookings by channel: Classify all bookings from the last fiscal year into: Direct (own web, phone, email), OTA (specifying platform and preference program if applicable), and Agencies/Groups.
2. Calculate direct variable cost: For OTAs, sum the base commission plus any additional charges for visibility or loyalty programs. For the direct channel, allocate the proportional cost of the technological infrastructure (web, PMS, booking engine) and spending on digital marketing (SEO, SEM, social media, CRM).
3. Incorporate the cost of price erosion: Analyze the difference between the rate published on the hotel's website and the effective rate charged on the OTA for the same period and room type. If the OTA offers a discount that is not authorized or that erodes the average ADR, this impact must be subtracted from the gross margin attributed to that channel.
4. Evaluate Data Value (LTV): Assign an estimated value to the retention capacity. A direct booking generates a data asset that allows contacting the customer in future stays without additional acquisition cost. An OTA booking does not. The CAC of the direct channel must be seen as an investment in the customer portfolio, while that of the OTA is a pure operational expense.

Strategic Implications for Investment

The conclusion of this analysis is not to eliminate OTAs, but to rebalance the distribution mix to maximize sustainable profitability.

• OTAs as a Volume Channel: They are useful for capturing incremental demand that would not arrive otherwise, especially in competitive markets or for properties without a strong brand. However, their use must be strategic, not passive.
• The Direct Channel as an Asset: Investing in digital marketing and technology for the direct channel is not an expense, it is the construction of an intellectual property asset (the customer database). The lower acquisition cost (4-5%) and the ability to build loyalty make this channel fundamental for long-term financial resilience.
• Price Parity Monitoring: It is crucial to actively monitor rates on OTAs to detect unauthorized undercutting. Price parity is not just a contractual issue, but a defense of gross margin and the competitiveness of the direct channel.

Conclusion

The profitability of an accommodation is not measured by the volume of bookings, but by the quality of those bookings in terms of acquisition cost and long-term value. Hotels that continue to treat OTA distribution as a simple commission line are underestimating the real cost of their dependence. By adopting an approach based on Customer Acquisition Cost (CAC) and actively auditing hidden costs, managers can identify which channels generate true value and redirect their resources towards building their own customer base, reducing vulnerability to changes in platform policies and ensuring sustainable profitability.