Introduction
Hotels need both OTAs and direct bookings—but each channel carries very different costs. Most hotels underestimate how much they lose when a guest books through an OTA instead of directly.
Here’s a breakdown of where money is lost—and how to fix it.
1. Commission Costs (The Obvious One)
Booking.com often takes 15%–22%.
Expedia ranges from 12%–20%.
For a room that sells at ISK 30,000:
- OTA booking yields ≈ ISK 24,000
- Direct booking yields ≈ ISK 30,000
You’re losing money before the guest even arrives.
2. Upsell Opportunities Are Lost on OTAs
Hotels make extra profit from:
- Breakfast
- Parking
- Room upgrades
- Airport transfers
- Add-ons
OTAs rarely allow you to control or promote upsells effectively.
3. OTA Guests Are Less Loyal
Guests who book through OTAs often:
- Don’t remember your brand
- Compare your hotel with another 20 properties
- Don’t return unless the OTA suggests you again
Direct guests are more likely to return directly.
4. Poor Website Conversion Leads to Losses
Hotels often blame OTAs when the real issue is their website.
Most common problems:
- Slow mobile speed
- Outdated photos
- Missing booking button
- Confusing navigation
Fixing these dramatically increases direct bookings.
5. Rate Parity Issues Hurt Your Reputation
If guests find a cheaper rate on an OTA, they distrust the hotel website.
Use a channel manager to maintain a clean rate structure.
Conclusion
OTAs are useful—but expensive. To maximize profit, your website and direct channels must be positioned as the best place to book.