What is an OTA commission rate?
An OTA commission rate is the percentage of eligible booking revenue a hotel pays an online travel agency for distribution and booking services. Exact commercial terms vary by property, market, program, and contract.
How hotel OTA commission works
Hotels often model OTA cost as a percentage of eligible booking revenue. Effective economics can also be influenced by promotions, merchandising, visibility programs, cancellation policies, and other commercial terms.
| Cost component | How to think about it |
|---|---|
| Base commission | The core percentage applied to eligible booking revenue. |
| Promotional participation | Discounting can alter realized economics even if the contractual commission percentage is unchanged. |
| Visibility programs | Additional exposure may carry additional economics depending on the program. |
| Cancellation treatment | Commission treatment may depend on booking and cancellation rules. |
How to calculate OTA commission
Multiply eligible OTA booking revenue by the applicable commission rate. For example, $100,000 in OTA revenue at 18% produces $18,000 in modeled commission expense.
OTA cost vs. direct booking cost
Direct bookings can avoid OTA commission, but direct demand is not free. Advertising, metasearch, loyalty benefits, payment processing, website costs, booking-engine fees, and marketing labor can all contribute to direct acquisition cost.
Are OTA commissions too high?
It depends on what the channel contributes. An OTA booking that creates incremental demand can be valuable even with a meaningful commission.