The short answer
Direct bookings usually keep more profit per room than OTA reservations. OTAs charge roughly 15–30% commission, while a functioning direct channel costs about 4–5%, so the same rate nets noticeably more when booked direct. But more profit does not mean no OTAs. OTAs deliver reach most hotels cannot replicate. The winning approach is to measure net revenue per channel and manage the mix deliberately.
Key takeaways
- OTA commissions run about 15–30% of booking value, and the effective cost rises further with loyalty discounts, paid placement and cancellations.
- A direct booking costs roughly 4–5% when the website and engine work well, but can climb to 8–15% with fragmented systems.
- OTA reservations cancel at about double the direct rate: 21.8% versus 10.6% in 2025 data from Cloudbeds.
- SiteMinder's 2024 data showed $519 average value per direct website booking versus $320 via OTAs.
- Net ADR and net revenue per channel, not gross volume, reveal which bookings actually earn their place.
- Rate-parity rules are shifting, notably in Europe, giving some hotels room to price direct below OTA.
The same rate is not the same profit
Start with a simple example. A room sells for $200. Booked through an OTA at an 18% commission, the hotel keeps about $164 before any other charges. Booked directly through the hotel website, the same room costs only payment and transaction infrastructure, roughly 3–5%, leaving around $190–194. The gap is profit, not revenue, and it repeats on every reservation.
That is why net ADR matters more than gross ADR when comparing channels. Gross ADR is what you charge; net ADR is what you keep after commissions, transaction fees and channel discounts. Two channels can show identical rates and very different net results.
Revenue-management providers estimate that shifting just 1% of bookings from OTAs to direct raises an independent hotel's net ADR by 2–3%. That gain needs no new rate and no extra guests — only a redistribution of demand toward the cheaper channel.
- $200 via OTA at 18% ≈ $164 net.
- $200 direct ≈ $190–194 net.
- A 1% shift to direct ≈ +2–3% net ADR.
What an OTA booking really costs
The base commission in the contract is a floor, not a ceiling. Booking.com has typically charged around 15–18%, and some platforms reach 25–30%. On top of that sit layers that push the effective cost above the headline rate.
The first layer is loyalty and visibility. Participating in a platform's traveler-loyalty program usually means a 10–15% discount off the rate, and paid placement, preferred positioning and cost-per-click campaigns all reduce what the booking actually nets, even though they are not called commission.
The second layer is cancellations and payment fees. Flexible cancellation attracts guests, but when a booking cancels the hotel loses the revenue with no recourse. Currency conversion and payment processing can add another one to three points. Together, these layers often make the effective cost several points higher than the contracted rate.
- Base commission: about 15–18% (Booking.com), up to 25–30% elsewhere.
- Loyalty program discounts: 10–15% off the rate.
- Payment and currency fees: +1–3 points.
- Cancellations: a further hidden risk.
Direct is cheaper, but never free
Direct bookings carry no OTA commission, but they are not free. A functioning website with a connected booking engine and basic marketing costs around 4–5% of booking value once you account for payment processing, hosting, support and a modest ad budget.
The trap is fragmentation. When the booking engine, channel manager and paid media are disconnected, total direct acquisition cost can climb to 8–15% and nearly match an OTA commission. Direct only wins when the infrastructure works as one system and spend is attributed to actual reservations.
A practical order of operations: check your website conversion before buying more traffic. If the engine does not convert, advertising spend is wasted and the promised commission saving never materializes.
- Working direct channel: about 4–5%.
- Fragmented systems: up to 8–15%.
- Booking engine fees: roughly 2–5%.
- Fix conversion before scaling ad spend.
Cancellations, data and the hidden gap
Cancellations are an underweighted cost. Cloudbeds data for 2025 showed OTA bookings cancelling at 21.8% versus 10.6% for direct, roughly double, and in some segments OTA cancellations approach half. Phantom inventory means some sold rooms actually sit empty, so net revenue falls further than the commission alone suggests.
The second gap is data ownership. A guest who books through an OTA remains largely the platform's customer: the hotel receives limited pre-arrival details and few ways to personalize the stay or remarket directly. A direct guest is the hotel's from the first confirmation, with a full profile and a channel for repeat offers.
SiteMinder's 2024 trends, based on more than 125 million reservations, found hotel websites averaged $519 per booking versus $320 through OTAs — about 60% higher. The gap reflects premium room types and the upsell opportunities a hotel controls on its own site.
- Cancellations: 21.8% OTA vs 10.6% direct (Cloudbeds, 2025).
- Average booking value: $519 direct vs $320 OTA (SiteMinder, 2024).
- Direct guest: full profile and remarketing rights.
- OTA guest: limited pre-arrival contact.
Managing the mix instead of picking a side
The goal is not to drop OTAs but to ensure every channel earns its place by design, not default. OTAs are genuinely useful for international reach, low-demand periods and early reviews at a new property. Direct is the source of margin, guest data and repeat business.
Simple operating rules help. Once occupancy for given dates passes about 70–75%, tighten availability on high-commission channels — those rooms will likely sell anyway, and paying commission to move them makes little sense. If a channel consistently cancels above 30–35% with no offsetting rate advantage, reduce exposure or close it during peaks.
Rate parity is shifting and market-specific. After the Berlin Regional Court ruled in December 2025 that Booking.com's parity clauses breached competition law, many European hoteliers gained room to price direct below OTA. In the Americas, publicly undercutting OTA rates remains risky; in Asia-Pacific and elsewhere the rules vary. Where flexibility is limited, member-only rates and email offers are the lowest-risk way to reward direct guests.
- OTAs: reach, shoulder seasons, early reviews.
- Direct: margin, data, repeat guests.
- At 70–75% occupancy, tighten high-commission channels.
- Check your own contract on parity clauses.
Put it into practice
Net Revenue Audit: A Channel-By-Channel Worksheet
Run each channel through a short calculation and five check questions once a quarter. It takes about an hour and shows which bookings actually earn their place.
- Net ADR = (rate − channel commission − transaction fees − program discounts + ancillary revenue) ÷ rooms sold.
- For each channel, record room nights, average rate, cancellation rate, and net revenue after commissions and discounts.
- Compare net revenue for an OTA and a direct booking at the same rate — the difference is your commission saving.
- List every visibility program you have enabled and test whether its incremental bookings justify the extra discount.
- Log the cancellation rate per channel and flag any above 30–35%.
- Identify dates running above 70–75% occupancy and decide which high-commission channels to restrict.
- Read your parity clause and confirm whether you may discount on your website or only through closed member offers.
Questions people ask
What commission do Booking.com and Expedia charge?
Base commissions are typically around 15–18% for Booking.com and can reach 25–30% on other platforms, with Expedia generally in a similar or higher range depending on market and contract. The effective cost is usually higher once loyalty-program discounts, paid placement and cancellation effects are included, so track net revenue rather than the headline rate.
Are direct bookings free?
No. A well-run direct channel — website, booking engine, payments and basic marketing — costs about 4–5% of booking value. With fragmented systems and unattributed ad spend, the figure can reach 8–15% and nearly match an OTA commission. Direct wins when the infrastructure is unified and converting.
Can hotels negotiate OTA commissions?
Yes. Commission is negotiable, and leverage comes from consistent room nights, strong review scores and a low cancellation rate. Diversifying across platforms, restricting availability on peak dates and revisiting terms when a channel's performance dips all strengthen the position.
Can a hotel undercut its OTA price on its own website?
It depends on the market and contract. After the Berlin court's late-2025 ruling, many European hotels can legally price direct below OTA. Public undercutting remains risky in the Americas, and Asia-Pacific rules vary. Where flexibility is limited, member-only rates and email offers are the safest way to reward direct guests.
What is a healthy direct booking share?
There is no universal number; it depends on property type, market and segment. Around 40% or more is a common benchmark for independents, but the more meaningful targets are net revenue per channel and cancellation dynamics. Chase profit contribution, not a share percentage for its own sake.
Why track net ADR instead of ADR?
ADR shows what you charge; net ADR shows what you keep after commissions, fees and program discounts. Two channels can post the same rate yet deliver different net revenue per room, and that difference is what determines which channel is actually profitable.
Sources and further reading
Sources were checked when this page was generated. Confirm changing dates, rules and prices with the original publisher.
- Hotelier's playbook to reduce OTA commissionLighthouse
- OTA vs Direct Booking: Pricing Tactics to Protect Net ADRRoomPriceGenie
- Hotel Direct Booking vs OTA: Why hotels need bothRateGain
- Why Profitability is More Important than RevenueRevenue-Hub
- «Коммерсантъ»: российским сервисам пока не удалось занять долю ушедшего BookingВедомости
- Hotels saw average booking value increase through direct channels in '24PhocusWire