How do I calculate the real cost of an OTA booking?
Short answer
The real cost of an OTA booking is more than the headline commission. Add the commission on the room revenue, any extra commission from visibility or promotional programmes, payment or virtual-card processing fees, discounts funded by the hotel, and any costs of managing the channel. Then compare that per-booking cost with the cost of a direct booking, which also isn't free — it includes your website, booking engine, marketing, and payment fees. The comparison tells you where to invest, not that OTAs are always bad.
By Lodging Engine Editorial Team· Reviewed by Eric Zwanenburg· Last reviewed
Step 1: Gather your actual figures
Use your own contracts and reports, not industry averages:
- Base commission rate for each OTA.
- Extra commission for visibility or preferred programmes.
- Promotions or discounts you fund (mobile rates, member discounts on the OTA).
- Payment processing or virtual card fees.
- Channel manager or connectivity fees attributable to the channel.
Step 2: Calculate cost per booking
For a given period:
OTA cost per booking =
(room revenue × commission %)
+ (room revenue × extra programme %)
+ promotional discounts funded by the hotel
+ payment / VCC fees
+ allocated channel feesThen divide total cost by revenue to get an effective cost percentage.
Step 3: Calculate the cost of a direct booking
Direct bookings have costs too:
- Booking engine fees (per booking or subscription).
- Website hosting and maintenance (allocated).
- Paid search, metasearch, and marketing spend attributed to direct.
- Payment processing fees.
- Direct-booking perks you provide.
Step 4: Compare fairly
Compare effective cost percentages by channel and by period. Consider also:
- Incrementality: would the guest have booked directly anyway? Bookings from guests who already knew your hotel are expensive to give away.
- Length of stay and cancellations by channel.
- Guest relationship: direct guests are easier to welcome back.
Worked example (illustrative numbers)
A €600 stay booked via an OTA at an assumed 15% commission, plus an assumed 3% visibility programme and €5 in payment fees:
- Commission: €90
- Programme: €18
- Fees: €5
- Total: €113 (about 18.8% of room revenue)
These figures are illustrative — use your own contract terms.
What to do with the result
- Identify which bookings you're paying OTAs for that could reasonably come direct (returning guests, brand searches).
- Invest some of that cost into direct-booking improvements.
- Keep OTAs for reach where they bring genuinely incremental guests.
Common mistakes
- Using only the headline commission.
- Assuming direct bookings cost nothing.
- Ignoring cancellations and length of stay by channel.
Checklist
- Contract terms collected for each OTA
- All OTA-related fees included
- Direct booking costs calculated too
- Effective cost % compared by channel
- Incrementality considered
- Review repeated quarterly