Are OTA Commissions Worth It? That Depends Entirely on Context. A recent… | Tata Graham Crocombe

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Are OTA Commissions Worth It? That Depends Entirely on Context.

A recent Cornell study claims that every $1 paid in OTA commission yields $20.20 in revenue, $7.08 in profit, and a 1.12% occupancy boost. Impressive on paper—but not every dollar of revenue is created equal.

Whether OTA bookings are worth the cost comes down to one word: incrementality.

Let’s break it down with two scenarios:

🔹 Hotel A: 40% occupancy, below breakeven

If the hotel can’t fill more rooms directly, an OTA booking—even with a 15–20% commission—is mostly incremental. It helps cover fixed costs and move toward profitability. Here, that OTA dollar is valuable.

🔹 Hotel B: 80% occupancy, above breakeven

This hotel may have filled more rooms via direct channels anyway. An OTA booking now might just replace a higher-margin direct booking. In this case, the OTA commission isn’t a necessary cost—it’s a margin leak.

The same OTA booking has two very different impacts depending on the hotel’s situation. This is why broad-brush averages like Cornell’s can be misleading when used for strategic decision-making.

Hotels must ask:

✅ Is this OTA booking truly additive, or would I have received it directly?
✅ What’s my breakeven occupancy?
✅ Do I have untapped direct demand?

If the answer is that the OTA is just inserting itself between you and a guest who was already going to book with you, then that commission is a wasted cost—not an investment.

And while OTAs can play a key role in expanding reach, over-reliance on them undermines profitability.

Max Starkov rightly highlight the $50B+ hotels pay OTAs each year—money that could be reinvested in direct booking tools, guest loyalty, staff training, or product upgrades.

The smartest hoteliers use OTAs tactically, not dependently:

To fill need periods
To access markets they can’t reach directly
To attract first-time guests (and then convert them to direct bookers)

But the endgame should always be: Grow direct. Reduce dependence. Own the guest relationship.

So, are OTA commissions worth it?

Only when they bring you bookings you couldn’t have secured yourself. Otherwise, you’re just trading profit for convenience—and that’s rarely a winning long-term strategy.

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