Tourism Industry Insight: How Hotels Can Make OTA Commissions Work Harder

A resort sells 100 room bookings through an online travel agency during a promotion. The campaign looks successful: OTA production rises sharply and occupancy improves. But imagine that 30 of those guests would have booked the resort directly anyway, while another 20 simply shifted from a different intermediary. The channel may have generated useful business, but not 100 additional bookings. This is the distribution question hidden behind commission reports: what would those travellers have done if the channel intervention had not existed?

Commission is visible; the counterfactual is not

Hotels can calculate OTA commission precisely. The harder number is incrementality—the demand that would not otherwise have reached the property.

This is a causal-inference problem. We observe what happened after a promotion, ranking boost or channel expansion. We cannot simultaneously observe the same hotel, on the same dates, without that intervention.

That distinction extends The Price the Guest Pays Is Not the Revenue You Keep. Distribution economics is not only about how much revenue remains after commission. It is also about whether the intermediary created demand, redirected demand or merely processed demand the hotel already possessed.

Recent evidence shows why simple answers are dangerous. A 2025 study using financial data from 644 U.S. hotels found OTA participation positively associated with occupancy, RevPAR and EBITDA overall, yet profitability effects differed by hotel class; economy properties showed weaker economics. A July 2026 study of urban hotels similarly found that managers rated direct channels most efficient even though online intermediaries produced the largest booking share.

Volume and value are therefore related, but not identical.

Ask what the booking replaced

Consider an illustrative 100-room OTA campaign.

Suppose historical evidence suggests that, without the campaign, 25 customers would probably have booked directly, 15 through another paid channel and 60 would not have booked the property at all.

The campaign has delivered 100 OTA reservations, but its strongest contribution is the 60 genuinely incremental bookings. The other 40 still matter, yet their economics are different because the channel partly changed where existing demand was captured.

A useful internal measure is therefore:

Incremental booking share = additional bookings caused by the channel ÷ bookings credited to the channel.

Hotels will rarely know this perfectly. The objective is not false precision. It is to stop assuming that every booking appearing in a channel report was created by that channel.

Timing helps. Hidden Clock: How Lead Time Can Help Operators Plan Better shows why booking behaviour should be examined before final occupancy appears. If an OTA promotion mainly accelerates reservations that normally arrive later through direct channels, the apparent uplift may partly be timing displacement rather than new demand.

Cancellation behaviour complicates the picture further. As The Cancellation Policy That Makes Forecasts Lie explains, bookings with different survival probabilities should not be treated as equivalent demand.

Test channels at the margin

The practical solution is controlled comparison wherever possible.

A hotel can vary promotion intensity across comparable date ranges, room categories or source markets while keeping other conditions reasonably stable. Then compare total bookings—not merely OTA bookings—together with net revenue, cancellation-adjusted room nights and direct-channel movement.

If OTA reservations rise by 30 but total hotel bookings rise by only eight, much of the observed gain may be channel migration. If total bookings rise almost alongside OTA production, incrementality looks stronger.

The same logic should shape direct-booking strategy. Discount Less, Add More Value shows that commission savings can finance useful direct benefits instead of simply becoming deeper discounts. But direct is not automatically free: website technology, payment costs, marketing and staff time also belong in the calculation.

Nor should distribution become unnecessarily complicated. How Simpler Choices Can Make Hotel Booking Easier demonstrates how excessive complexity can create customer friction. Channel strategy should make purchasing easier while keeping the economics visible behind the screen.

Return to those 100 OTA bookings. The commission invoice tells management exactly what distribution cost. It does not reveal what distribution created.

That requires a counterfactual.

For a property facing unused capacity—the pressure described in The Million Unsold Nights: What Shadow Inventory Reveals—an intermediary that brings genuinely new guests can be extraordinarily valuable. During high demand, paying commission to redirect customers who would have booked anyway may be less attractive.

The strongest hotels will therefore move beyond asking, “Which channel produced this booking?”

They will ask the more important question: “How many bookings would we have lost without it?”