What OTA commission really costs a 20-room hotel

Most independent hoteliers know roughly what they pay in OTA commission. Far fewer have sat down and worked out what it costs over a year, or what a small shift towards direct bookings would actually be worth.

Here is the arithmetic, using a property size we see often.

A 20-room hotel, one year

Assume a 20-room property running at 75% occupancy with an average daily rate of £95. That is a realistic picture for a well-run independent outside London.

Now suppose 40% of those room nights come through OTAs — again, typical for an independent without a strong direct channel.

Thirty-one thousand pounds a year. That is a full-time salary, or a bathroom refurbishment programme, leaving the business every twelve months.

It is worth putting that next to what the software running the hotel costs. A modern cloud PMS with channel management sits in the region of £1,400–£3,600 a year. The commission bill is roughly ten times the entire technology budget — and unlike the software, it scales up every time you have a good year.

The shift that matters is smaller than you think

Nobody is suggesting you leave the OTAs. The useful question is narrower: what is one incremental percentage point of direct business worth?

Move just 10% of those OTA room nights to your own website — 219 nights — and you keep the commission on £20,805 of revenue. At 15%, that is £3,121 a year, from 219 bookings. Move a quarter of them and it is £7,800.

Put differently: on a £95 room, every direct booking is worth roughly £14 more to you than the identical booking through an OTA. Two extra direct bookings a week covers a Growth-tier PMS subscription with change left over.

Be fair about what OTAs are for

It is fashionable to treat commission as pure loss. It is not. OTAs do real work:

• Discovery. Guests who have never heard of your hotel find it on a platform they already trust.
• The billboard effect. A meaningful share of guests find you on an OTA and then book direct. Pull your listings entirely and you lose those too.
• Distressed inventory. A wet Tuesday in February is easier to fill on Booking.com than on your own site.

The goal is not zero commission. It is making sure you are not paying 15% on the guests who were always going to come to you — the repeat visitors, the wedding party, the contractor who stays every fortnight, the guest who typed your hotel's name into Google.

Where direct bookings are actually won or lost

Your website has to be quick and finish the job

A guest comparing your site against an OTA app is making a two-second judgement. If your pages are slow, if the booking form asks for information the OTA never asked for, or if availability lives on a different domain with different branding, you lose them. The booking engine should feel like part of the site, not a bolt-on.

Rate parity is narrower than most people assume

You generally cannot undercut the OTA on the same room and rate. You can, however, offer things that are not a room rate: breakfast included, late checkout, parking, a drink on arrival, a flexible cancellation the OTA rate does not carry. Value-adds are where direct wins, and they cost you less than the commission does.

Capture the email, properly

An OTA booking gives you a masked address and a guest who belongs to the platform. A direct booking gives you a guest you can contact again — lawfully, with consent, under GDPR. Over three years, that list is worth more than any single campaign.

Make the repeat booking effortless

Your highest-margin guest is the one who already stayed and liked it. If rebooking means finding your website, remembering which room type, and re-entering everything, many of them will simply use the app they booked with last time. A short, direct rebooking link in your post-stay email removes that friction.

A sensible target

Most independents we work with are not trying to get to zero OTA business. They are trying to move from roughly 40% OTA to roughly 30%, while holding total occupancy steady. For the hotel above, that is about £7,800 a year, retained — without a single additional guest walking through the door.

Work out your own numbers before you change anything. Take last year's rooms revenue, split it by source, and apply your actual commission rates. The figure is usually larger than people expect, and it makes the case for investing in your direct channel far better than any sales pitch.

InnCloud charges a flat monthly subscription with no per-booking fees and no commission — your booking engine, website and PMS in one place, so a direct booking costs you nothing extra. See pricing.