Hotel Revenue Glossary · Distribution

OTA (Online Travel Agency)

A third-party platform that markets or distributes hotel offers to consumers under its own participation, payment, and compensation terms. Commercial models and total hotel cost vary by platform, programme, contract, market, and booking.

Why it matters: OTAs can provide incremental reach or substitute demand that would have arrived elsewhere. Compare channel-specific acquisition, payment, loyalty, cancellation, servicing, attribution, and net contribution rather than assume OTA necessity or direct profitability.

Worked example: An OTA books 220 nights in a month at an average A$212, gross A$46,640. At 16% commission the hotel keeps A$39,177.60. Shift 40 of those nights to direct at the same rate and you save 40 × A$33.92 = A$1,356.80 in commission - but if the campaign that moved them cost A$1,900 in ad spend, the shift lost A$543.20 that month. Direct is cheaper per booking only when the cost of creating the booking is counted.

Common mistake: Counting every OTA night as a night you could have had direct. Some of that volume is demand that only ever saw you on the platform. Before funding a shift campaign, work out what share of the channel is genuinely substitutable, and price the campaign against the commission it actually removes — not the gross commission bill.

All glossary terms Distribution Channel GDS (Global Distribution System) Rate Parity