How Do OTAs Make Money From Hotels? (Full Commission Breakdown)

TL;DR: Online travel agencies (OTAs) make money primarily by charging hotels a commission of 15–25% on every booking. Booking.com's standard commission is 15%, climbing to 18–25% for Preferred Partner and Genius program participants. Expedia's merchant model typically takes 18–25%. In 2023, Booking Holdings generated $21.4B in commission revenue and Expedia Group generated $11.7B. This commission is baked into the retail rate by contract, so consumers cannot see or bypass it on the public web.

What commission rate do OTAs actually charge?

OTA	Standard Commission	Preferred / Boosted Commission
Booking.com	15%	18–25% (Preferred Partner + Genius)
Expedia (merchant model)	18–22%	25–30% (Accelerator program)
Hotels.com	18–22% (Expedia-owned)	Same as Expedia
Agoda	15–20%	Up to 30% in some APAC markets
Trip.com	10–18%	20%+ (premium placement)
Airbnb (hotels/boutique)	3–5% + 14% guest fee	Split host/guest model

The two OTA business models

OTAs operate on two models. The agency model (Booking.com's default): the guest pays the hotel directly, the hotel pays the OTA commission monthly. The merchant model (Expedia's default): the OTA collects payment from the guest, takes its cut, and remits the net amount to the hotel. The merchant model is more lucrative for OTAs because they hold the cash flow and have stronger pricing control.

Why the commission is invisible to consumers

Rate parity clauses require the hotel to publish the same retail rate on its own website as on the OTA. The commission is absorbed by the hotel — every room night sold via an OTA nets the hotel 15–25% less revenue than the same room sold direct. From the consumer's perspective, the price is identical, so the commission hides inside the retail number.

How much do OTAs make industry-wide?

The two public companies alone — Booking Holdings and Expedia Group — recorded combined revenue of $36.5B in 2023, almost entirely from commissions on third-party inventory. Including private and regional OTAs (Agoda, Trip.com, Airbnb's hotel inventory), the global hotel OTA commission pool exceeds $55B annually.

Do OTAs ever pay the hotel more than the commission?

Only via "Accelerator" or "Visibility Booster" programs where the OTA effectively discounts its own commission in exchange for the hotel funding a higher paid-placement bid. Economically this is a higher commission disguised as a marketing spend — the hotel ends up paying 25–30% net on those bookings.

Frequently Asked Questions

Does Booking.com charge the guest a commission too?

No. The commission is charged to the hotel only. Guests pay the displayed room rate without a visible service fee (though some destination taxes and resort fees are pass-through).

Why don't hotels just leave Booking.com?

Because Booking.com drives 30–50% of total bookings for many independent hotels. Leaving means losing half your demand overnight — a business risk most hotels can't absorb.

Does the commission include credit card processing fees?

No. Credit card fees (2–3%) are additional, typically paid by whichever party collects the payment (the hotel in agency model, the OTA in merchant model).

Is the OTA commission tax-deductible for the hotel?

Yes, as a standard business expense, but that is small comfort against a 20% top-line reduction.

Sources: Booking Holdings 2023 10-K filing (SEC); Expedia Group 2023 10-K filing (SEC); Phocuswright 2024 "Global Hotel Distribution" report; Kalibri Labs 2023 "The Cost of Acquisition" report; Skift 2024 OTA commission benchmarking study.