How OTAs Actually Make Money: The 15–25% Commission No One Talks About

When you book a $240 hotel room on a major OTA, roughly $36 to $60 of that never reaches the hotel. It goes to the platform as commission. Booking.com's standard commission sits around 15%, and in the US it commonly climbs to 18–25% once hotels opt into "Preferred Partner" or "Genius" programs. Expedia's Expedia Collect model typically runs 18–25%. That is not a markup layered on top of the price — it is carved out of the price the hotel itself is forced to honor.

Why the hotel cannot just charge you less

Rate parity clauses (more on this in a separate post) contractually prevent hotels from publishing a lower price on their own website than the one you see on Booking.com. That means the commission is absorbed — hotels effectively subsidize the OTA by taking 15–25% less revenue per room. The list price stays identical so you, the traveler, never see the margin being eaten.

How much does the OTA industry extract annually?

Booking Holdings reported $23.7B in revenue in 2023, and Expedia Group reported $12.8B. Almost all of it is commission, not owned inventory. For perspective: that is roughly equal to the total annual revenue of the entire global cruise industry, collected purely as a finder's fee between hotel and guest.

Where the gap opens up

Because the OTA is skimming 15–25%, any channel that bypasses the OTA layer — wholesale feeds, bedbanks, loyalty portals, travel agent consortia — can legitimately sell the same room for less and still be profitable. This is the pricing gap Vacayos is built to surface. The hotel does not lose money, and the traveler captures the commission that would otherwise go to the middleman.

The takeaway

The "discount" you see on Booking.com is not a discount. It is the retail price, minus Booking's 15–25% cut, frozen in place by contract. Understanding that single fact changes how you shop for every hotel night for the rest of your life.