What an OTA is, and why since 2024 you can sell cheaper on your own site

In November 2024 a rule changed that had spent more than a decade shaping how a European hotel sets its prices. The change obliges nobody to do anything, which makes it the kind that goes unnoticed: anyone who does not hear about it carries on exactly as before, and pays exactly the same.

This article explains what an OTA is, how the cost of one is calculated, what the European Commission forced to change, and what can be done about it without breaking with anyone.

What is an OTA?

An OTA — online travel agency — is an intermediary that displays the property in its own shop window, handles the booking and charges a commission on every stay it generates. Booking.com and Expedia are the best known. The property is still the one providing the service; the OTA supplies visibility, traffic and a booking process that is already built.

In Europe they move a substantial share of the business. The HOTREC European hotel distribution study, carried out with HES-SO Valais across more than 3,000 hotels, puts OTAs at 29.6% of European room nights, against 19.7% ten years earlier. Direct channels sit at 50.9%. One in five European hotels sells more than half its nights through OTAs.

What an OTA costs

We are not going to publish a commission percentage, because it varies by platform, country, volume and each property's specific agreement, and there is no reliable public source for an average. What can be done is the calculation with yours, which is the only one that matters.

Take a four-night stay at €100 a night, with a hypothetical 15% commission:

That calculation has two wrinkles worth not skipping. The first is that the commission applies to the gross value of the booking, not to what the property earns from it. If the margin on that stay is €120, the €60 commission is not 15% of anything relevant: it is half the profit.

The second is that direct sales are not free either. There is a payment gateway, a booking engine, and the work of getting someone to the site in the first place. The right question is not what the OTA costs, but how much of that commission can be recovered and at what price.

What changed in November 2024

For years, parity clauses stopped properties from offering a better price through their own channel than the one published on the platform. That ended, and not by voluntary agreement.

On 13 May 2024 the European Commission designated Booking Holdings as a gatekeeper under the Digital Markets Act. As of 14 November 2024, the Commission states that Booking "must now allow hotels, car rentals, and other relevant service providers to offer better prices and conditions on other online channels, including their own websites, than those offered on Booking.com", and prohibits it from implementing any measure that would restrict that freedom.

In practical terms: a property in the European Union can put a lower price on its own site than the platform's, and the platform cannot penalise it for doing so.

What that change does not mean

It does not mean leaving the OTAs is a good idea. A small property that pulls out all at once loses the shop window before it has built its own, and that is a quick way to turn a commission problem into an occupancy problem.

Nor does it mean lowering the price on the site is enough. There is a recognised effect in the sector whereby appearing on an OTA generates direct bookings from people who discover the property there and then look it up by name. The published estimates of its size are old and come largely from work more than a decade back, so we are not going to put a number on it: it is useful for understanding that the channel has value beyond the bookings it invoices, not for calculating anything.

And it does not mean the obligation applies outside the European Union. The designation is European. A Dominican or Costa Rican hotel is not covered by it, whatever its particular contract may say.

What to do about it

The reasonable goal is more modest than switching channels: to stop paying commission on bookings the property had already won.

The most common case, and the cheapest to fix: someone finds the property on an OTA, comes to its website for a closer look, and runs into a contact form instead of somewhere to book. They go back to the platform and book there. That commission is paid on a booking the property already had.

With parity out of the equation, this is the order that makes sense:

1. Be able to take payment on your own site. Without a booking engine that accepts payment, everything else is theoretical.
2. Keep availability the same everywhere. A lower direct price on top of mismatched inventory produces cancellations, not margin.
3. Give a reason to book direct. It can be price, now that it is allowed, or anything else the platform cannot offer.
4. Measure where each booking comes from. Without that there is no way to know whether the change worked.

If you want to review how much of your revenue goes to commission today and what part of it is recoverable, write to us.

Sources

• European Commission, Booking must comply with all relevant obligations under the Digital Markets Act, 14 November 2024. Designated as a gatekeeper on 13 May 2024.
• HOTREC and HES-SO Valais, European Hotel Distribution Study, covering more than 3,000 European hotels.

This article describes a public regulatory obligation and does not constitute legal advice. For the specific scope of your contract with a platform, consult a lawyer.