Every hotel wants more direct bookings. The pitch is compelling: cut out OTA commissions, keep more revenue per booking, build direct relationships with guests. The math looks simple. If you’re paying 18% commission on 80 bookings and you shift 10 of those to direct, you save commission on 10 bookings. More profit, same revenue.
NB: This is an article from Direct Your Bookings
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Except that’s not what happens.
When you push harder for direct bookings, something else changes. Something most hoteliers don’t account for until it’s too late.
Your total booking volume drops.
Not because guests don’t want to book with you. But because the algorithms that drive most of your demand have decided you’re less interesting than you used to be.
The math everyone ignores
Let’s use a concrete example.
Your hotel gets 100 bookings per month. Average stay is 2 nights, average daily rate is $200. OTA commission averages 18%.
Currently, 20% of your bookings come direct. The remaining 80% come through OTAs.
Your monthly numbers look like this:
- Total bookings: 100
- Room revenue: $40,000
- Direct bookings revenue: $8,000 (no commission)
- OTA bookings revenue: $32,000
- Commission paid: $5,760
- Net revenue: $34,240
Now you decide to increase direct bookings. You invest in marketing, improve your booking engine, maybe break rate parity to offer better deals on your website.
It works. Your direct booking percentage jumps from 20% to 30%.
Most hoteliers would calculate the new scenario like this:
- Total bookings: 100 (still)
- Direct bookings revenue: $12,000
- OTA bookings revenue: $28,000
- Commission paid: $5,040
- Net revenue: $34,960
You just made an extra $720 per month. Success.
Except this scenario assumes something critical: that your total bookings stay at 100.
They won’t.
Here’s what actually happens:
- Total bookings: 97 (estimate)
- Room revenue: $38,800
- Direct bookings revenue: $11,640
- OTA bookings revenue: $27,160
- Commission paid: $4,889
- Net revenue: $33,911
You increased your direct booking percentage. You saved on commissions. And yet you lost $329 in total net revenue.
The first scenario is what hoteliers imagine. The second scenario is what usually happens.
