

2.3

EFFECTS OF OTAS’

INFLUENCE ON HOTELS

The increasing influence of OTAs over hotels

has had severe effects on hotel margins,

especially for smaller hotel brands. While

larger hotel chains are able to negotiate

lower commissions given their global

exposure and market strength (~15%–25%),

independent brands face OTA commissions

as high as 30% of the room fee.

5

Small hotels either have to increase their price per

room or be forced to reduce their profit margins to

survive in an OTA-controlled environment. In many

cases, hotels are also limited by OTAs’ insistence

on best price guarantee and rate parity. Partner

hotels have signed agreements with OTAs which

ensure that rates offered on these sites

match those listed on the hotel-owned website.

6

Although this may appear beneficial to consumers,

hotels are left with little to no flexibility to increase

profitability or attract customers to their

website for dir...