OTA vs Organic: Revenue Channel Comparison for Hotels

Understanding the true cost per acquisition for each channel is essential. Most hotels underestimate OTA costs and overestimate organic investment.

OTA Channel Costs

• Base commission — 15-25% per booking (varies by platform and agreement)
• Preferred partner — Additional 5-10% for better placement
• Promotional campaigns — Flash sales, genius deals further reduce margin
• Rate parity — Can't publicly undercut, limiting direct price advantage
• Net revenue per booking — 75-85% of room rate at best

Organic/Direct Channel Costs

• SEO investment — Monthly retainer + content production
• Website maintenance — Hosting, booking engine, design updates
• Brand PPC — Protecting branded searches from OTA competition
• Net revenue per booking — 95-98% of room rate (payment processing only)

OTAs aren't the enemy. They serve legitimate purposes that direct channels can't always replicate.

OTA Strengths

• Discovery — Reaching travellers who don't know your hotel exists
• International reach — Access to overseas markets without local marketing
• Last-minute fill — Moving unsold inventory at short notice
• Trust for unknown brands — Booking.com's guarantee reassures first-time bookers
• Mobile booking — OTA apps have enormous install bases

When to Lean on OTAs

• New properties — Before brand awareness exists
• Low seasons — Fill rooms that would otherwise go empty
• New markets — Entering international source markets
• Events and peaks — When demand exceeds your direct marketing capacity

Direct channels deliver the highest profit margins and the strongest guest relationships. They win in most scenarios for established properties.

Organic Strengths

• Margin — 95-98% net revenue vs 75-85% through OTAs
• Guest data ownership — Build your own CRM and remarketing lists
• Relationship building — Direct communication before, during, after stay
• Upsell opportunity — Packages, add-ons, upgrades at point of booking
• Repeat booking rates — Direct bookers are 2-3x more likely to return

Compounding Returns

Unlike OTA commissions (which increase with volume), organic investment compounds:

• Content published once continues ranking for years
• Brand authority grows, reducing cost per acquisition over time
• Email lists grow, enabling free remarketing to past guests
• Review volume builds, strengthening local SEO automatically

The right balance depends on your hotel's maturity, location, and target market. Here's a framework for working toward optimal allocation.

Channel Mix by Hotel Maturity

• Year 1 (new property) — OTA: 70-80%, Direct: 10-20%, Paid: 10%
• Year 2-3 (growing) — OTA: 50-60%, Direct: 25-35%, Paid: 10-15%
• Year 4+ (established) — OTA: 30-40%, Direct: 40-50%, Paid: 10-20%
• Mature (strong brand) — OTA: 20-30%, Direct: 50-60%, Paid: 10-20%

Investment Allocation

Invest a percentage of OTA commission savings into direct channel growth:

• SEO & content — 40% of direct channel budget
• Website & CRO — 20% of direct channel budget
• Brand PPC — 20% of direct channel budget
• Email & loyalty — 15% of direct channel budget
• Social media — 5% of direct channel budget

Shifting from OTA-dominant to balanced requires a phased approach. Moving too fast risks occupancy drops; moving too slowly wastes commission.

Months 1-3: Foundation

• Audit current channel mix and true cost per acquisition
• Optimise booking engine for conversion
• Launch brand PPC to capture branded searches
• Begin SEO content strategy (area guides, experience pages)
• Implement best rate guarantee messaging

Months 4-6: Growth

• Publish 2-3 content pieces per month targeting non-branded queries
• Build email list from direct bookings and website visitors
• Launch retargeting campaigns for website visitors who didn't book
• Start Google Hotel Ads integration

Months 7-9: Optimisation

• Review OTA contract terms and negotiate better rates based on reduced dependence
• Expand content to cover seasonal and event-based queries
• Launch loyalty programme for repeat direct bookings
• Test direct booking incentives (free upgrade, late checkout)

Months 10-12: Scale

• Target 10-15% shift in direct booking ratio vs baseline
• Calculate commission savings and reinvest in highest-performing channels
• Plan year two content calendar based on ranking performance data
• Reduce OTA preferred partner spend where direct channels are strong

Our SEO services are built around this exact framework, designed for businesses that need predictable growth.

See how we applied this approach in our client case studies.