OTA Commission Cost as % of Revenue
OTA commissions as a percentage of total room revenue
What is OTA Commission Cost as % of Revenue?
Online travel agent (OTA) commission cost as a percentage of revenue is the share of room revenue paid away in commissions to booking sites. It shows how much of income goes to distribution.
Commissions can be a major cost for hotels, so tracking the share helps manage profitability.
How this KPI is measured
- Function
- Sales
- Sub-function
- Channel Mix
- Industry
- Hospitality & Hotels
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Monthly
- Formula
- (OTA commissions paid / Total room revenue) × 100
How to calculate it
Divide OTA commissions paid by total room revenue, and multiply by 100.
For example, if a hotel earned 1,000,000 in room revenue and paid 150,000 in commissions, the share is 15%.
Also see the split by OTA, since commission rates and guest value differ.
Where it is used
Managing distribution cost
See the price of third-party bookings.
Setting direct goals
Justify a shift to direct bookings.
Negotiating
Use data in talks with OTAs.
How to improve it
Tips and common mistakes
- Some OTA business is valuable extra demand. Do not drop it all.
- Include the cost of any promotional fees.
- Compare with the cost of direct marketing.
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