What is an OTA in hotels?

OTA stands for online travel agency: a website that advertises your rooms, takes the booking and charges you a percentage of it. Booking.com, Expedia, Airbnb, Agoda, Hotels.com and Vrbo are all OTAs, and the first thing worth knowing is that almost all of them belong to just two companies, so listing on several is far less diversification than it looks.

The acronym turns up in every contract and on every invoice and almost nobody explains it, so: an OTA is a shop that sells your rooms on commission. You set the rate, they put it in front of a traveller who has never heard of you, and when that traveller books you pay for the introduction. Whether that is a good deal depends entirely on whether the guest would have found you anyway.

Two companies own most of them

This is the part that surprises people. Booking Holdings owns Booking.com, Agoda, Priceline and Kayak. Expedia Group owns Expedia, Hotels.com, Vrbo, Orbitz and Travelocity. Airbnb is independent, and so is Tripadvisor, which is a review site that also sells bookings.

So a property listed on Booking.com, Agoda, Expedia and Hotels.com has not spread its risk across four channels. It has two relationships with two companies, and a policy change at either one moves a large share of its business at once. That is worth knowing before anyone tells you the answer to OTA dependence is more OTAs.

The two ways they bill you

Every OTA uses one of two models and the difference decides who holds your money and for how long.

• Agency, or commission. The guest pays you at the property. The platform invoices you for its percentage afterwards, usually monthly. You keep control of the payment and the cancellation terms, and you carry the risk of a no-show. This is the common model on Booking.com for UK independents.
• Merchant, or net rate. The platform takes the guest's money up front and pays you an agreed net rate later, often weeks after the stay. You are effectively lending the platform the cash in the meantime, and the guest's card details may never reach you at all. Expedia has historically leaned this way.

Neither is automatically worse, but they are not interchangeable. A property with tight cash flow feels the merchant model in a way the headline commission rate does not show.

What you are actually buying

Demand from people who do not know you exist, in markets you cannot reach, with a payment system and a review system attached. For a new property, or one in a town nobody searches by name, that is genuinely valuable and worth paying for.

There is also a documented side effect worth understanding: a good share of travellers find a property on an OTA and then search for it by name to book direct. The platform generated the awareness and you keep the margin, provided your own site and your Google listing are there when they look. If they are not, you pay commission on a booking the platform had already earned you once.

What it costs beyond the percentage

• Rate parity. Your contract may restrict what you can advertise elsewhere. UK and EU rules have loosened this considerably since 2019, and most properties have more freedom than they think they do.
• The guest relationship. Bookings made through a platform often arrive with a masked email address, so the guest is theirs to remarket to, not yours.
• Ranking dependence. Where you appear in their results is decided by their algorithm and by paid visibility programmes, which is the same dependency people object to with Google, with a commission attached.

So what do you do with that

Not leave, in most cases. The sensible aim is a ratio you chose rather than one that happened to you, and the practical first step is making sure the guest who searches your name by hand can book direct in two taps. If your own rate is missing from the price list in your Google panel, you are paying commission on guests who were already coming to you.