Derek Martin
04 Jun 2025
In the evolving landscape of travel booking, Online Travel Agencies (OTAs) like Expedia, Booking.com, and Kayak have become dominant players. While hoteliers and travel providers often balk at the commission fees charged by OTAs, a closer examination reveals that OTA bookings are frequently more cost-effective than other booking channels, such as direct bookings or those facilitated through traditional sales teams. This article explores the hidden costs and personnel expenses associated with non-OTA channels and discusses the declining relevance of sales teams in the modern travel industry.
The True Cost of Non-OTA Booking Channels
At first glance, direct bookings or bookings through traditional channels (e.g., phone, email, or corporate sales) appear cheaper because they avoid OTA commissions, which typically range from 15% to 25%. However, these channels come with significant hidden costs that are often overlooked.
Personnel Costs
Non-OTA bookings, particularly those handled through call centres, front desks, or sales teams, require substantial human resources. These include:
Staff Salaries and Benefits: Reservation agents, front desk staff, and sales representatives require competitive salaries, health insurance, and other benefits. For a mid-sized hotel, employing a dedicated reservations team can cost upwards of $500,000 annually.
Training Expenses: Staff must be trained to handle bookings, manage customer inquiries, and upsell services. Ongoing training to keep up with industry trends and technology adds to the expense.
Overtime and Turnover: High turnover rates in hospitality mean frequent hiring and training, while peak seasons may require overtime pay, further inflating costs.
In contrast, OTAs operate as self-service platforms, requiring minimal human intervention from the hotel’s side. The booking process is automated, reducing the need for dedicated staff and associated costs.
Technology and Infrastructure Costs
Direct booking channels require robust technology to compete with the seamless user experience offered by OTAs. These include:
Booking Engine Development: A custom booking engine for a hotel website can cost $10,000 to $50,000 to develop, with annual maintenance fees of $5,000 or more.
Website Maintenance: A user-friendly, mobile-optimized website with secure payment gateways requires ongoing investment in web developers, hosting, and cybersecurity.
Marketing Expenses: To drive traffic to direct booking channels, hotels must invest heavily in search engine optimization (SEO), pay-per-click (PPC) advertising, and social media campaigns. For example, a single Google Ads campaign can cost thousands of dollars per month, with no guaranteed conversions.
OTAs, on the other hand, handle these costs as part of their service. Their platforms are optimized for search engines, mobile devices, and global accessibility, sparing hotels the expense of building and maintaining their own infrastructure.
Customer Acquisition Costs
Acquiring customers through direct channels is often more expensive than through OTAs. Hotels must:
Invest in Brand Awareness: Building a recognizable brand requires significant marketing spend, including partnerships, sponsorships, and loyalty programs.
Compete in a Crowded Market: OTAs aggregate thousands of properties, making them a one-stop shop for travellers. Hotels relying on direct bookings must compete with this convenience, often at a higher cost per acquisition.
OTAs leverage their vast user bases and marketing budgets to attract customers, reducing the burden on individual hotels. A study by SiteMinder found that OTAs account for 60% of online bookings globally, highlighting their effectiveness in customer acquisition.
The Declining Importance of Sales Teams
Historically, sales teams played a pivotal role in the travel industry, securing corporate contracts, negotiating with tour operators, and building relationships with high-value clients. However, their importance is waning due to several factors:
Shift to Digital Channels
The rise of OTAs and direct-to-consumer platforms has shifted booking power to travellers. Corporate clients, once reliant on sales teams for negotiated rates, now use OTAs or corporate booking tools like Concur or Egencia, which integrate with OTA platforms. A 2024 report by Phocuswright noted that 70% of business travelers book accommodations through digital channels, bypassing traditional sales interactions.
Automation and AI
Advancements in automation and artificial intelligence have reduced the need for human intervention in sales. Chatbots, dynamic pricing algorithms, and personalized marketing tools can replicate many functions of sales teams, such as upselling packages or responding to inquiries. For example, hotels using AI-driven revenue management systems can adjust rates in real-time to maximize occupancy, a task once handled by sales managers.
Cost-Benefit Analysis
Maintaining a sales team is expensive, with salaries, commissions, and travel expenses adding up quickly. In contrast, OTAs charge a predictable commission fee, which is often lower than the total cost of a sales team when factoring in overhead. For smaller hotels or chains with limited budgets, reallocating resources from sales to digital marketing or OTA partnerships yields a higher return on investment.
Changing Consumer Behavior
Modern travelers value convenience, transparency, and choice—qualities inherent in OTA platforms. Sales teams, while skilled at relationship-building, cannot match the speed and accessibility of OTAs. For instance, Booking.com allows users to compare hundreds of properties, read reviews, and book in minutes, a process that would take hours through a sales representative.
The Value Proposition of OTAs
Beyond cost savings, OTAs offer unique advantages that enhance their value:
Global Reach: OTAs operate in multiple languages and currencies, making it easier to attract international travelers. For example, Expedia’s platform is accessible in over 40 countries, broadening a hotel’s market without additional marketing spend.
Data Insights: OTAs provide hotels with analytics on booking trends, customer preferences, and competitive pricing, enabling data-driven decisions.
Trust and Reliability: OTAs invest heavily in fraud prevention, secure payments, and customer support, reducing the risk of chargebacks or disputes for hotels.
Addressing Common Misconceptions
Critics of OTAs often cite commission fees as a reason to prioritize direct bookings. However, this overlooks the comprehensive service OTAs provide, from marketing to customer support. Additionally, hotels can offset commissions by optimizing their OTA listings to drive higher occupancy and revenue. For example, properties that invest in high-quality photos and detailed descriptions on Booking.comoften see a 20% increase in bookings, according to industry data.
Another misconception is that direct bookings foster greater customer loyalty. While loyalty programs have value, OTAs also offer loyalty schemes, such as Expedia Rewards, which encourage repeat bookings across multiple properties. Moreover, the convenience of OTAs often outweighs brand loyalty for price-sensitive travelers.
While OTA commissions may seem steep, a holistic analysis reveals that these platforms are often the most cost-effective booking channel when accounting for hidden costs like personnel, technology, and customer acquisition. The decline of traditional sales teams further underscores the efficiency of OTAs, as digital platforms and automation take centre stage in the travel industry. For hotels and travel providers, embracing OTAs as a strategic partner—rather than a necessary evil—can unlock significant savings and growth opportunities in an increasingly competitive market.
By understanding the true costs of non-OTA channels and adapting to the digital-first preferences of modern travellers, the industry can move toward a more efficient and profitable future.