Thanks Cloudbeds, we now have an eye-opening report on the global hotel dependency on OTA distribution.

Last year’s “leader” in OTA dependency is Europe. In 2024, 77% of hotel online bookings in Europe came from OTAs, almost 10% above other regions. Asia Pacific had the second-highest dependence, reaching 68.6% in 2024, a 3% increase from 2023. If you remove branded hotels from the report, U.S. independent hotels would not be faring better.

There have always been intermediaries in hotel distribution, the question is: to what extent? Even in the pre-Internet era, back in 1995, 25% of roomnights were generated by intermediaries vs 75% were direct. In other words, direct vs indirect ratio was 4:1.

Fast forward to today: For many independents direct vs indirect (OTAs, bedbanks and other intermediaries) online booking ratio is negative 1:3 to 1:4 and even 1:5 i.e. less than 15% of online bookings are direct. Compare this to the major hotel chains’ positive 3:1 to 4:1 online booking ratio.

Why do the independents have such an over dependence on the OTAs? Systemic underinvestments in talent, technology and digital marketing are the main reasons. Ex. Hotels spend on marketing less than 2.5% of net room revenue. Compare this to 36% of revenue for Booking and 54% for Expedia!

Yet, in spite of the billions in marketing spend, the OTAs are spending on marketing an average of $250 per month per hotel on their platform. This is it! Can independent hotels spend $250 and more on their marketing per month?

Of course they can! If they invest adequately in technology, marketing and talent, they can double, triple and quadruple their direct online revenues and decrease their dependence on the OTAs. And do this at a very respectable ROI!

At NextGuest, now part of Cendyn, we tracked the cost of direct online distribution in the course of 20 years across our more than 5,000 plus independent hotel clients. You know what? The average cost has stayed consistently in the range of 4.25% - 4.5%, including website cost amortized over 36 months, website maintenance, hosting, analytics, digital marketing (Content Marketing, SEO, metasearch, online media, social media, email marketing, CRM marketing, omnichannel marketing campaigns, etc.), consulting fees.

Compare this to OTA commissions of 18%-25% plus commissions for increased visibility, mobile bookings, OTA loyalty member discounts, etc.

Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist

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