Online travel agency (OTA)

What does OTA mean?

OTA stands for Online Travel Agency.

The term comes from the digital evolution of traditional travel agencies. Instead of selling rooms, flights or travel packages through a physical office or travel consultant, the search and booking process now takes place on an online platform.

The first major online travel agency was Expedia.com, launched in October 1996 with support from Microsoft.

In the hospitality industry, an OTA acts as an intermediary between you and the guest. The platform shows your property in search results, allows users to compare prices and availability and, in most cases, also manages the booking process.

The difference from your direct website is simple:

• On your website, the guest books directly with you and you do not pay an intermediary commission.
• On an OTA, the guest books through the platform, which acts as the intermediary and keeps a percentage commission on each booking.

For this reason, OTAs should not be seen simply as “booking portals.” They are sales channels that need to be managed within a broader distribution strategy, together with your official website, booking engine, metasearch, direct marketing and guest loyalty activities.

How OTAs work

OTAs work as intermediaries between travelers and accommodation providers.

To appear on an OTA, you need to create a property profile, or listing, on the platform you choose. This is where you add your description, photos, services, availability, rates, restrictions, property rules and cancellation policies.

From that moment, your property can appear in the search results when users look for a stay in your destination.

The way OTAs work is based on a few key elements: booking commissions, the extranet, algorithmic ranking, traveler safeguards and payment management. Let’s look at them in more detail.

Commissions and service fees on bookings

OTAs apply a cost to the bookings you receive. This may be a commission paid by the property, a service fee split between the property and the guest, or a different model depending on the platform.

As a general indication, commissions range between 5% and 25% of the booking value.

The exact percentage changes based on several factors: country, property type, payment model and participation in visibility programs, discount programs or other commercial options offered by the platform. For this reason, the exact percentage should always be checked in the extranet or in the contract with each OTA.

In this table, you will find a practical overview to help you start understanding the costs of the main OTAs.

Remember that the figure that really matters is net revenue: how much you keep after commissions, promotions, possible payment costs, taxes and commercial conditions.

To compare OTAs correctly, do not look only at the percentage. Also consider how much visibility the channel brings you, what type of guests it generates, how much it affects cancellations and how many direct bookings you can build over time from that first contact.

Extranet

The extranet is the control panel where you manage your presence on the OTA. From there, you can manage rates, availability, restrictions, photos, descriptions, promotions, sales conditions and guest messaging.

Algorithmic ranking

OTAs decide the order in which listings appear through algorithms. This order is called “ranking.”

A property’s position in the OTA ranking can depend on several factors: availability, price competitiveness, content quality, reviews, conversion rate, cancellation policies, response speed, listing updates and participation in commercial programs.

Some OTAs allow you to analyze and improve your property’s position. For example, Booking.com gives you a dedicated dashboard inside the Analytics section of the extranet. There, you can monitor your performance for clicks, views and your listing score over the last 30, 90 or 365 days.

Traveler safeguards

OTAs offer users an environment that is easy to use and perceived as reliable. They do not simply show available properties: they support the guest through different stages of the booking process, reducing the feeling of risk.

For example, before booking, users can read verified reviews, compare several properties, filter by services, check cancellation policies and view the price summary. During the booking process, they can use familiar payment systems, receive immediate confirmation and find the main information in one place.

Even after confirmation, the platform can offer automatic notifications, booking summaries, customer support and guided procedures in case of changes, cancellations, unavailable accommodation or problems with the stay. For many guests, knowing that they can rely on a recognized intermediary adds an extra layer of security.

This is especially important when users do not know the property directly, are booking in a new destination, are traveling abroad or want to avoid managing unexpected issues only with the hotel.

Payment management

Payment management changes depending on the OTA and the selected settings.

In some cases, the guest pays directly on the platform at the time of booking and the OTA later transfers the amount to the property, net of any commissions or service fees. In other cases, the guest books on the OTA but pays directly at the property.

This matters because it affects cash flow, cancellations, refunds, accounting reconciliation and administrative work. Before activating or changing an OTA channel, it is always worth checking how payments, commissions, taxes, invoices and payout timelines are managed.

The main OTAs for hotels in the global market

Not all OTAs serve the same purpose. Some are broad platforms with a strong role in hotel bookings. Others work better for vacation rentals, travel packages, business travel or specific international source markets.

At European level, the hotel OTA market is highly concentrated. According to data reported by Statista, Booking.com holds the largest share of the European hotel OTA market, with around 69.3%, followed by Expedia Group with around 11.5%.

HOTREC shows a similar concentration in its analysis of European hotel distribution, with Booking Holdings at around 71% of the OTA market and Expedia Group close to 15%.

For a global audience, however, it is useful to look not only at market share, but also at the role each platform can play in your distribution strategy.

Here is a practical overview of the main OTA categories to know:

What is the difference between OTA and metasearch?

OTAs and metasearch are often confused, but they play different roles.

An OTA sells the room or accommodation unit directly through its own platform. A metasearch platform, on the other hand, compares prices and availability from multiple sources and then redirects the user to the relevant booking page. This could be the property’s own website, an OTA or another connected sales channel.

Common examples of metasearch platforms include Google Hotels, Tripadvisor, Trivago and Kayak.

In this table, you will find the main differences between OTA and metasearch.

In short: an OTA is a sales channel, while metasearch is a comparison tool that can direct users toward different booking channels.

Advantages and disadvantages of OTAs for accommodation providers

OTAs can bring visibility and bookings, but they should not become the only channel your distribution depends on. The point is not deciding whether to use them or not. The real question is understanding when they help, how much they cost and how to avoid becoming too dependent on them.

Advantages of OTAs

They increase your property’s visibility

OTAs allow you to appear in front of guests who do not yet know your official website or your brand. This is especially useful if you operate in a very competitive destination or want to be found more easily by users comparing several properties in the same area.

They help you reach international guests

Platforms such as Booking.com, Expedia, Agoda or Airbnb can bring you international guests who would be unlikely to arrive directly on your website straight away. For many properties, especially in art cities, tourist destinations and locations with strong international demand, OTAs remain an important channel.

They make booking easier for guests who do not know you yet

Many guests trust OTAs because they find reviews, photos, filters, clear conditions, support and familiar payment systems there. This can support conversion, especially when users are discovering your property for the first time.

They can help you on specific dates or with specific audiences

OTAs can be useful for giving visibility to weaker periods, reaching guests who do not come from your direct website or working on markets you do not yet cover well. In this sense, they work as an acquisition channel, not only as a source of bookings.

Disadvantages of OTAs

Commissions reduce your margin

Every intermediated booking has a cost. OTA commissions can have a significant impact, especially if a large share of your bookings always comes from the same platforms.

For example, if you receive a €1,000 booking through an OTA with a 15% commission, the intermediation cost is €150. Your gross revenue therefore drops to €850, before even considering any promotions, payment costs or other commercial conditions.

The issue becomes even clearer at the end of the year. If you generate €200,000 in bookings through OTAs with an average commission of 15%, you pay around €30,000 in commissions. It is revenue you generated, but it does not stay with the property.

That is why it is not enough to look at the revenue generated by the channel. You also need to evaluate net revenue after commissions, promotions and applied conditions.

You have less control over the guest relationship

When a guest books through an OTA, you often have less data and fewer opportunities to manage the relationship directly before, during and after the stay. This makes it harder to work on loyalty, upselling, cross-selling, newsletters and future direct bookings.

You depend on the platform’s ranking

Visibility on OTAs depends on algorithms and factors you do not fully control: reviews, availability, price, conversion, cancellations, content, conditions and visibility or discount programs. If your property loses positions in the results, you may receive fewer bookings even if the quality of your property has not changed.

In short: an OTA is a sales channel, while metasearch is a comparison tool that can direct users toward different booking channels.

Advantages and disadvantages of OTAs for accommodation providers

OTAs can bring visibility and bookings, but they should not become the only channel your distribution depends on. The point is not deciding whether to use them or not. The real question is understanding when they help, how much they cost and how to avoid becoming too dependent on them.

Advantages of OTAs

They increase your property’s visibility

OTAs allow you to appear in front of guests who do not yet know your official website or your brand. This is especially useful if you operate in a very competitive destination or want to be found more easily by users comparing several properties in the same area.

They help you reach international guests

Platforms such as Booking.com, Expedia, Agoda or Airbnb can bring you international guests who would be unlikely to arrive directly on your website straight away. For many properties, especially in art cities, tourist destinations and locations with strong international demand, OTAs remain an important channel.

They make booking easier for guests who do not know you yet

Many guests trust OTAs because they find reviews, photos, filters, clear conditions, support and familiar payment systems there. This can support conversion, especially when users are discovering your property for the first time.

They can help you on specific dates or with specific audiences

OTAs can be useful for giving visibility to weaker periods, reaching guests who do not come from your direct website or working on markets you do not yet cover well. In this sense, they work as an acquisition channel, not only as a source of bookings.

Disadvantages of OTAs

Commissions reduce your margin

Every intermediated booking has a cost. OTA commissions can have a significant impact, especially if a large share of your bookings always comes from the same platforms.

For example, if you receive a €1,000 booking through an OTA with a 15% commission, the intermediation cost is €150. Your gross revenue therefore drops to €850, before even considering any promotions, payment costs or other commercial conditions.

The issue becomes even clearer at the end of the year. If you generate €200,000 in bookings through OTAs with an average commission of 15%, you pay around €30,000 in commissions. It is revenue you generated, but it does not stay with the property.

That is why it is not enough to look at the revenue generated by the channel. You also need to evaluate net revenue after commissions, promotions and applied conditions.

You have less control over the guest relationship

When a guest books through an OTA, you often have less data and fewer opportunities to manage the relationship directly before, during and after the stay. This makes it harder to work on loyalty, upselling, cross-selling, newsletters and future direct bookings.

You depend on the platform’s ranking

Visibility on OTAs depends on algorithms and factors you do not fully control: reviews, availability, price, conversion, cancellations, content, conditions and visibility or discount programs. If your property loses positions in the results, you may receive fewer bookings even if the quality of your property has not changed.

They increase operational work

The more OTAs you use, the more you need to keep rates, availability, restrictions, content, promotions and conditions aligned.

Without a connected PMS and channel manager, the risk of errors, duplicate work, misaligned rates and overbooking increases.

You risk becoming too dependent on portals

If a large share of your bookings comes from OTAs, it becomes harder to manage distribution freely.

You may feel pushed to accept discounts, programs or conditions in order to maintain visibility, even when they are not the best choice for your margin.

How to manage multiple OTAs without overbooking

When you work with several OTAs, the main risk is overbooking: selling the same room or unit on multiple channels at the same time.

There are two types of overbooking:

• Unintentional overbooking, meaning an unplanned overlap of reservations, often caused by manual updates, unsynchronized availability or delays between one portal and another.
• Planned overbooking, used by some properties as a strategy to compensate for cancellations and no-shows. This choice requires solid historical data, reliable forecasts and a clear plan for relocating or re-accommodating guests if needed. To explore this topic in more detail, you can read the article on how to turn overbooking into a strategy to increase hotel revenue.

Main causes of overbooking in hotels

Unintentional overbooking can happen when:

• a room is sold on an OTA, but availability is not updated immediately on the other channels
• a phone or direct booking is not recorded in the system in time
• the PMS, booking engine, channel manager and portals do not communicate correctly
• rates, minimum stays or closures are updated manually across several extranets
• a room suddenly becomes unavailable due to a technical issue or an operational problem

In all these cases, the problem is not being present on OTAs in itself, but the lack of centralized management.

That is why the best way to reduce the risk of overbooking is to work with a property management system (PMS) that connects reservations, availability, prices and sales channels.

Even better if it is an all-in-one PMS, because it allows you to manage several activities from the same platform: reservations, booking engine, channel manager, payments, guest communication and daily operations.

This reduces manual work, avoids duplicate updates and lowers the risk of human error. To understand which features are included in an all-in-one property management system and how they can support daily operations, you can read the in-depth guide to Smartpms.

Now let’s look at the 6 steps that help you manage multiple OTAs while reducing the risk of overbooking.

1. Centralize availability and reservations

The first step is to avoid managing each channel separately.

Booking.com, Airbnb, Expedia, your official website, booking engine, phone bookings and reservations received by email or WhatsApp should all flow into one system. If each channel is updated separately, one forgotten or delayed change is enough to create a mismatch.

Availability, reservations, closures, minimum stays and restrictions should all start from one reliable source. This way, the team always works with the same data and can see in real time what is available, what has been sold and which dates need more attention.

2. Use a channel manager

The channel manager synchronizes availability, rates and restrictions between your property management system and all connected sales channels, including OTAs, your website and your booking engine.

For example, when a booking comes in from an OTA, the channel manager automatically closes that availability on the other channels. This reduces the risk of selling the same room or unit twice.

This is especially important if you work with several OTAs, have many room or unit types, or often change rates, minimum stays and restrictions.

3. Connect the channel manager to the PMS

A channel manager reduces the risk of overbooking, but it works best when it is connected to the PMS or integrated directly into it.

The PMS centralizes reservations, rooms, units, guest profiles, payments and daily operations. The channel manager distributes rates and availability across your sales channels.

When the two systems communicate correctly, every reservation is recorded in the property management system and availability is updated automatically across the connected channels.

This prevents duplicate updates, forgotten changes and unnecessary manual work. In practice, the team does not need to check each extranet one by one, but can work from a single control point.

4. Manage cancellations and no-shows carefully

Even with synchronized systems, cancellations and no-shows can make availability management more complex.

That is why it is useful to monitor cancellation history, distinguish between early and last-minute cancellations, and check which channels generate more changes or no-shows. This data helps you understand the real level of risk on specific dates and decide which conditions to apply.

For example, during periods of high demand, you might consider stricter cancellation policies, credit card guarantees or well-structured non-refundable rates.

5. Prepare an internal procedure

Technology reduces the risk of overbooking, but it does not replace good organization.

The team needs to know what to do when availability changes, when a direct booking comes in, when a room becomes unavailable or when a last-minute cancellation arrives.

A clear procedure prevents different answers from reception, revenue, administration and ownership. This is especially important in properties where several people can intervene on reservations and availability.

6. Prepare an emergency plan

Even with careful management, unexpected situations can still happen.

That is why it is useful to have a relocation plan ready in case of overbooking: know in advance which partner properties to contact, which criteria to use when choosing the guest to relocate, which costs you may need to cover and how to communicate the solution clearly and professionally.

The goal is to prevent an operational problem from becoming reputational damage.

How to reduce dependency on OTAs

Reducing dependency on OTAs does not mean stopping using them. It means using them as visibility and acquisition channels without letting them become your property’s main source of bookings.

The goal is to rebalance your sales mix: continue receiving OTA bookings when they are useful, while increasing the weight of the direct channel, where you have more control over margin, guest data, communication and loyalty.

Smartness was created to help accommodation providers reduce OTA dependency and increase direct bookings. That is why it brings together, in one platform, the tools needed to do it.

To learn more, you can read the in-depth guide to the tools that help you reduce OTA dependency and grow direct bookings.

1. Measure how much OTAs weigh in your sales mix

To reduce dependency on OTAs, you first need to understand how much they really affect your business.

Monitor at least these data points:

• percentage of OTA bookings out of total bookings;
• commissions paid by channel;
• net revenue after commissions and promotions;
• cancellation rate by channel;
• share of direct bookings;
• OTA guests who return and book directly.

This data helps you decide where to act: website, booking engine, pricing, communication, marketing campaigns or channel management.

2. Use the billboard effect

OTAs can help you get discovered by guests who do not know your property yet. This mechanism is called the billboard effect: the user sees you on an OTA, then searches for your property name on Google, visits your official website and may decide to book directly.

For this to happen, however, simply being present on the portals is not enough. Your brand needs to be recognizable, your property name needs to be easy to find and your official website needs to appear among the first results when the user searches for you.

If the guest lands on your website and finds incomplete information, weak photos, unclear prices or a complicated booking process, they will go back and book on the OTA.

3. Make your website more competitive

Your property’s official website needs to answer the guest’s questions better than the OTA:

• which rooms or units are available;
• what is included in the price;
• which cancellation conditions apply;
• why it is worth booking directly;
• how to contact the property in case of questions.

You do not always need to promise the lowest price. Clear, credible benefits are often enough: better conditions, upgrades when available, more flexible check-in, included services, dedicated offers or more direct communication with the property.

4. Use a simple and reliable booking engine

The booking engine is the point where the user’s interest becomes a booking.

If the booking engine is slow, unclear or difficult to use on mobile, the guest may leave your website and go back to the OTA, where the process feels more familiar.

An effective booking engine needs to show availability, prices, conditions and services clearly. It should allow users to complete the booking in just a few steps, including on mobile devices, and build trust all the way to payment or confirmation.

5. Work on direct-channel prices and conditions

Rate parity rules vary by market, platform and contract. In many cases, however, accommodation providers have more room to strengthen the direct channel than they may think.

This does not only mean working with a different price. It can also mean offering better conditions, dedicated packages, promo codes, included services, exclusive benefits or more flexibility for guests who book through the official website.

At European level, the Digital Markets Act has strengthened this principle for platforms designated as gatekeepers, including Booking.com. Since November 14, 2024, Booking.com cannot prevent hotels and other providers from offering better prices or conditions on other channels, including their official website.

This does not mean that simply lowering prices on your direct website is enough. It means you can build a clearer and more competitive direct-booking strategy, helping guests immediately understand why booking on your website is worth it.

6. Build the relationship with your guests

A direct booking is worth more than the commission you save. It also allows you to get to know the guest better, communicate before the stay, offer additional services and keep the relationship going after check-out.

Email, WhatsApp, pre-arrival messages, newsletters and dedicated offers can help you turn a guest acquired through an OTA into a guest who books directly next time.

To do this more easily, choose a CRM tool that includes email marketing features, such as Smartconnect. Smartconnect centralizes the contacts in your database, segments them and automatically creates newsletters and personalized offers.

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