How Much Commission Does Airbnb, Expedia and Booking.com Take (+ Others)
Are you a hotelier who’s interested in using online travel agents (OTAs) to help fill your rooms? If so, you’ll need to know what commission rates the OTAS charging. In this blog post, we’ll break down the commission rates for some of the most popular OTAs. We’ll also share with you some tips and tricks for negotiating better commission rates.
How do OTAs make money?
OTA’s make money through commission by taking a percentage of the total booking cost from the hotel. The commission rates vary depending on the OTA, but they typically range from 15% to 25%. Some OTAS also charge a commission on extras (such as breakfast or parking), which can add up to an additional few percent. For example, some OTAs charge a commission of 15% on the room rate, plus an additional $0.40 per extra. So, if you’re booking a room that costs $100 per night, with breakfast and parking included, they would take a total commission of $17.40.
What is a OTA commission rate?
A commission rate is the percentage of the total booking cost that an online travel agent (OTA) charges for their services. For example, if an OTA charges a 15% commission on a room that costs $100 per night, the hotelier would pay the OTA $15 for each reservation made through them.
Commission rates can vary widely and are typically negotiable between the OTA and the hotelier. OTAs will often charge higher commission rates for hotels that are in high demand, or for rooms that are difficult to sell.
Some OTAs will also offer discounts on commission rates if the hotelier agrees to certain terms, such as signing a contract or committing to a certain number of bookings.
Hoteliers should compare the commission rates charged by different OTAs before deciding which one to use. It’s also important to consider the other benefits that an OTA can provide, such as increased exposure and marketing support.
Can you negotiate the commission rates with OTAs like Expedia or Agoda?
Yes, it is possible to negotiate commission rates with OTAs like Expedia or Agoda. Many hoteliers have successfully negotiated lower commission rates by showing their value and negotiating for better terms.
Tips on how to negotiate better commission rates with OTAs
There are a few things hoteliers can do to try to get better commission rates from OTAs. First, it’s important to understand what the OTA is looking for in a partner hotel. What kind of occupancy rate does the OTA need to make a profit? What kind of margins are they looking for?
Second, hoteliers should be prepared to offer something in return for a lower commission rate. This could be a contract commitment or a guarantee of a certain number of bookings.
Third, it’s often helpful to have someone else negotiate on your behalf. This could be a professional negotiator, or even just a friend or family member who is good at haggling. Make sure they’re familiar with the structure of OTAs and your business so they can agree on the best deal.
Fourth, don’t be afraid to walk away from the negotiation if you don’t feel like you’re getting a fair deal. Remember, there are other OTAs out there who may be willing to work with you for a better rate.
If you plan on listing your property on multiple OTAs we recommend using a property management software that allows you to manage pricing and reservations from within one platform, such as Preno. Preno integrates with 50+ of the most popular OTAs – including all the online travel agents mentioned below.
How do you calculate your true cost of using an OTA?
Calculating the true cost of using an OTA involves more than just looking at the commission rate. Hoteliers also need to consider other fees and costs associated with using an OTA, such as credit card processing fees and any additional charges for special services.
It’s important to factor in these costs when comparing commission rates between different OTAs. A slightly lower commission rate may not necessarily mean a better deal if there are hidden fees or additional charges.
Hoteliers should also consider the potential long-term effects of using an OTA. While they may provide short-term benefits in terms of increased bookings, relying too heavily on OTAs can lead to a decrease in direct bookings and potentially harm the hotel’s brand.
Ultimately, the true cost of using an OTA will depend on the individual hotel’s business model and needs. It’s important to carefully consider all factors before deciding on using an OTA.
What are the commission rates for Booking.com?
Booking.com commission rate varies between 10% to 25% depending on the location of your property and your cancellation policy. On average, it is about 15%. To find out more information about the commission rate you will pay, make sure to read their Accommodation Agreement when signing up to their platform.
What are the commission rates for Expedia?
As with Booking.com, Expedia charges a range of commission rates depending on the size of your hotel. Independent hotels tend to pay a 15-30% commission rate, whereas big brands can expect to pay 10-15%. Typically these rates won’t be negotiable unless you’re part of a large hotel chain, such as Marriott which famously did so in 2019.
What are the commission rates for Airbnb?
Airbnb has the lowest commission rate of all OTAs and hosts can expect to typically pay a commission rate of 3-15% per booking subtotal. However, this may vary depending on your location and whether you have a strict no-cancellation policy. Airbnb has kept commission rates low to compete with other OTAs and therefore, guests tend to pay additional fees rather than the hotel or accommodation owner.
What are the commission rates for Trip.com?
If you gain a booking through Trip.com you can expect to be charged a commission rate between 10-25%. Again, this rate fluctuates depending on the size of your hotel and the location. It’s best to talk to a representative to get a better understanding of what commission rate you should expect, and take this opportunity to negotiate a better rate for your property.
What are the commission rates for Agoda?
Agoda sets a commission rate based on your property location (city and country), and this is usually about 15%. Generally, Agoda does not negotiate these rates as they’re standardised across the region, but you can request a lower rate if you have a valid reason to, such as a chain agreement. They also have an option for hoteliers to join their Agoda Growth Express program (AGX) which you can agree to a higher commission rate to appear higher on the Agoda search results, without any additional fees.
What are the commission rates for Hostelworld?
Hostelworld takes a commission every time a booking is made through their website or app and this sits between 10-25%. One bonus of using Hostelworld is that they add this rate to the guests’ booking, so the hotelier won’t be affected.
Why can relying too heavily on OTAs make it difficult to build a loyal customer base?
Guests who book through an OTA may not even be aware of your hotel’s brand, making it harder to create a lasting relationship with them. When hotels rely on OTAs to fill their rooms, they are essentially letting the OTAs dictate their pricing and availability, which can make it difficult to optimise revenue and maximise profits. By implementing strategies for reducing dependency on OTAs, hotels can take back control of their revenue management strategy and build a loyal customer base. So instead of solely relying on OTAs for bookings, hotels should look into ways to attract guests to book directly with them. This includes investing in their own website, offering incentives for direct bookings, leveraging social media, developing a loyalty program, and partnering with local businesses.
In conclusion, it’s important to understand the commission rates that OTAs charge as this will directly affect your business. Be sure to do your research and be prepared to negotiate a lower rate if you feel like you’re not getting a fair deal. There are many OTAs out there who are willing to work with you so don’t be afraid to walk away from the negotiation if you’re not happy. Remember, OTAs are a great way to increase bookings and grow your business, but the best way overall to increase revenue is by increasing your direct bookings.
Need a PMS that allows you to manage all your OTA listings from within one platform? Trial Preno for free today!
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