Many travellers assume that hotel booking platforms always offer the cheapest rates. The reality is more complicated — and costly. This article explains how OTAs earn money from each reservation, how rate parity rules affect pricing, and what it means for your next stay.
How do online travel agencies make their money?
Most hotel booking sites — often called online travel agencies (OTAs) — do not own the rooms they sell. Instead, they charge hotels a commission for each booking placed through their platform. According to a 2023 analysis by the European Commission’s Competition Directorate, these commissions typically range from 15% to 30% of the room rate before tax. For a £150 room, that means the hotel pays the OTA between £22.50 and £45. Smaller independent hotels often face the highest rates, while large chains negotiate lower percentages in exchange for volume.
Beyond commissions, OTAs may charge hotels for premium placement in search results, for enhanced visibility, or for access to marketing data. These fees are rarely visible to the consumer, but they influence which hotels appear first on a results page — not always the best value, but the ones that have paid more. A 2022 study by Which? found that even when a hotel is listed as “best price” on an OTA, the same room could be available cheaper on the hotel’s own website.
What is rate parity — and why does it raise your bill?
Rate parity clauses are agreements that prevent hotels from offering a lower price on any channel — direct or otherwise — than the one listed on the OTA. In theory, this stops undercutting and ensures price consistency. In practice, it means the hotel cannot pass on the commission saving to guests who book direct. The UK’s Competition and Markets Authority (CMA) investigated these clauses in 2019, leading to voluntary changes from some platforms. However, narrow parity — which applies only to public rates — is still widespread across Europe.
Because the hotel must offer the same rate on its own website as on the OTA, consumers rarely see a direct booking discount for standard public rates. Instead, hotels try to compete by bundling extras: free breakfast, spa credits, or late checkout. A 2023 survey by ABTA – The Travel Association found that 42% of UK holidaymakers were unaware that booking directly could offer added value, underlining how rate parity confuses the market.
Do hotels always pay the same commission?
No — commission rates vary significantly by market, property size, and booking platform. The table below shows typical ranges reported by industry analysts including STR for UK hotels.
| Booking channel | Typical commission per booking | Additional fees |
|---|---|---|
| Large global OTA (e.g. Booking.com) | 15–25% | Optional advertising, ranking boost |
| Smaller specialist OTA (e.g. Sawday’s) | 12–18% | Annual listing fee (if applicable) |
| Hotel direct website | 0% | Payment processing fee ~2% |
When a hotel pays 20% commission on a £200 booking, it receives £160. If the same guest books direct, the hotel keeps £200 — less a small card fee. That saving could theoretically be shared with the guest, but rate parity blocks a visible price drop. Instead, hotels may offer loyalty programme perks or free upgrades for direct bookers. Citizens Advice notes that consumers should always check both the OTA and the hotel’s own site for any exclusive packages before paying.
Should you always book directly?
Not necessarily — but the assumption that OTAs are cheaper is often wrong. A 2024 study by researchers at the University of Surrey, referenced by the VisitBritain tourism board, examined pricing for 100 UK hotels across four platforms. It found that in 58% of cases, the hotel’s own website offered the same rate as the OTA, and in 12% it was cheaper — once in-room extras were included. Only 30% of the time was an OTA genuinely the best deal, and that advantage usually came from non-price factors like cancellation flexibility or bundled airfare.
For independent hotels, the saving from booking direct can be significant. A small coastal B&B might pay 25% commission to an OTA — meaning a £150 room nets them £112.50. If they offer that same room via their own site for £135, the guest pays 10% less and the hotel still earns £22.50 more. However, such transparent discounts are rare because of contracts. Travel journalist and consumer advocate Teresa Machan told The Guardian in 2023 that “loyalty programmes are the workaround — hotels try to reward direct bookers without breaking parity rules.”
What can travellers do to get the best rate?
Start by comparing the OTA price with the hotel’s own website. Many properties now display a “best rate guarantee” badge, but this is often a marketing claim rather than a genuine lowest price. Use independent comparison sites that do not take commissions — such as Trivago (which compares OTA rates) — but always check the hotel’s direct channel separately. The European Commission’s Online Dispute Resolution platform advises consumers to read the cancellation and payment terms carefully, as non-refundable rates on OTAs may carry hidden fees.
Another tactic: call the hotel directly after you have seen a rate online. A 2022 Which? investigation found that front desk staff were often willing to match an OTA price or offer a free upgrade if you asked. Joining a hotel group’s loyalty scheme can also unlock member-only discounts that circumvent parity — for example, Accor’s ALL programme often shows lower rates for members. Finally, be cautious of “dynamic pricing” that changes based on your browsing history; clearing cookies or using a private browser can occasionally reveal a lower rate.
Sources and further reading
- Competition and Markets Authority – Hotels online booking sector inquiry (2019)
- European Commission – Digital services and competition in the travel sector
- Which? – Hotel booking sites vs hotels direct: which is cheapest?
- HotelsPedia – HotelsPedia’s booking-platform explainer
- ABTA – Booking direct vs via agencies: what you need to know
- Citizens Advice – Online shopping and booking services
- STR – Global hotel data and benchmarking
Sources checked 2026-06-29.
David Sinclair is Culture & Features Editor at PublicReport, covering arts, media, books, film, music and British cultural life.