# The hotel groups vs. the OTAs: a 20-year power struggle
In 1996, a scrappy Microsoft side project called Expedia launched with one pitch to hotels: "We'll fill your empty rooms, and it'll barely cost you anything." Thirty years later, that same industry pays Expedia Group and Booking Holdings commissions of 15-20% per reservation, and hoteliers openly describe the relationship as one of dependency, not partnership. This lesson traces how that reversal happened, and why it is the defining power struggle in modern hospitality.
Online travel agencies (OTAs) like Expedia and Booking.com solved a real problem. Hotels, especially independent ones, had no way to reachreachThe number of unique people exposed to your message in a given period. Unlike impressions, reach counts each person once, no matter how often they see it.Voir la définition complète → global demand. Before OTAs, distribution ran through Global Distribution Systems (GDS), legacy booking networks originally built for airlines (Sabre, Amadeus, Travelport) that travel agents used, charging their own fees.
OTAs offered something new: a consumer-facing website, massive marketing budgets, and a simple commission model. Hotels paid only when a room actually sold. In the early 2000s this looked like a fair trade: hotels got incremental bookings, OTAs took a cut (then often 10%) for the traffic.
The catch was scale. As OTAs consolidated (Expedia acquired Hotels.com, Travelocity, Orbitz; Booking Holdings absorbed Priceline, Kayak, Agoda) they stopped being one channel among many. They became the channel through which a large share of unattached and international travelers searched for hotels at all.
Two mechanisms turned OTAs into gatekeepers rather than vendors.
1. Search dominance. Booking.com and Expedia collectively spend billions annually on Google search advertising (a well-documented pattern, exact figures vary by year), effectively buying the top of the customer's search journey. A traveler searching "hotels in Lisbon" sees OTA listings before they see the hotel's own website. Hotels found themselves paying, indirectly, to appear in front of their own potential guests.
2. Rate parity clauses. For years, OTA contracts required hotels to offer the same or better price on the OTA as on their own site, so-called "most favored nation" clauses. This meant hotels could not undercut the OTA to reward direct bookers, even though direct bookings cost the hotel nothing in commission. Regulators intervened: the European Commission and several national competition authorities investigated these clauses through the 2010s, and many EU countries now restrict "wide" parity clauses. In the US, similar scrutiny came from state attorneys general and antitrust litigation rather than a single federal rule.
The combined effect: commissions that started near 10% drifted toward the 15-20% range commonly cited today (Booking.com and Expedia typically disclose ranges rather than fixed rates, and actual rates vary by hotel size, market, and negotiated volume).
It helps to mapmapUsing software to automate repetitive marketing tasks and campaigns, enabling personalisation at scale across channels like email, web, and social.Voir la définition complète → the chain explicitly.
The uncomfortable truth for hotels: independents and small chains have almost no leverage. They cannot walk away from Booking.com, because for many markets (especially leisure travel in Europe and Asia) it is the dominant discovery channel. Booking Holdings has consistently reported gross bookings in the hundreds of billions of dollars annually (exact figures published in its 10-KKThe average number of new users each existing user generates through referrals. Above 1.0, growth compounds on itself and becomes exponential.Voir la définition complète → filings), a scale no individual hotel or even mid-size chain can replace with its own marketing.
Large branded chains have more leverage, because they have something OTAs cannot fully replicate: loyalty programs.
Marriott Bonvoy, Hilton Honors, and World of Hyatt are not just perks programs. They are the mechanism by which hotel groups fight to reclaim direct bookings.
The logic is straightforward: a guest who books direct gets points, status, free wifi, potential upgrades, none of which OTAs can offer because OTAs have no ongoing relationship with the guest after checkout. Marriott has publicly pushed "book direct" campaigns since the mid-2010s, and it discloses that a large majority of its bookings come through direct channels (Marriott's own reporting), though this includes calls to reservation centers and corporate travel agreements, not only its app and website.
The strategic bet is that if a chain can make its app and loyalty program sticky enough, travelers will search Marriott.com or open the Bonvoy app first, bypassing the OTA search step entirely. This is the same logic airlines used decades earlier with frequent flyer programs to fight travel agents.
The limitation: loyalty programs only work at scale. A traveler joins Bonvoy because Marriott has thousands of properties worldwide. An independent boutique hotel cannot build an equivalent program, which is why the OTA relationship remains far more asymmetric for smaller suppliers than for global chains.
Vérification des acquis
1. What was the original value proposition that OTAs offered hotels in the early days?
2. What structural shift explains why OTAs moved from being 'one channel among many' to becoming gatekeepers?
3. Why does paying heavily for Google search ads give OTAs structural power over individual hotels?
4. Select ALL correct answers about how OTAs differ from the older GDS (Global Distribution System) model.
Sélectionnez toutes les réponses correctes.
5. Select ALL correct answers describing why hoteliers describe their relationship with OTAs today as 'dependency' rather than 'partnership'.
Sélectionnez toutes les réponses correctes.
By 2026, the standoff looks like a negotiated truce rather than a resolution.
A simple way to see the margin stakes: on a $200/night hotel room, an 18% OTA commission is $36 that never reaches the hotel's P&L. Multiply that across a 150-room hotel running at 70% occupancy for a year, and the commission drag runs into hundreds of thousands of dollars annually, money hotels are trying to recapture through direct channels and loyalty economics.
🎬 [VIDEO: "How Booking.com Became a Travel Monopoly" - youtube.com - a concise explainer on OTA consolidation and market power, useful for visualizing the scale argument in this lesson]
For a regulatory deep dive, the European Commission's sector inquiry materials on online hotel booking are a genuinely useful primary source if you want to see how competition authorities reasoned through the parity clause issue.