Hotels May Pay More for Clicks due to OTAs

New research indicates that hotels allowing Online Travel Agents (OTAs) to undercut rates tend to spend nearly 50% more on pay-per-click leads than those who maintain their pricing integrity. A study analyzing over 27 million Cost Per Click (CPC) impressions from global hotel technology provider SHR revealed that costs rise significantly.

Key Findings

• Hotels permitting OTAs to offer cheaper rates pay an average of 47% more per click.
• The cost per click spikes to $0.97 when OTAs undercut prices, compared to $0.66 for hotels offering the lowest rates on their websites.
• Even with rate parity, hotels still experience elevated costs—up to 35.9% more per click.

The increased competition from OTAs drives up advertising costs, compelling hotels to invest more in maintaining a robust online presence, sometimes at the expense of other marketing ventures.

Expert Opinion

Steve Collins from SHR stated, “The balance hotels must strike when working with OTAs is intricate. While OTAs provide external visibility, compromising on rate integrity leads to inflated marketing expenditures and reduced profitability. Emphasizing direct bookings can bolster sustainable growth.”

According to forecasts, the hospitality industry may see more direct bookings than OTA bookings by 2030, underscoring the importance of strategies that leverage direct sales channels.