Why Hotels Lose 15-20% to Booking.com and Airbnb (And How to Stop)

What OTA Commission Rates Actually Are

Booking.com and Airbnb don't charge a flat listing fee — they take a cut of every booking that goes through their platform. For most independent hotels, resorts, and homestays in India, that commission sits between 15% and 25% per stay, and standalone (non-chain) properties enrolled in certain OTA visibility programs have reported rates as high as 40%. On a ₹5,000-a-night room, that's ₹750 to ₹1,000 gone before you've paid for housekeeping, staff, utilities, or anything else that stay actually costs to deliver.

The commission is deducted automatically — either withheld from the guest's payment or invoiced separately — so it rarely shows up as a single, visible number. Owners tend to notice it in aggregate, at month-end, when the gap between "rooms sold" and "money in the account" is larger than expected.

Why It's Worse Than the Percentage Suggests

The commission itself is only part of the cost. OTAs also control the guest relationship: the booking confirmation comes from Booking.com, guest questions often get routed through the OTA's messaging system, and the guest's email address and phone number frequently stay with the platform rather than with you. That means a guest who had a great stay and would happily book directly next time has no easy way to do that — and no reason to, since the OTA is the last brand they interacted with.

Many OTA contracts also include rate parity clauses, which restrict a property from offering a lower price on its own website than it lists on the OTA. In practice, this pushes owners toward matching OTA pricing everywhere, even on direct channels — which erases much of the incentive a guest would have to book with you directly in the first place, even if they wanted to.

Add it up over a year of bookings and the number stops looking like a processing fee and starts looking like one of the largest line items in the business — often larger than what most properties spend on marketing, staffing training, or property upkeep combined.

The Arithmetic, One Room at a Time

Take a ₹3,500-a-night room booked through an OTA at a 20% commission: the property nets about ₹2,800. The same room offered directly at ₹3,300 — genuinely cheaper for the guest — nets roughly ₹3,234 once a typical ~2% payment gateway fee is taken out. The guest pays ₹200 less. The property still earns ₹434 more per night. That gap repeats on every booking a property could have taken directly instead of through an OTA.

What India's Competition Regulator Said About Parity Clauses

On 19 October 2022, the Competition Commission of India fined MakeMyTrip–Goibibo ₹223.48 crore and OYO ₹168.88 crore, ruling that the wide price-parity and room-availability-parity clauses in their hotel contracts amounted to an abuse of a dominant market position — and directing MMT–Go to remove them from its agreements with hotel partners. (Business Today, 19 October 2022)

MakeMyTrip and OYO have since appealed to the National Company Law Appellate Tribunal, and recovery of the remaining 90% of the penalty is currently stayed pending that appeal (Inc42) — so this is an active regulatory finding, not a closed legal precedent, and press reporting since has suggested parity-style terms can still turn up in contracts in practice. What the order does establish, on the record, is that India's own competition regulator examined these clauses and called them an abuse of dominance. If your OTA agreement includes one, it's worth reading closely rather than treating it as fixed.

The Fix: A Direct Booking Engine You Own

A direct booking engine is a real-time reservation system built into your own website. Guests check availability, pick dates, and pay — directly to you, with no OTA in the middle and no commission taken out. Farvigo builds this into the Growth plan, so it's not a bolt-on tool disconnected from your site; it's built into the same website guests already land on when they search for your property.

• Real-time availability calendar, so guests see exactly which rooms are open, instantly
• Secure online payments through UPI, cards, and netbanking via Razorpay
• Optional 360° virtual tours, so guests can walk through the property before they commit
• Guest contact details captured directly, so you own the relationship for repeat stays
• No commission, ever — you keep 100% of what guests pay

The Growth plan is a ₹29,999 one-time build plus ₹2,999 a month, and that monthly plan is where we keep working on your Google listing, reviews and local search so guests actually find your site. That's a fraction of what most properties hand over in OTA commissions in a single busy month. Starter, without the booking engine, is ₹19,999 plus ₹1,999 a month.

What This Looks Like in Practice

Himalayan Nest, a homestay in Bir Billing, runs on exactly this setup — a direct booking engine built into their own website. You can see it live and go through the booking flow yourself.

Ready to Own Your Bookings?

You don't have to leave OTAs behind entirely — most properties keep them for discovery and fill-in demand. But every guest who could have booked directly, and instead booked through a 15-25%+ commission, is money that didn't need to leave the business. Book a free consultation and we'll walk through what a direct booking engine would look like for your property.