Online Travel Agencies (OTAs) are now the new big thing in the property rental world. So you might be wondering, how does the OTA make money from listing and selling a property? The profit comes from commission rates. A commission rate is the percentage of the total booking cost that an online travel agent (OTA) charges for their services. This blog will teach you more about commission rates, and their ability to make sure OTAs transact smoothly with the hotel or property company.
Commission Rates Overview
The average commission rate for OTAs is in the 15%-20% range. While some companies, such as Booking.com, will charge a lower than average commission rate of 10%, others, such as Expedia, have a commission rate of up to a whopping 30%, and others, like Agoda, will charge the rate based on the location of your property, depending on which city or country your property is located in. To make a profit, OTAs take a percentage of the commission rate from the total price of the property being listed. Certain OTAs can also profit from amenities such as breakfast, wi-fi, room service, and parking.
Can You Decrease Commission Rates?
While it doesn’t happen as much currently, it is possible to decrease commission rates, usually by negotiating with your OTA service provider. OTAs typically have a higher commission rate not only on properties that are in high demand but also on properties that are difficult to sell. Commission rates can vary and are negotiable from the OTA provider to the hotelier/property manager. Always compare commission rates between various OTAs to find the one with the best quality and the most reasonable price.