How Hotels Can Reduce OTA Commissions

Hotels are constantly grappling with the growing dependency on online travel agencies (OTAs) for bookings. While OTAs provide valuable exposure, the high commission fees—typically ranging from 15% to 30%—can significantly erode a hotel's bottom line. Independent hotels, in particular, face the dual challenge of driving direct bookings while balancing the benefits of OTAs. However, with innovative loyalty and conversion strategies, hotels can shift share away from OTAs and reclaim profitability. Laasie’s Retain and Convert products offer practical, data-backed solutions to help hotels reduce OTA commissions, foster guest loyalty, and increase direct bookings.

The OTA Dilemma: A Costly Channel for Hoteliers

OTAs have become an essential tool for driving occupancy, but their commission structures significantly cut into revenue. In fact, according to research by Kalibri Labs, hotels in the U.S. pay over $10 billion annually in OTA commissions. For independent hotels, which often lack the marketing budgets of larger brands, these costs can be particularly damaging. As more travelers turn to OTAs for their ease of comparison and broad range of choices, the direct booking channel becomes even harder to grow.

While OTAs are effective at generating bookings, the reality is that guests who book through these platforms tend to have less loyalty to the hotel itself. They are booking through the OTA for convenience or perceived savings, not because they have an emotional connection to the property. In contrast, direct bookings not only save hotels the high OTA commissions but also allow for a more personalized guest experience, deeper relationships, and the opportunity to collect valuable first-party data.

The Power of Loyalty: Driving Direct Bookings

One of the most powerful tools to reduce reliance on OTAs is a robust loyalty program, but not just any program will do. Traditional points-based programs often fail to engage today's digitally savvy travelers who crave instant gratification. This is where Laasie Retain comes in. Designed to revolutionize loyalty, Retain leverages instant rewards to create immediate value for guests, encouraging them to book directly with the hotel rather than through an OTA.

Instead of waiting months or years to accumulate enough points for a free night, guests earn instant rewards from a global marketplace of over 1,000 merchants when they book directly. These rewards can range from dining experiences to retail discounts, providing guests with something of tangible value right away. This model aligns with the modern traveler’s expectations and dramatically increases guest engagement with the hotel.

Data proves the effectiveness of Retain’s instant rewards approach. Hotels using Laasie Retain have seen a 10-15% increase in repeat bookings from loyalty members. Furthermore, the combination of instant rewards and the ability to collect first-party data allows hotels to deliver personalized offers and experiences, further solidifying guest loyalty. This shift from OTA bookings to direct loyalty-driven bookings can significantly reduce the commission burden.

Converting Lookers into Bookers: The Role of Rewards

While loyalty programs like Retain focus on increasing repeat business, the real challenge lies in converting the first-time guest. Laasie Convert addresses this critical gap by boosting direct booking conversion rates and enhancing the guest experience from the first interaction.

Laasie Convert uses real-time data and behavior-driven incentives to engage potential guests when they visit a hotel's website. This could be a targeted reward offer, such as a dining voucher, a room upgrade, or an instant discount, designed to nudge the guest toward completing their booking directly. The results are substantial: hotels using Laasie Convert have experienced a 43% conversion lift, translating to more direct bookings and less reliance on OTAs.

In an industry where booking abandonment rates are as high as 80%, a 43% conversion lift represents a massive opportunity. Every guest who books directly not only saves the hotel from paying a hefty OTA commission but also becomes a part of the hotel's ecosystem, where they can be nurtured through loyalty programs like Retain for future stays.

A Pay-for-Performance Model for Maximum ROI

One of the key advantages of Laasie Retain and Convert is their pay-for-performance model. This structure ensures that hotels only pay when they see results, whether that’s an increase in repeat bookings or a conversion lift on direct bookings. This low-risk model is especially appealing to independent hotels, which often operate with tight marketing budgets and need solutions that guarantee a return on investment.

With Laasie’s month-to-month flexibility, hotels aren’t locked into long-term contracts, and they have the freedom to scale the program according to their needs. This adaptability, combined with the cost-effective nature of pay-for-performance, ensures that hotels are not only reducing OTA commissions but also improving their overall profitability.

Shifting OTA Share to Direct Channels

The combination of Laasie Retain and Convert is a powerful one-two punch that allows hotels to combat the rising costs of OTA commissions. By providing instant rewards that drive loyalty and real-time incentives that increase direct booking conversions, hotels can begin to shift share away from OTAs and toward more profitable direct channels.

The shift from OTAs to direct bookings isn’t just about reducing costs—it’s about building long-term, valuable relationships with guests. Hotels that leverage the full potential of Laasie’s solutions not only see immediate financial benefits but also position themselves for sustainable growth in an increasingly competitive market.

By embracing modern loyalty and conversion strategies, hotels can finally take control of their guest acquisition channels and reduce their dependency on OTAs—leading to higher margins, better guest experiences, and a healthier bottom line.