Most hotel owners think OTA commission is just the price of getting a booking. That's only half the picture. The other half is the expensive part.
What OTAs are actually doing for you
Ask any hotelier what OTAs are for. The answer comes back the same almost every time. Distribution. Fill the rooms. Pay the 7 to 30% commission, and move on. Fair enough, that's not wrong. But it treats the OTA like a booking engine, when really it works more like an ad platform that also happens to process the payment.
This is where the billboard effect comes in. Almost nobody explains it properly. A guest sees your property on Booking.com or MakeMyTrip. They don't book there. They open a new tab, search your hotel by name to see direct information, and book direct, or just call the front desk. The OTA did the work of getting found. It didn't get paid for that particular booking. Cornell University's Research's mentioned this years ago and the effect held up: OTA visibility lifts direct bookings, even when the guest never clicks "book now" on the OTA itself.
So commission isn't really a booking fee. It's closer to a discovery fee. You're paying for visibility, and some of the guests who see you there end up finding you another way. That should change how a hotel thinks about its OTA budget. Most don't make that shift. Commission still gets treated as a pure cost line, not as one channel feeding another.
Where most hotels quietly lose it
Say the billboard effect works exactly as it should. Guest sees the property on the OTA, gets interested, looks it up directly. Good, that's the win everyone talks about. But if the website has no working booking engine, the guest won't wait. They go back to the OTA tab still open in the background and book there instead, because it's right there and it works.
At that point the hotel has paid for the same guest twice, in a way. Once through commission on the original listing. Again by handing the booking straight back to the platform that visibility was supposed to pull them away from. The billboard effect worked fine. There was just nowhere for it to land. That's not really an OTA problem. That's a Direct Booking Engine problem.
How to actually use the billboard effect
Knowing about the Billboard Effect isn't enough. It only creates direct bookings if your direct channel is ready before a guest searches for your hotel.
Make sure these four essentials are in place:
- Google Hotel Ads is active.
- Your direct rates match OTA rates (Rate Parity).
- Your Hotel Website or Google Hotel Ads appears when guests search for your hotel.
- Your hotel ranks #1 on Google for its own brand name (Branded SEO).
Miss even one, and the Billboard Effect drives guests to an OTA instead of your direct booking channel.
What to fix first
Fix the booking engine first. Everything after that, direct rate strategy, retargeting guests who almost booked, loyalty offers for repeat stays, only works once that foundation is actually in place to catch what the OTA sends back.
Ready to make the Billboard Effect work for your hotel?
MMR Hotels helps hotels build high-performing direct booking channels through Revenue Management, OTA Optimization, Google Hotel Ads, Branded SEO, and Hotel Marketing.
