You Don't Have a Commission Problem — You Have a Retention Problem

If you own or manage an independent hotel, you already know the number that keeps you up at night: 15 to 25 percent. That is what you hand over to Booking.com, Expedia, or one of their subsidiaries every time a guest books through them. On a $200 room, that is $30 to $50 — gone before the guest even checks in.

It is easy to blame the OTAs. They are an easy target, and plenty of industry conferences have built entire panel discussions around the injustice of commission rates. But here is the hard truth most hotel owners do not want to hear: the commission is not the problem. It is a symptom. The real problem is that your guests leave after checkout and you have no way to bring them back direct.

That is a retention problem. And until you solve it, no amount of complaining about commission rates will change your bottom line.

What Actually Happens When a Guest Books Through an OTA

Let us walk through a scenario every independent hotel owner knows by heart. A family is planning a beach vacation. They search “hotels in Rehoboth Beach” and end up on Booking.com. They find your property, read some reviews, like what they see, and book a three-night stay for $600.

You receive the reservation. You prepare the room. The family arrives, has a wonderful stay, and checks out on Sunday morning. Everyone is happy.

Except here is what just happened behind the scenes: Booking.com collected $120 in commission. They own the guest's email address, search history, and booking preferences. They will send that family targeted emails for the next twelve months — promoting your competitors. You got a three-night stay. They got a lifetime customer.

When that family decides to come back next summer — and many of them do want to come back — they will search the same way they did before. They will land on Booking.com again. You will pay another $120. And the cycle continues, year after year.

The Retention Gap Nobody Talks About

Here is the number that should bother you far more than the commission rate: for most independent hotels, fewer than 20 percent of guests who had a great stay will book direct the next time. Not because they did not enjoy it — but because you gave them no reason, no mechanism, and no reminder to come back to you directly.

Think about that. Eight out of ten satisfied guests will go right back to the OTA next year. They are not disloyal. They simply have no reason to do anything different. You did not capture their email. You did not give them points. You did not offer them a perk for booking direct next time. You did not stay in touch.

Compare that to what the big chains do. When someone stays at a Marriott, they earn Bonvoy points. They get a follow-up email within 48 hours. They see their points balance growing. When it is time to book again, they do not go to Expedia — they go to Marriott.com, because that is where their points live. That is retention. That is the system independent hotels are missing.

The Commission Is Just a Tax on Poor Retention

When you look at it this way, OTA commissions are not really a cost of distribution. They are a tax you pay because you do not have a relationship with your own guests.

A first-time guest who discovers you through Booking.com? That commission might be worth it. It is a customer acquisition cost, and every business has one. The problem is when that same guest comes back a second, third, and fourth time — and you are still paying 20 percent each time because you never built a direct relationship.

That is the commission trap. It is not about the rate. It is about paying it repeatedly for guests who should already be yours.

What Changes When You Actually Retain Guests

Now picture a different version of that same scenario. The family books through Booking.com — same as before. But this time, during their stay, your front desk enrolls them in your hotel's loyalty program. It takes thirty seconds. They download your branded app, they see their points balance, and they get a welcome email from you — not from Booking.com.

A month later, they receive an email from you with a special offer for returning guests: book direct and earn double points on your next stay. Six months later, when they are planning next summer's vacation, they do not search on Booking.com. They open your app, see their points, and book direct on your website.

That booking costs you zero in commission. You own the relationship. You have their contact information. You can reach them any time you want. And the loyalty program gives them a reason to keep coming back — not because you are the cheapest option, but because they have something invested with you.

The Math That Should Keep You Up at Night

Let us put some numbers to this. Say your hotel does $2 million in annual revenue and 40 percent of that comes through OTAs. That is $800,000 in OTA bookings and roughly $160,000 in commissions at a 20 percent rate.

Now suppose you start a loyalty program and over the next twelve months, you convert just 15 percent of those OTA guests to direct bookers for their next stay. That is $120,000 in bookings that shift from OTA to direct. At a 20 percent commission rate, you just saved $24,000.

But here is where it compounds. Those guests who booked direct this year? Many of them will book direct again next year. And the year after that. Meanwhile, you are enrolling new guests every month. By year three, you could be looking at $60,000 to $80,000 in annual commission savings — and that money goes straight to your bottom line.

The OTA commission rate did not change. What changed is that your guests have a reason to come back direct.

Why Independent Hotels Struggle With This

If retention is the answer, why are so few independent hotels doing it? Three reasons:

First, building a loyalty program used to be impossibly expensive. Custom apps, custom software, ongoing development costs — it was a big-chain game only. Most independent hotels simply could not afford it.

Second, hotel owners are busy running their hotels. Between managing staff, handling guest issues, and keeping up with maintenance, there is no time left to design a loyalty strategy, build an app, and manage a points system.

Third, there was no good solution in the market. The options were either wildly expensive enterprise platforms or generic discount card programs that guests never used. Neither worked.

That is exactly the gap South EST fills. A white-label loyalty platform built specifically for independent hotels — your brand, your guests, your data. It deploys in days, not months. And it costs a fraction of what the chains spend.

Stop Blaming the Commission. Start Building the Relationship.

OTA commissions are not going down. Booking.com and Expedia are publicly traded companies with shareholders who expect growth every quarter. They will keep raising rates, keep tightening their grip on search results, and keep marketing to your past guests.

You cannot control what OTAs charge. But you can control whether your guests come back direct. Every guest who checks out of your hotel today is either going to come back through an OTA — or come back through you. The difference is whether you gave them a reason.

A loyalty program is not a cost. It is the most direct answer to the commission problem that every hotel owner talks about. It turns one-time OTA guests into repeat direct bookers. It builds a guest database that becomes your most valuable asset. And it compounds over time — every month you wait is another month of lost guest relationships you can never get back.

The hotels that figure this out now will be the ones that thrive for years to come. The ones that keep waiting will keep writing commission checks and wondering where all their profit went.