Everyone in short-term rentals agrees direct bookings are better. Very few have worked out by how much, which is why the shift never gets prioritised. So let us do the arithmetic properly.
What an OTA booking actually costs
The headline commission is only part of it.
Host commission
Deducted from your payout. Rates vary by platform and model, but plan around the low-to-mid teens as a percentage unless you know your exact figure.
The guest-side service fee
Often overlooked because it never appears on your statement — but it inflates the total the traveller sees. Your $250 night displays as something closer to $290 after platform fees. That higher number is what you are judged against by a guest comparing options, and it costs you conversions you never learn about.
Payment processing
Usually inside the commission, so no separate line. Fair enough.
The guest relationship
No invoice, largest cost. You do not own the email address. You cannot market to them. Next year they open the app, not your site — and you pay commission on the same guest a second time.
What a direct booking actually costs
Payment processing
Typically low single-digit percentages plus a small per-transaction fee. Real, but modest.
Software
Your PMS, channel manager or booking engine subscription. Critically, this is a fixed cost. It does not rise when you take more bookings.
Website
Build cost amortised, plus hosting and maintenance. Also fixed.
Marketing
Content, SEO, and whatever you spend acquiring the visitor. Variable, but you control it — and unlike commission it builds an asset.
Running a real example
One property at $250 per night, 150 booked nights, $37,500 in annual revenue.
All bookings via OTA
- Revenue: $37,500
- Commission at 15%: −$5,625
- Net: $31,875
All bookings direct
- Revenue: $37,500
- Payment processing at 3%: −$1,125
- Software, say $70/month: −$840
- Website, amortised: −$600
- Marketing: −$1,200
- Net: $33,735
A difference of roughly $1,860 on one property in one year. Meaningful, but perhaps not the transformation the headline commission number implies.
Now look at what happens at scale.
Where the maths gets interesting
Take five properties on the same numbers — $187,500 in revenue.
OTA: commission at 15% is $28,125.
Direct: processing scales to $5,625, but software rises only modestly, the website cost is shared across all five, and marketing does not multiply either. Total lands somewhere near $10,000.
The gap is now roughly $18,000 a year.
This is the structural point that the single-property example hides. OTA cost scales linearly with revenue. Direct cost is largely fixed. Every additional property and every additional booked night widens the advantage. That is why professional managers obsess about direct mix and hobbyist hosts do not bother.
The repeat-guest multiplier
The single-year comparison understates the case badly.
A guest acquired through an OTA who returns next year through the same OTA costs you commission twice. A guest acquired directly, whose email you hold, costs you an email to bring back.
If 20% of your guests would return given the chance, and you own that relationship, you have removed the acquisition cost on a fifth of next year’s bookings permanently. Over three years the compounding dwarfs the year-one saving.
Where direct bookings lose
Being straight about it, because pretending otherwise leads people into bad decisions:
- Fixed costs need volume. Below roughly 60 to 80 booked nights a year on a single property, commission may genuinely be cheaper than running your own infrastructure.
- OTAs supply demand you have not built. A new property with no reviews and no traffic will sit empty on a direct site. Commission buys you occupancy while you build.
- Direct bookings need work. Guest communication, payment issues, cancellations and disputes all become yours. That has a time cost.
- Trust takes longer. Travellers hand card details to Airbnb without hesitation. Your site has to earn that, through reviews, secure checkout and clear policies.
The realistic path
The goal is not zero OTA. It is shifting the mix while protecting occupancy. Our channel-by-channel comparison of Google Vacation Rentals, Airbnb and Vrbo sets out what each one is actually good for.
- Measure where you are. What percentage of last year’s bookings came direct, and what did commission cost you in cash?
- Build the destination. A booking site that actually converts is the prerequisite for everything else.
- Capture the guests you already have. Every past guest is a direct booking waiting to happen. Get consent, build the list, stay in touch.
- Open free channels. Google Vacation Rentals refers travellers to your site with no commission on the referral. Our guide to the channel covers how it works.
- Build organic demand. Destination content and local SEO produce visitors who arrive already wanting your area — see the local SEO playbook.
- Reduce OTA reliance gradually. As direct volume grows, tighten platform availability. Never before.
One caution on pricing
Undercutting the platform price on your own site is the obvious tactic and often breaches rate parity terms in your agreements. Compete on value instead — flexible cancellation, a welcome extra, early check-in, a returning-guest discount. Same effect, no contractual exposure.
Frequently asked questions
What direct booking percentage should I target?
Established operators commonly aim for 30–50%. Above that you are carrying more demand-generation risk than most single-market businesses should.
How long does it take to shift?
Twelve to eighteen months to move meaningfully, assuming consistent effort. Faster if you already hold a large past-guest list.
Should I leave the platforms entirely?
Rarely wise. They remain the best discovery mechanism for new properties and off-season gaps. Treat them as paid acquisition, not as your business.
What if my occupancy drops during the shift?
Then you moved too fast. Reduce platform availability only after direct demand demonstrably replaces it, not in anticipation.
Run the numbers on your own business
The break-even depends on your rates, occupancy and property count, and generic examples only take you so far. Send us your figures for a free channel analysis and we will show you exactly what your current mix costs.
