Revenue Management
OTA Leakage
Profit lost to commission when a hotel rents its own guests back from OTAs.
Academic definition
OTA leakage describes the profit a hotel loses when bookings that could have been captured directly instead flow through online travel agencies and incur commission. It arises when guests who are already aware of, or loyal to, a hotel nonetheless book through an OTA out of habit, for perceived price assurance, or because the direct channel offers no advantage. In these cases the commission paid does not buy genuinely incremental demand; it is paid on demand the hotel effectively already had, so the spend leaks value rather than generating it. The concept is distinct from the legitimate cost of using OTAs to reach new demand, which can be incremental and worthwhile. Quantifying leakage involves estimating the share of intermediated bookings that would have converted directly absent friction, and it informs direct-booking strategy, website experience, and loyalty investment aimed at recapturing that demand.
Worked example
A repeat guest who stayed direct last year books via OTA this time after seeing the hotel in a search ad; the ₹810 commission buys no new demand and leaks straight off the profit line.
The ProfitPAR™ lens
OTA leakage is the purest form of avoidable loss in the hotel — commission paid on guests the property already owned. The OTA earns its cut when it brings a genuinely new guest; it leaks the hotel's profit when it merely intercepts a guest who would have booked direct anyway. That intercepted booking pays fifteen to twenty-five percent for nothing the hotel needed. ProfitPAR™ isolates leakage as the part of channel cost that buys no incremental demand, and targets it directly: a frictionless direct channel, a real reason to book direct, and loyalty that recaptures repeat guests. Closing leakage is profit found for free — same guests, same rate, the commission simply kept instead of surrendered.
Commission paid on a guest you already owned is profit handed away for nothing.
Measure what each room actually keeps.
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Request an InvitationWorked examples use illustrative figures in Indian Rupee (₹) with lakh/crore conventions. They are composite and representative, not drawn from any single property. ProfitPAR™ is a trademark of Sibasish Misra.