How to reduce OTA dependency and boost profitability

While you might be grateful to Online Travel Agencies (OTAs) for increasing your reach and helping you through the low season, the pain points associated with them – not least that they charge around 15% to 30% commission per booking – will be familiar to anyone working in the hotel industry.

So how can you drive more direct bookings and reduce your dependency on OTAs? In this blog post, we outline the core strategies to answer that question effectively.

Assess your current direct booking strategy and your reliance on OTAs

Understanding your current level of OTAs is the first step in creating a more profitable and balanced revenue management strategy.

By analyzing your reliance on them, you can make smarter decisions about how to optimize your distribution channels, allocate marketing resources effectively and build a more sustainable long-term strategy.

To gain clarity on your OTA dependence, start by assessing:

• Booking volume: Use the digital tools and real-time data at your disposal to identify which OTAs contribute the most bookings to your property. Are a few, like Booking.com and Expedia, responsible for the majority of your reservations or is your distribution diversified?

• Revenue impact: Determine how much revenue each OTA generates. Are they bringing in high-value guests who spend more on-site or are they primarily filling rooms with discount-seeking travelers?

• Commission costs: Calculate the total cost of OTA commissions. Understanding how much of your revenue is being lost to fees can help you determine whether the benefits of OTA exposure outweigh the costs.

• Customer acquisition and retention: Are OTA guests converting into loyal, repeat customers who book directly in the future or do they consistently return via third-party platforms?

It’s all about the OTA vs direct booking balance. As a successful hotelier, you’ll recognize that OTAs are a valuable tool, but not necessarily the foundation of your revenue strategy. A healthy balance includes:

• Strategic OTA use: Leveraging OTAs to drive bookings during low-demand periods while focusing on direct channels for peak occupancy.

• Strong direct booking incentives: Encouraging guests to book directly through loyalty programs, exclusive discounts and value-added services like flexible cancellation policies or complimentary upgrades.

• Data-driven decision-making: Using insights from OTA bookings to refine marketing strategies, personalize guest experiences and improve direct booking conversion rates.

Failing to manage your OTA dependency can lead to several negative outcomes. First, you'll face profit erosion as high commission fees significantly cut into your bottom line. Second, you risk brand dilution when guests associate their experience with the OTA platform rather than your property. Finally, you'll have reduced control over the guest relationship before arrival, limiting your ability to create personalized experiences, offer upgrades, or capture additional revenue opportunities.

By critically assessing your reliance on online travel agents and refining your direct booking strategy, you can take greater control of your revenue and profitability while maintaining the right balance in your distribution mix.

Optimize your hotel website to ensure a smooth booking experience

A well-crafted hotel website with a user-friendly booking engine creates a seamless experience that encourages direct bookings. By providing a visually appealing, easy-to-navigate site you’ll build trust, while a fast, mobile-optimized booking process reduces friction.

So, how do you eliminate barriers to convert more visitors into guests, reducing OTA reliance and increasing profitability? SEO best practices are the key to success.

Follow SEO best practices to boost your search rankings

Search engines like Google play a crucial role in driving direct bookings by ensuring your hotel appears when potential guests search for accommodation in your area.

A well-optimized website increases visibility, reduces reliance on OTAs and captures high-intent travelers ready to book directly.

To improve your hotel's search rankings and attract more direct traffic, try following these SEO best practices:

• Keyword optimization: Use relevant keywords (e.g., “boutique hotel in [your town or area]” or “luxury beachfront resort”) in your website’s content, meta descriptions and headers to improve search visibility.

• Fast loading speed: Ensure your website loads quickly by optimizing images, using caching and minimizing unnecessary scripts – slow sites lead to higher bounce rates.

• Fix technical errors: Address broken links, 404 errors and mobile usability issues to create a seamless browsing experience.

• Intuitive site structure: Organize your website with clear navigation, simple menus and logical internal linking to help users (and search engines) find information easily.

• High-quality content: Regularly update your website with fresh, valuable content such as local guides, blog posts and FAQs to improve engagement and rankings, and encourage backlinks from other sites. Don’t forget to include relevant, enticing pictures.

A strong SEO foundation makes it easier for travelers to find and trust your website, increasing the likelihood of direct bookings.

Add clear calls to action to the site

Well-placed calls-to-action (CTAs) guide prospective guests through your website, making it easier for them to book a room, explore amenities or contact your team.

Without clear CTAs, visitors may leave without taking action, reducing your chances of securing a direct booking. CTAs also help highlight key selling points, such as special offers, dining options or spa services, encouraging guests to explore everything your hotel has to offer.

To write an effective call-to-action, use clear, action-oriented language that creates urgency and highlights the benefit (e.g., "Book your stay and save 10%" or "Check availability now").

CTAs should be visually distinct – using contrasting colors and buttons rather than plain text – to draw attention without overwhelming the page.

Strategic placement is key: position CTAs in high-visibility areas such as your homepage, above the fold on key pages, within room descriptions and at the end of blog posts or special offers.

By ensuring CTAs are easily accessible on both desktop and mobile devices, you’ll help streamline the booking process and increase conversion rates.

Ensure booking on mobile is seamless

With a growing number of travelers booking hotels via smartphones – 68% of hotel website traffic in 2023 was from mobile devices – a smooth mobile experience is crucial for maximizing your direct bookings.

A clunky or slow mobile site can frustrate users, leading them to abandon the process and book elsewhere – often through an OTA.

To optimize your site for mobile, action as much of the advice in this resource as you can and be sure to implement the basics, which include:

• Using a responsive design: Ensure your website adapts seamlessly to different screen sizes.

• Simplifying navigation: Minimize clutter, use clear menus and make CTAs easily tappable.

• Speeding up load times: Compress images, enable caching and reduce unnecessary scripts.

• Streamlining the booking process: Reduce form fields and offer autofill options for faster checkouts.

A mobile-friendly website enhances user experience, builds trust and will increase direct bookings to your hotel. So take the time to get it right.

Offer travelers incentives to book direct

Travelers will often default to OTAs because they perceive them as offering the best deals and convenience. However, by providing exclusive incentives for direct bookings you can shift this perception and encourage guests to book directly.

Well-crafted incentives not only increase profitability by reducing commission fees but also foster guest loyalty and enhance the overall booking experience.

To get you started, let’s look at a couple of initiatives in this vein that you could consider.

Implement a loyalty program

Loyalty programs are effective tools for encouraging direct bookings and retaining guests. By offering rewards and exclusive benefits, these programs incentivize customers to choose your hotel over competitors, fostering repeat business and enhancing customer lifetime value.

To implement a successful loyalty program:

• Define clear rewards: Offer tangible benefits such as free nights, room upgrades or dining discounts that appeal to your target audience.

• Simplify enrollment: Make joining easy, either automatically after a certain number of stays or through a straightforward sign-up process.

• Communicate effectively: Use email newsletters and your website to inform members about their status, available rewards and exclusive offers.

• Make use of technology: Employ loyalty program management software to track points, manage redemptions and analyze member data for continuous improvement.

For example, Stash Hotel Rewards is the largest points-based loyalty program for independent hotels in North America. Its members earn five points for every dollar spent at participating hotels, which can be redeemed for free stays without blackout dates. This program has successfully attracted a wide customer base by offering straightforward and valuable rewards.

By implementing a well-structured loyalty program along these lines you’ll drive direct bookings and cultivate lasting relationships with guests, leading to sustained profitability and brand advocacy.

Provide discounts, upgrades and other special offers

Offering incentives such as discounts, free upgrades and special packages is an effective strategy for driving direct bookings. These incentives provide immediate value to potential guests, making direct booking more attractive compared to OTAs that often lack personalized perks.

For instance, a hotel in Miami ran a social media campaign offering a 20% discount for direct bookings during the summer, resulting in a 25% boost in direct bookings.

To maximize the effectiveness of these offerings, consider:

• Exclusive discounts: Provide special rates available only through direct booking channels, encouraging guests to bypass OTAs.

• Room upgrades: Offer complimentary upgrades to enhance the guest experience, fostering loyalty and repeat business.

• Package deals: Create bundled offers that include additional services like dining, spa access or local tours, adding value to the guest's stay.

By implementing these strategies, you not only increase direct bookings but enhance overall guest satisfaction, leading to improved retention and positive word-of-mouth referrals.

Invest in marketing campaigns to encourage direct bookings

A strong marketing strategy is essential for driving direct bookings because it helps you build brand awareness, engage potential guests and highlight to them the benefits of booking directly.

Without targeted marketing efforts, travelers are more likely to book through OTAs, which dominate search results and advertising spaces. By leveraging digital marketing channels you can compete more effectively for direct traffic, reducing reliance on third-party platforms and increasing profitability.

Metasearch

Metasearch engines like Google Hotel Ads, TripAdvisor and Trivago play a crucial role in driving direct bookings by displaying hotel rates across multiple channels, including OTAs and your hotel’s direct website.

Paid ads, such as Google Ads and social media campaigns, further amplify your visibility, allowing you to target high-intent travelers searching for accommodation. By investing in these strategies, you can capture more direct traffic and compete effectively with OTAs.

To succeed, you must ensure rate parity to avoid being undercut by external channels and encourage guests to book directly. You can also improve conversion rates by optimizing bidding strategies, using retargeting campaigns to reach past visitors and leveraging high-quality visuals and compelling ad copy.

Additionally, tracking key performance metrics, such as cost per acquisition and return on ad spend, helps refine campaigns for maximum effectiveness.

Social media

Social media is a powerful tool for increasing hotel visibility and driving direct bookings by allowing properties to engage with potential guests in a more personal and interactive way.

Social media platforms like Instagram, Facebook and TikTok, or LinkedIn for the business traveler, allow you to showcase your unique experiences, promote special offers and build brand loyalty. A strong social presence helps hotels stay top-of-mind, encouraging travelers to book directly rather than through OTAs.

To capture audience attention, try leveraging high-quality visuals, user-generated content and interactive campaigns. Influencer partnerships can expand reach by showcasing your hotel to relevant audiences, while social media giveaways encourage engagement and brand awareness.

Email marketing

Email marketing is a cost-effective way to nurture leads, retain past guests and drive direct bookings. It supports retargeting by reaching travelers who have shown interest in your hotel, whether they’ve visited the website, abandoned a booking or stayed previously.

By sending personalized offers, reminders and exclusive deals, you can re-engage potential guests and encourage them to book directly.

Focus on segmentation, personalization and timing. Sending targeted emails based on guest behavior – such as lower rates for past visitors or birthday discounts – enhances engagement.

Compelling subject lines, high-quality visuals and clear CTAs also improve open rates and conversions, while regularly testing and optimizing email campaigns ensures maximum impact.

Learn how a channel manager strengthens distribution and increases revenue

OTAs and metasearch platforms offer invaluable reach for the modern hotelier but striking the right balance between these channels and direct bookings on your website is the key to unlocking a successful distribution strategy and sustained growth.

This is where Lighthouse’s Channel Manager comes into play. Lighthouse's Channel Manager empowers you to optimize distribution, save time, and maximize revenue across 200+ channels.

Learn more about how Lighthouse can help your property thrive and request a demo today.