CASE STUDY: How hotels can reduce 3rd party booking fees to increase gross profit

By: Jeff St. Onge

Every industry is bound to different strategies and systems in the process of finding revenue opportunities in the digital space. For B2B organizations, different tools and processes need to be engineered than for B2C, needless to say.

For the hospitality industry, let’s call it restaurants and hotels for the sake of this conversation – fortunately the path is direct and simple. Simple but not easy.

A typical hotel 3rd party booking engine like TripAdvisor, Expedia, offer users quick access to rates and comparables across several properties when planning your stay. While these platforms occasionally do have issues with inventory, booking rooms that are not actually available and subsequent back end issues with partner properties, for the majority on the user side they offer an efficient way to find rates and get your hotel stay booked. Fair.

However on the client side, or the property itself – the equation is simple. The more rooms booked on 3rd party platforms rather than on the properties native website, the less net profit.

WHY? 3rd party platforms take up to an 18% commission PER BOOKING. This is a significant piece of revenue lost for hotel operators.

As a strategy partner – our delivery methodology here is simple.


So, how do we do that? A three tiered strategy.

1 – Digital Transformation via Web Design + Development (includes native booking engine). This will increase engagement, conversions and likelihood of a direct revenue action from users. This is a must have for converting users once they’ve actually arrived on site.

2 – Search Engine Marketing. Directing traffic away from 3rd party providers to native hotel websites is crucial. In order to receive the booking, you have to win the top of Google game and land the users to your website first. This is a must have for winning the game of attention and beating 3rd party agents to the punch. SEM must be done at an expert level to reduce CPC and Cost Per Conversion to compete with 3rd party booking orgs that may have a much larger overall spend.

3 – Analyze data, iterate and re-deploy

If the hotel website is sharp, easy to use with booking & mobile friendly AND you win the SEM battle, your likelihood of receiving that booking on your native site and avoiding the 18% commission goes WAY UP. Of course, there’s always a possibility that users will price check across different properties, but even in that case as long as they’ve landed on your website first – if and when they decide to make a reservation with you, it’s yours 100%.

Needless to say this requires A+ execution across both SEM and Design + Development.

CASE STUDY: The Numbers work

We’ve deployed this strategy to a number of hotel properties and here is a recent look at the proof by numbers. This exact methodology was deployed for Howard Johnson. Design + Engineering was made, in short for a sleek but highly usable interface with native booking engine capabilities.


In the first month and YOY comparison these were the results of 3rd party agent commissions paid out, an average of 30% reduction:

Booking – Oct 2018 – $3782.00

                     Oct 2019 – $ 2325.00

Expedia – Oct 2018 – $6018.00

                    Oct 2019 – $4426.00

In subsequent months we were able to reduce Expedia commissions by as much as 45%


These numbers continue to improve as our SEM spend is iterated and tweaked for maximum value, tracked all the way through to hotel data on a YOY basis. A peak at a few months our conversion data in the same campaign as exported from Google. Again, this is just on the SEM side, not factoring the value add that organic SEO has delivered.

These numbers are continuing to tick in our clients favor as each quarter passes and campaigns are adjusted.

For hotel industry patrons, the equation is clear.

Expert level SEM + Web UX = Increased reservations on your native website

Increased reservations on your native website = Reduced 3rd party booking commissions

Reduced 3rd party booking commissions = Increased GROSS/NET PROFIT