Hotels and Hospitality in India
Online Travel Agents and Commissions
How platforms like MakeMyTrip, Booking.com and Agoda sell hotel rooms, why hotels pay commissions of 15 to 25 percent, and how hotels fight back with direct bookings.
Many travellers book hotels through online travel agents (OTAs).
Major OTAs
- MakeMyTrip (which also owns Goibibo) in India.
- Booking.com, Agoda and Expedia globally.
Commissions
Hotels pay OTAs commissions, often 15 to 25 percent of the booking value.
Why hotels use them
- Visibility to millions of travellers.
- Marketing power that small hotels lack.
The tension
- High commissions cut hotel profits.
- Rate parity clauses once required hotels not to offer lower prices elsewhere, including on their own websites.
Competition cases
- The Competition Commission of India fined MakeMyTrip and Goibibo in 2022 for abusing dominance, including parity clauses and dealings with OYO.
- European authorities also restricted parity clauses.
Direct booking
Hotels push direct bookings through loyalty programmes, member rates and their own apps to avoid commissions.
Two-sided platforms
OTAs are two-sided markets: more hotels attract more travellers, and vice versa, creating network effects and market power.
A hotel sells a room for 5,000 rupees on an OTA and pays 1,000 rupees in commission. Selling the same room directly would keep that money.
Commissions of 15 to 25 percent are common.
- OTAs like MakeMyTrip and Booking.com sell many hotel rooms.
- Commissions are often 15 to 25 percent.
- The CCI fined MakeMyTrip and Goibibo in 2022.
- Hotels push direct booking through loyalty programmes.
No recording for this one yet - EconReader can read it aloud for you.