A strategic guide to balancing OTA bookings and direct revenue

Love ’em or hate ’em, online travel agencies (OTAs) here to stay in the travel and tourism industries. From showcasing your offerings to millions of travelers worldwide to keeping those last-minute cancellations from impacting your bottom line, these platforms have become an essential part of how tourism-based companies do business. 

And there’s more to their role than just boosting bookings — they’re also a lifeline for visibility, brand recognition, and inventory management in an industry that never stops moving.

The role of OTAs in tour business’s sales strategies

Online travel agencies are like the ultimate matchmakers for tour operators and travelers. They connect people hunting for a unique travel experience with providers that fit the bill, making them a game-changer for business owners. OTAs go far beyond simply getting butts into seats — they’re a key tool for managing inventory and staying visible in a competitive market as well.

One of the biggest perks of using OTAs is their ability to help tour operators maintain steady traffic year-round. Instead of worrying about unfilled seats during off-peak periods, operators can use OTAs to attract tourists from all over the world, 24/7. With four out of every five people who book online now visiting an OTA at some point during their journey, they’ve become absolutely vital for ensuring potential customers can find their way to your offerings.

Leveraging OTAs for inventory management

Unsold spots in your tour are like fruit — they’re perishable, and once the day is gone, you can’t sell yesterday’s stock. That’s where online travel agencies step in to save the day. With their massive platforms and global reach, OTAs connect tour operators with a huge pool of potential customers, helping to turn those unfilled seats into additional revenue.

And when demand starts to spike? OTAs can handle that too. With tools like dynamic pricing, you can easily adjust your rates based on demand, ensuring you’re not leaving money on the table.

Pro tip: As a FareHarbor operator, you can implement affiliate rules to control which days, times, items, and affiliates can book your tours. This is a great option for limiting OTA bookings during your busiest months, and encouraging more bookings in your slower months. 

The impact of OTAs on market reach

Think of OTAs like a megaphone for your business, amplifying your reach to travelers across the globe. In fact, research shows that 40% of travel bookings worldwide are now made through an OTA, showcasing the ability of these channels to help reach new customers.

Direct bookings: the profitable parallel

While OTAs have become an essential component of any tourism-based company’s distribution approach, direct bookings are still the holy grail for profitability. 

When guests book directly through your website or social media, you’re cutting out those pesky third-party commissions, which can take a significant chunk of your revenue. That means more money stays in your pocket — which is where it should be.

Financial dynamics of OTA bookings

Let’s face it: the partnership between small businesses and OTAs is a bit of a love-hate relationship. OTAs bring in a ton of guests, sure, but their commission rates can make profitability a little tricky. That’s why building up your direct booking channels is such a game-changer. 

Standard 15% commission rate

For tour operators, standard commission fees charged by OTAs typically fall anywhere between 15% and 30% for every booking made through their platform. That’s a big chunk, but remember: you’re paying for access to the massive audience that these agencies bring to the table. 

The exact percentage you’ll pay depends on factors like the size of your business, your location, and your overall relationship with the OTA. If you’re a small operator, don’t be surprised if you’re closer to that 30% mark — these platforms often reserve their lower rates for big players with lots of volume.

The economics of direct vs. OTA bookings

When it comes down to OTA commissions versus direct bookings — who wins? 

Spoiler alert: direct bookings every time.

To really drive home why this is, let’s take a look at how some of those per-tour commission fees translate over a longer period. Suppose your tour brings in $500,000 annually through OTA bookings. With a 20% commission, that’s $100,000 you’re losing out on each year. If you could shift even 25% of those bookings to direct channels, you’d save a whopping $25,000.

Enhancing direct booking performance

If you’re serious about upgrading your direct booking game, it’s all about combining smart tech with clever marketing. The secret? A mix of user-friendly tools, data-driven campaigns, and a focus on hitting those all-important performance benchmarks.

Optimizing the booking engine

These days, tourists are obsessed with convenience, and if your booking process isn’t silky smooth, you’re probably losing a lot of customers before they ever hit ‘Book Now.’ With most bookings currently being made from phones, a sleek, easy-to-navigate booking engine that works seamlessly on mobile devices has become a must-have.

Setting benchmarks with conversion rates

When it comes to direct booking conversion rates, the industry standard is typically around 2-5%. What does that mean exactly? Well, for every 100 visitors who check out your tour’s booking site, you can expect 2-5 of them to actually hit the ‘Book Now’ button. 

When starting out you’ll want to aim to achieve this industry standard. Once that’s reached, you’ll then be competing with yourself, tweaking and trying new things to impact your conversion rate.

Balancing OTA and direct booking strategies

When used alongside one another, OTAs and direct booking are like the ultimate tag for diversifying your distribution channels. Here, direct booking stars as the main attraction, allowing you to personalize engagement and keep all of your profits, while still having the option to tag in OTAs to help reach a wider audience and fill any last-minute availabilities.

Luckily, you don’t have to take on optimizing your bookings alone — FareHarbor can help enhance your efforts across all your distribution channels. No matter which channel tourists use to find you, FareHarbor makes it more likely they’ll make their way to that all-important ‘Book Now’ button.

Ready to see what FareHarbor can do for you? Sign up for your commitment-free demo today!