Hotels allowing Online Travel Agents (OTAs) to undercut their direct booking rates face significantly higher costs for pay-per-click (PPC) leads, according to a study by global hotel technology provider SHR. The research analyzed 27 million cost-per-click (CPC) impressions, revealing that hotels pay an average of 47% more per click when OTAs offer the lowest rates compared to hotels that ensure their own website provides the best deal.
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GLOHotels allowing Online Travel Agents (OTAs) to undercut their direct booking rates face significantly higher costs for pay-per-click (PPC) leads, according to a study by global hotel technology provider SHR. The research analyzed 27 million cost-per-click (CPC) impressions, revealing that hotels pay an average of 47% more per click when OTAs offer the lowest rates compared to hotels that ensure their own website provides the best deal.
Access full report here.
Image: SHR
The Cost of Rate Undercutting
The report, Digital Strategy Secrets for Hospitality, found that CPC rates climb to $0.97 (£0.79) when OTAs have the lowest rate for a hotel, compared to $0.66 (£0.54) when hotels maintain rate integrity on their own website. This increase is driven by heightened competition; OTAs, confident that having the lowest rate will drive conversions, bid aggressively on branded searches. This competition raises costs for hotels trying to advertise their own direct booking channels.
Even when hotels maintain rate parity—offering the same rates on their website as on OTA platforms—they still pay 35.9% more per click, with an average CPC of $0.89 (£0.73). The findings highlight how rate undercutting not only erodes profit margins but also forces hotels to allocate more resources to digital advertising, limiting their ability to invest in other growth-driven marketing initiatives.
Balancing OTA and Direct Booking Strategies
While OTAs are valuable for providing broader visibility and access to travelers, their impact on marketing budgets due to rate undercutting is substantial. SHR’s report emphasizes the need for hotels to adopt a balanced approach that leverages the benefits of OTAs while prioritizing direct booking strategies. By maintaining rate integrity, hotels benefit from the lowest CPC and higher conversion rates, freeing resources to focus on sustainable guest acquisition strategies.
Steve Collins, VP of Digital Marketing at SHR, commented: “Our findings highlight the delicate balance hotels must maintain when working with OTAs. While these platforms expand reach, sacrificing rate integrity impacts both marketing spend and profitability. Prioritizing direct bookings and ensuring balanced OTA partnerships can help hotels achieve sustainable growth and improve digital marketing efficiency.”
Future Trends and Strategic Importance
The study anticipates a major industry shift, predicting that hotels will secure more direct bookings than OTA bookings by 2030. This underscores the growing importance of strengthening direct channels and reducing reliance on OTAs for lead generation. Approaches that focus on rate integrity and holistic digital strategies—such as early-stage brand-building activities—are crucial for staying competitive.
About SHR
SHR, founded in 2004, is a global provider of technology and services for the hotel industry. Supporting over 2,000 hoteliers worldwide, SHR offers tools and strategies to optimize booking ecosystems, improve revenue, and build stronger guest retention.
As the hospitality industry evolves, balancing OTA partnerships with robust direct booking strategies will remain a critical challenge for hotels aiming to maximize profitability and long-term growth.
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