What One OTA Booking Really Costs a Franchised Hotel (Worked Example)

For years the story has been hotel brands versus online travel agencies. But on every OTA booking at a franchised hotel, there is a third party paying both of them: the owner.

That is the argument Skift founder Rafat Ali made this week, and it comes as owners are pushing back openly on how much of the system’s money flows to the brands. Here is a simple worked example of what one OTA booking costs a franchised hotel, and what owners can do about it.

The $200 room, booked on an OTA

Skift’s example is simple. A $200 room sold through an OTA at a 15% commission costs the owner $30 to acquire that guest. But the brand’s royalty is a percentage of gross room revenue, so it is still charged on the full $200, not on the $170 the owner keeps after commission. Program fees for marketing, reservations, technology and loyalty are charged on top of the royalty.

Here is how that looks on one night. The royalty and program fee rates below are illustrative only, not any brand’s actual rates. Every franchise agreement is different; see our franchise fee comparison for 164 brands for real numbers.

	Booked on an OTA	Booked direct
Room rate	$200	$200
OTA commission (15%)	-$30	$0
Royalty (6% of $200, example)	-$12	-$12
Program fees (4% of $200, example)	-$8	-$8
Owner keeps, before operating costs	$150 (75%)	$180 (90%)

In this example, a quarter of the room revenue on the OTA booking goes to the OTA and the brand before the owner pays for housekeeping, utilities, labor or debt. The brand collects the same $20 either way. The owner carries the whole $30 difference.

Why the brands’ numbers look so good

Brand fees are tied to the revenue flowing through the system, not to what owners keep. Hilton reported $815 million in franchise and licensing fees for the third quarter, across 8,683 franchised and licensed hotels, 892 managed hotels and only 45 it owns or leases, Skift notes.

Brands have offered some relief. Hilton’s RISE program, launched in June 2025, cuts loyalty costs system-wide by 30 basis points, with another 50 basis points for hotels that meet a quality threshold. But those cuts lower system fees, not royalty rates.

Marriott owners want a bigger cut

The same tension is playing out at Marriott. Earlier this year, a group of owners wrote to Marriott’s management asking for a bigger share of loyalty income, pointing in particular to co-branded credit card fees, Skift reported. Marriott’s gross fees rose 14% to $1.52 billion in the third quarter, and its CFO said co-branded card fees are on track to rise in the “high 30% range” this year.

Marriott has already announced some changes, including a lower owner contribution rate on loyalty spending, better reimbursement for points stays on busy nights, looser operating and renovation rules and a rebate for some well-reviewed hotels. CEO Anthony Capuano did not rule out more, but reportedly told owners not to expect a “big reveal” on fee relief.

AI could make it better, or worse

Hilton CEO Chris Nassetta has said AI should eventually bring more direct bookings at lower cost, while OTAs will still matter for part of the business. Skift’s point is that if AI booking agents send guests into brand systems, the real test for owners is whether that channel leaves them more margin after all fees. Skift says the data to measure that does not exist yet.

Not every owner accepts the setup. Skift notes that MCR Hotels, which owns and operates about 150 hotels, has long urged owners to move away from OTAs, and its TWA Hotel at JFK has no brand flag.

What owners can do

• Know your real cost per booking by channel. Run the table above with your own royalty, program fees and commission rates for OTA, brand.com, phone and group bookings.
• Read the fee base in your franchise agreement. Know exactly which fees are charged on gross room revenue and which are charged on something else.
• Ask about the relief programs. If you fly a Hilton or Marriott flag, ask your brand rep what the current loyalty and fee programs mean for your hotel in dollars, not basis points.
• Push direct bookings where the math works. In the example above, every booking moved from an OTA to direct is worth $30 to the owner.
• Bring numbers to your renewal or PIP talks. Owners who know their channel costs negotiate from a stronger position.

FAQ: OTA commissions and franchise fees

Do hotels pay brand royalties on OTA bookings?

In Skift’s example, yes: franchise royalties are a percentage of gross room revenue, so the royalty is charged on the full room rate even when an OTA also takes a commission. Check your own franchise agreement for how your fees are calculated.

How much commission do OTAs charge hotels?

Skift’s example uses 15%. Actual rates vary by contract, market and program.

Does Hilton’s RISE program lower royalty fees?

No. RISE cuts loyalty costs by 30 basis points system-wide, plus 50 basis points for hotels meeting a quality threshold. Those are system fee cuts, not royalty rate cuts.

What are Marriott owners asking for?

A bigger share of loyalty income, especially from co-branded credit card fees, according to Skift.

Compare royalty and program fees across 164 brands in our hotel franchise fee comparison.

Sources: Skift, Nov. 3, 2026; Skift, Nov. 2, 2026.