What does a 25% OTA commission really cost a tour operator?

Most operators read a 25% commission as a quarter of their revenue. It is worse than that. The OTA takes 25% of the selling price, but your costs stay exactly the same.

Commission comes out of margin, not out of price

Take an illustrative day tour sold at €100. Guide, transport, entrance fees and payment costs come to €65. Sold direct, you keep €35.

At 25%, the OTA earns €25 on the sale and you earn €10. The same booking is worth three and a half times more to you when it comes direct. That ratio is the number to manage, not the headline rate.

The costs that sit on top of the rate

• Promotions you fund. Check whether commission is calculated before or after a discount, and who pays for the discount.
• Paid visibility. Placement programmes add commission points in exchange for rank. Price them per extra booking, never accept them by default.
• Cancellation terms. Free cancellation lifts conversion. It also creates late cancellations on capacity you held for that customer.
• Payment timing. Many platforms pay after the activity, often monthly. For a seasonal operator, that is working capital you finance.
• Price parity. If your direct price must match the OTA price, you cannot pass your lower direct cost on through price alone.

How to measure it in your own business

Calculate contribution margin per booking by channel, not revenue per channel. Include commission, funded discounts, payment fees and the cost of cancellations.

Then compare each channel’s share of total margin with its share of bookings. Operators who do this for the first time often find their biggest channel by volume is not their biggest by margin.

What to do with the number

• Set a target direct share by product, not one figure for the whole company.
• Keep OTAs for what they do well: new markets, last-minute demand and customers who would never find you.
• Move repeat customers, groups and high-value products toward channels you own.
• Go into the next commission discussion with the margin table in hand.