Online travel agencies (OTAs) earn money through merchant booking revenue, supplier commissions or ticketing fees, advertising, and related services. The model depends on the booking: an OTA may collect the traveler’s payment and retain revenue after accounting for what it owes the provider, or arrange a booking for a hotel or airline and earn a fee. The trip’s full price is not necessarily the OTA’s revenue.
What counts as an OTA’s revenue?
A traveler’s booking total can include money owed to a hotel, airline, or other travel provider. Booking Holdings describes merchant transaction net revenue as the amount charged to travelers, including merchandising effects, minus the amount owed to travel providers. That distinction matters: booking value and the OTA’s reported revenue are not interchangeable.
OTAs also report revenue in different categories, and their mix varies by company and year. Booking Holdings reported $26.9 billion in 2025 revenue across merchant, agency, and advertising and other categories. Expedia Group reported $14.7 billion in 2025 revenue; its reported mix was 70% merchant, 22% agency, and 8% advertising, media, and other. These are company-specific figures, not an industry average. See the companies’ [Booking Holdings 2025 Form 10-K] and [Expedia Group 2025 Form 10-K].
How merchant bookings generate revenue
In a merchant transaction, the OTA can take a more direct role in the sale and payment. Expedia says it can act as merchant of record for merchant bookings. A hotel booking may be paid to Expedia in advance, often when the traveler books; the OTA then accounts for the amount it owes the provider and its own transaction revenue. The amount retained is not the same as the entire booking price.
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Merchant revenue may also include reservation commissions, payment facilitation revenue, and ancillary fees. The precise components and accounting categories depend on the company, so “merchant” should not be treated as one universal fee or markup formula.
How agency bookings generate revenue
In an agency transaction, the OTA arranges a booking with a provider rather than acting as the merchant of record. Expedia describes its agency model this way: “Under the agency model, we facilitate travel bookings and act as the agent in the transaction, passing reservations booked by the traveler to the relevant travel provider.” The OTA may earn a commission from the supplier, a ticketing fee from the traveler, or both, depending on the arrangement.
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Payment can follow a different path from a merchant booking. Expedia says agency hotel travelers may pay the property at the stay, while merchant hotel travelers generally pay before departure. Some hotel offerings let the customer choose whether to pay Expedia in advance or the hotel at the property. The booking’s payment arrangement helps explain the OTA’s role, but does not by itself determine when the company recognizes revenue.
When does an OTA recognize the revenue?
Payment timing and accounting recognition are distinct. Expedia says it recognizes revenue for most travel services as the travel takes place, while it generally records agency air revenue when the traveler books. Therefore, the date a traveler pays, the date a provider receives funds, and the date revenue appears in the OTA’s accounts may differ.
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Advertising and related services
OTAs can also sell advertisers access to potential incremental traffic and transactions across their websites and apps, including metasearch. Booking Holdings reports an “advertising and other” category; Expedia reports “advertising, media, and other.” These categories show that revenue need not come only from fees tied directly to a completed reservation.
How to compare two OTA bookings
To understand who earns what on a particular booking, check these details rather than assuming all online travel bookings work alike:
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- Transaction role: Is the OTA merchant of record, or is it facilitating a provider’s booking as agent?
- Payment collection: Does the traveler pay the OTA when booking or the provider at the property or another service point?
- Revenue basis: Is the OTA earning merchant transaction net revenue, a commission, a ticketing or related service fee, advertising revenue, or some combination?
- Recognition timing: When does the company record revenue for that type of service? Do not infer this from payment timing alone.
Is there a typical OTA commission rate?
There is no universal commission-rate figure established by the cited company filings. A rate can vary with product, geography, contract, and period; a percentage without those details would not describe the whole industry. The filings support the broader point that agency commissions and ticketing fees are among possible revenue sources, not a single standard rate for every OTA or booking.
How does Booking.com make money from hotels?
Booking Holdings reports revenue across merchant, agency, and advertising and other categories, but that company-level reporting does not establish one payment model or fee for every Booking.com hotel reservation. The specific booking’s payment terms and role determine whether the OTA is collecting payment as merchant or facilitating the hotel’s booking as agent. Booking Holdings’ 2025 filing gives company-wide categories, not a universal hotel commission rate.
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