Striking Balance

Building a resilient booking ecosystem through both direct bookings and OTAs

By Amy King

For much of the past two decades, hotel distribution strategy has been framed as a tugof-war. On one side stood online travel agencies (OTAs), powerful demand engines with global reach but also rising commission costs. On the other side sat direct bookings, prized for their profitability and guest ownership but more difficult to scale in an increasingly fragmented digital marketplace.

Today, that dualistic thinking no longer holds. As distribution costs rise, traveler behavior evolves, and technology accelerates decision-making, hoteliers are redefining what balance looks like and how it can work for them.

A healthy distribution strategy is no longer about choosing sides. It is about orchestrating channels with intention, understanding the role each one plays in the guest journey, and using data to maximize long-term value rather than short-term volume. For hoteliers, the challenge is not eliminating OTAs but leveraging them strategically while strengthening direct relationships that endure beyond a single stay.

“Having a presence on many channels used to be the goal, casting as wide a net as possible,” said Tanya Pratt, global vice president of strategy and product management at Oracle Hospitality, a Bronze Industry Partner. “Today it is more about achieving a strategic balance of share, understanding where your consumers are, and which channels deliver the highest overall value, not just the lowest booking cost.”

That distinction matters because in the past, distribution decisions often centered on which channel offered the lowest acquisition cost or filled rooms fastest during periods of low demand. Now, hoteliers are taking a more holistic view by evaluating total spend, ancillary revenue, loyalty potential, and repeat behavior.

“It’s no longer just about the room rate a guest paid,” said Pratt. “It’s about what that guest is worth over time and how technology allows us to make those decisions in real time rather than reactively.”

Anis Rahaman, assistant vice president of operations at Yanolja Cloud Solution, a Platinum Plus Industry Partner, sees the same evolution playing out across markets.

“A healthy mix isn’t about where bookings come from, it’s about how profitable and valuable those bookings are,” said Rahaman. “OTAs are effective at creating demand and reach, while direct channels are where hotels build lifetime value. You have to manage both dynamically, based on cost of acquisition, guest value, and seasonality.”

That mindset is particularly important for independent hotels and smaller portfolios that may not have the brand recognition to rely solely on direct demand. For these operators, OTAs often serve as the first touchpoint for travelers visiting a destination for the first time. Rather than viewing those bookings as necessary, many hoteliers are reframing OTAs as a marketing channel that introduces guests to the property.

“If you’re an independent hotel in a market that someone hasn’t visited before, odds are their first interaction will be through an OTA,” said Pratt. “That doesn’t mean you’ve lost the relationship. It means the OTA got them into the funnel. What matters is what you do with that guest once they arrive.”

If You Can’t Beat ‘Em, Convert ‘Em

Using OTAs intentionally means resisting the urge to chase volume at any cost. Hotels that rely too heavily on discounted OTA inventory risk eroding rate integrity and training guests to shop on price alone. Instead, owners are becoming more disciplined about when and how they deploy OTA inventory, using it to fill need periods, test new segments, or enter new geographic markets without diminishing direct demand.

“Competing head-to-head with OTAs isn’t realistic for most hotels,” said Rahaman. “They are global platforms investing heavily in demand generation. The opportunity for owners is to use them as a demand engine, not a dependency. The real profitability begins with the second, third, and fourth stay, when that guest returns directly.”

That conversion from OTA guest to direct loyalist hinges on experience, personalization, and communication. Across the industry, hoteliers are recognizing that direct booking only becomes meaningful when paired with guest recognition.

“Without guest data, a direct booking channel is simply another anonymous website,” said Rahaman. “With guest data, direct booking becomes a relationship.”

Personalization and loyalty platforms now sit at the core of that relationship. Guests increasingly expect hotels to know who they are, remember their preferences, and anticipate their needs.

“Travelers are moving toward meaningful experiences,” said Mercedes Blanco, vice president of enterprise growth at Lighthouse. “If your website shows the same message to a business traveler as it does to a family of four, you’re leaving money on the table. Personalization allows you to control the conversation and to own the relationship with your guests.”

At the same time, data privacy regulations have added complexity, forcing hotels to be more transparent and intentional about how they collect and use guest information. That tension has elevated the importance of loyalty programs, where guests provide explicit consent in exchange for value.

“Loyalty becomes the gateway to personalization,” said Pratt. “It allows hotels to deliver consistent experiences across every touchpoint so no stay feels like the first.”

Tell Your Value Story

Discipline around data and analytics is what separates healthy distribution strategies from reactive approaches. Technology allows companies to look at profitability by channel, conversion trends, and how guests behave over time. Real-time data, predictive analytics, and automation tools are replacing manual processes that once slowed decision-making. Revenue, sales, and distribution teams that previously operated in silos are becoming more integrated, sharing a common view of demand and performance.

“Twenty years ago, sales teams managed some channels and revenue teams managed others,” said Pratt. “Now we’re seeing integrated commercial management where everyone is aligned around overall value.”

That integration also supports brand storytelling, an often overlooked component of distribution strategy. In a crowded marketplace where many hotels appear interchangeable on third-party sites, storytelling helps properties differentiate themselves beyond price and location.

“Content is critical,” said Pratt. “Guests need to be informed and inspired across every channel, from search to booking to arrival. That only works when systems are connected and data flows seamlessly across the guest journey.”

Rahaman agrees that technology has transformed storytelling from a marketing exercise into a measurable driver of revenue.

“Technology allows hotels to personalize a story at the right moment,” said Rahaman. “If a guest books a room and receives no follow-up, no personalization, it feels transactional. When the messaging reflects who they are and why they’re traveling, it creates an emotional connection that influences booking behavior.”

This ability to tailor messaging also helps hotels communicate the benefits of booking direct without undermining OTA partnerships. Rather than competing solely on price, successful hotels emphasize value, flexibility, and experience.

“Smart booking engines and guest experience platforms allow hotels to say, ‘Book wherever you want, but when you book direct, your journey gets better,’” said Rahaman. “That positioning protects OTA relationships while elevating direct bookings.”

On-property teams play a critical role in reinforcing that message. While technology enables personalization at scale, human interaction often leaves the strongest impression.

“We underestimate how much travelers value interactions with hotel staff,” said Pratt. “Especially frequent travelers. They may not remember the room, but they remember how someone made their stay easier.”

Those interactions can be powerful conversion moments, encouraging guests who booked through an OTA to return directly next time. When staff are empowered with guest data and trained to articulate the value of direct booking, they become an extension of the distribution strategy.

While there may not be a universal benchmark for hoteliers to know when they have struck the right balance between OTA and direct bookings, there are signals. A growing base of repeat guests, improving net RevPar, and stable rate parity across channels all point to a healthy mix.

“A strong direct share that grows organically, not through heavy discounting, is a good sign,” said Pratt. “OTAs should be additive, not cannibalizing.”

Rahaman points to profitability and resilience as key indicators.

“When profit per booking improves and OTAs are no longer the only solution in a low season, that’s balance,” said Rahaman. “If direct bookings and repeat guests continue to come in even when demand softens, then the hotel has achieved the right balance between direct and OTA bookings.”

A World of AI-Driven Discovery

Looking ahead, automation, artificial intelligence, and unified data platforms are reshaping how hotels manage distribution. AI, in particular, is poised to influence both direct and OTA channels.

“OTAs will use AI to become stronger at capturing demand, while hotels will use AI to strengthen guest relationships,” said Rahaman.

Blanco believes that AI can level the playing field and boost direct bookings for those who adopt it early.

“AI is the new distribution channel,” said Blanco. “We are moving from a world of search to a world of discovery. If your content, rates, and inventory aren’t easily read by AI agents, you will become invisible in the next phase of the internet.

“OTAs are investing billions in AI agents,” she continued. “If we do not act fast, we will lose the opportunity. Tools like Connect AI give hotels a data bridge to AI agents like ChatGPT and Gemini, allowing the hotel’s own website to become the primary interaction point.”

Ultimately, a healthy distribution strategy is less about chasing an ideal channel mix and more about building a resilient ecosystem. OTAs generate demand and visibility. Direct channels cultivate loyalty and lifetime value. Technology connects the dots, while people deliver the experience that turns first-time guests into repeat customers.

“Of course, all of this may look different a year from now,” said Pratt. “I’ve never seen this speed of change before. Search is changing, and we’re seeing a lot of itinerary creation through AI tools. We’re still learning what that means for bookings, but one thing is clear: Hotels that focus on value, relationships, and adaptability will be best positioned for whatever comes next.”

In a landscape defined by rising costs and intensifying competition, balance is no longer a static goal. It is an ongoing practice guided by data and powered by technology. Distribution works best when every channel plays its part.

Image: SVETAZI/STOCK.ADOBE.COM