The (not so) Hidden Cost of OTAs: Why the Smartest Property Managers Are Investing in Direct Bookings

The uncomfortable truth no one is saying out loud

If you manage vacation rentals today, there’s a good chance OTAs (Airbnb, VRBO, etc) feel like a necessary evil. It delivers demand, visibility, and bookings at scale. But beneath the surface, it’s quietly draining your margins, weakening your brand, and putting your entire business at risk as travel discovery fundamentally changes.

This isn’t an anti-OTAs rant. OTAs helped build this industry. And OTAs serve a good purpose, one of exploration and discovery. But the economics have shifted, and the future of travel is moving fast in a direction most property managers are dangerously unprepared for.

Let’s break it down.

The 15.5% Dilemma

Property managers are caught in a recurring debate over how to handle OTAs fees.
Whether you raise rates to offset them, absorb the cost, or keep prices identical across all platforms, you aren't actually solving the problem.

The OTA fee issue isn’t a pricing problem, it’s a dependency problem.

The Unsolvable Tradeoff

OTA guests are the most price-sensitive travelers in hospitality. They filter by price, compare listings, and switch them in a heartbeat.

This creates a "lose-lose" loop for managers:

• Raise OTA prices: Your conversion rate drops as guests find cheaper alternatives.

• Absorb the fees: Your profit margins erode on every single booking.

• Maintain price parity: The guest still books through the OTA because they trust the platform more than a direct booking site.

Trust Beats Savings

Roughly 75% of travelers are willing to pay a premium to book on a platform they recognize. This is why Airbnb wins bookings even when it’s the more expensive option.

If you rely on OTAs for discovery, you are forced into a defensive crouch:

1. Protect your margin and lose demand.

2. Protect your demand and lose margin.

3. Try to do both, and still lose the booking.

The conclusion most people miss is that no pricing strategy fixes this. 

As long as OTAs control discovery, your pricing decisions are defensive by nature. You’re reacting to a system you don’t own. The real solution isn’t adjusting your rates, it’s breaking the dependency by owning the demand in the first place.

“But guests won’t book direct”

The issue is that most PMs cannot reliably drive traffic to their own site, so OTAs become the crutch.

When PMs say: "If I lower my prices, Airbnb will win anyway”

What they’re really saying is: “I don’t control my demand.”

That’s the vulnerability.

The real ROI of direct bookings (it’s not what you think)

Direct bookings aren’t just about saving fees.

They unlock:

• Higher total bookings (recovered lost demand)

• Lower price sensitivity

• Brand loyalty

• Email and remarketing

• Control over the guest relationship

• Independence from OTA algorithm shifts

Even a 2% shift from OTA to direct creates meaningful profit lift.

Not because each booking is magically better,  but because your entire funnel performs better.

More visibility → more trust → more conversion.

The uncomfortable strategic question

Ask yourself this: If Airbnb disappeared tomorrow, how would guests find me?

If the answer is “they wouldn’t,” that’s not an OTAs problem.

That’s a business continuity risk.

Marking up OTAs is not free (and it’s costing you bookings)

Some PMs try to fix the margin problem by marking up their OTAs by 10–15%.

On paper, this looks smart.

In reality, it’s quietly killing demand.

Pricing elasticity is real:

• Lower price = more demand and bookings

• Higher price = lost demand and bookings

Every dollar you add to stay competitive on margin reduces your total addressable market. Those lost bookings don’t magically come back to your direct site, they disappear.

That lost demand is the money you never see. 

And the OTA’s don’t want you to see it. The guest simply just books with another PM and the OTA gets their cut. 

And it’s the exact demand direct booking engines are designed to recover.

The myth of “we already do direct bookings”

Another common claim: “We get 10–15% of bookings direct.”

When you dig deeper, you often find: The majority are repeat guests . Very few are net-new discoveries

That’s not a growth engine, that’s a retention artifact.

Top-performing PMs are seeing:

• 30–75% of new bookings coming direct

That gap isn’t incremental. It’s existential.

Why OTAs are losing the discovery war

Here’s the part that should make every PM uneasy: Travel search is no longer starting on Airbnb.

It’s starting on:

• Google

• Google Maps

• ChatGPT

• Gemini

• AI-powered travel assistants

Guests are asking: “Where should I stay in Scottsdale for a group of 8?”

Not: “Which Airbnb should I book?”

OTAs were built for browsing listings.

AI is built for recommending brands.

If your properties don’t exist outside an OTA ecosystem, you don’t exist in the future of travel.

The future belongs to PMs who play offense

The next generation of winning property managers will:

• Treat OTAs as a supplement, not a strategy

• Invest in discoverability outside marketplaces

• Price intelligently, not defensively

• Own the guest relationship end-to-end

• Be visible where AI sends travelers

Airbnb won’t vanish overnight, but dependence is already a liability.

The smartest PMs aren’t asking how to survive OTAs. They’re asking how to outgrow them.

And the answer is clear: Direct is no longer optional. It’s the future of travel.