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Freedom251 › Blog › Booking Holdings

How Online Travel Agencies Make Money From Bookings

By Freedom251 Team · · 3 min read

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Online travel agencies (OTAs) make money through a mix of booking revenue, supplier commissions or ticketing fees, advertising, and related services. The amount a traveler pays is not necessarily the OTA’s revenue: in many transactions, much of the payment is owed to a hotel, airline, or other travel provider. The arrangement depends on the booking model and the company.

Booking value and OTA revenue are different

A trip’s booking value is the amount charged to the traveler. It may include money the OTA must pass on to the travel provider, so it should not be treated as the agency’s earnings.

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Booking Holdings describes merchant transaction net revenue as the amount charged to travelers, including merchandising effects, less the amount owed to travel providers. That is one company’s accounting description, not a universal formula for every OTA. Booking Holdings’ 2025 Form 10-K

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Merchant bookings: the OTA handles the transaction

In a merchant booking, the OTA may act as the merchant of record, collect the traveler’s payment, and retain transaction revenue after accounting for amounts owed to the supplier. Merchant revenue can also include reservation commissions, payment-facilitation revenue, or ancillary fees, depending on the company’s model and accounting.

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Payment timing and revenue recognition are not necessarily the same. Expedia says travelers generally pay for merchant hotel bookings before departure, often at booking. For most travel services, it recognizes revenue as the travel takes place. Expedia Group’s 2025 Form 10-K

Agency bookings: the OTA arranges a supplier booking

In an agency transaction, the OTA facilitates a booking with the provider and earns a commission or ticketing fee from the supplier, the traveler, or both. Expedia describes its role 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.”

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Payment may go directly to the provider. Expedia says agency hotel travelers may pay at the property, while it generally records agency air revenue when the traveler books. These examples show why the date a traveler pays does not by itself tell you when an OTA records revenue. Expedia Group’s 2025 Form 10-K

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A hotel booking can offer different payment arrangements

Some hotel offerings let the customer choose between paying Expedia in advance and paying the hotel during the stay. The payment choice affects who collects the money and when; the OTA’s role and accounting treatment depend on the arrangement. Expedia’s filing describes this hybrid offering, but it should not be assumed that every OTA or hotel provides the same options.

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Advertising and related services add revenue

OTAs can sell advertisers access to potential customers and transactions across their websites and metasearch services. Booking Holdings reports an “advertising and other” revenue category, while Expedia describes selling advertising access to potential incremental traffic and transactions. Related services can also contribute revenue, but the exact offerings and accounting vary by company.

What major OTA filings report

The figures below are company-reported totals for the year ended December 31, 2025. Expedia’s percentages describe Expedia Group’s own revenue mix, not an industry-wide split.

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Company 2025 reported revenue Reported revenue categories or mix
Booking Holdings $26.9 billion Merchant, agency, and advertising and other. The filing does not give a comparable percentage mix in the cited information. Source
Expedia Group $14.7 billion 70% merchant, 22% agency, and 8% advertising, media, and other. Source

The companies’ categories and business mixes are not interchangeable. These figures do not establish an average for the OTA industry or describe the economics of any individual booking.

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How to tell what an OTA earns on a booking

For a specific reservation, check the booking and payment details rather than assuming that the displayed trip price is what the OTA keeps. These questions help distinguish the arrangements:

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  • Who is the seller or agent? Look for whether the OTA is merchant of record or is arranging a booking with the provider.
  • Who collects payment, and when? The traveler may pay the OTA at booking or pay the provider later, such as at the hotel.
  • What is the OTA’s revenue basis? It may be transaction net revenue, a commission or ticketing fee, advertising, or a related service fee.
  • When does the OTA recognize revenue? Do not infer this from payment timing alone; recognition depends on the company and service.

There is no single OTA commission rate

Booking Holdings’ and Expedia Group’s 2025 filings describe different revenue categories and company-specific business mixes; they do not establish a universal commission rate for online travel agencies. A rate for a particular product, geography, supplier contract, or period should not be generalized to the whole industry.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

Booking HoldingsExpedia Grouponline travel agenciesOTA revenuetravel booking

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