The OTA is not your competitor on Google
Hotels that stopped bidding against the OTAs on Google have not lost. They have read a market they cannot win
A commercial director at an independent hotel decides to recover bookings from the OTAs.
She allocates a budget for paid search. She bids on the property's brand terms — the hotel's own name, its city, its category. She builds a clean landing page with direct-booking incentives. She runs the campaign for a quarter and reads the numbers.
Booking.com appears above her. Sometimes Expedia, too. Her cost per click is high. Her conversion is mixed. The bookings she captures are mostly ones she would have received through her direct channel anyway. The OTAs continue to dominate the auction on the very terms she expected to own.
She tries again. Better creative, sharper targeting, a higher daily budget. Marginal improvement, same picture. After two quarters she moves the budget to metasearch, to content, or back into commission. She concludes that paid search on Google is not a winning channel for an independent hotel.
She is right about the conclusion. The reason most hoteliers reach for — and that consultants and agencies often reinforce — is the wrong one. It is not a matter of bidding sophistication, creative quality, or budget size. It is a matter of what the bid is actually competing against.
What the bid is competing against
On a recent episode of the Skift Travel Podcast, Skift's head of research Seth Borko explained OTA economics in unusually plain terms. The framing, paraphrased here, is that the OTA does not bid against an individual hotel with its own money. It bids against an individual hotel with the pooled commissions of every other hotel.
The mechanism works like this. A hotel signs a commercial agreement with an OTA at, say, eighteen percent commission. Every booking the OTA originates routes that commission into the OTA's revenue. The OTA then allocates the largest share of its operating budget to performance marketing — which is to say, to Google.
The hotel is therefore not bidding against Booking.com or Expedia in any individual sense. It is bidding against a venue that aggregates the commission revenue of tens of thousands of comparable properties and turns that aggregated budget into a single bid. Some portion of the bid that beats the hotel is funded by the hotel's own commissions. A larger portion is funded by the commissions of every other property the hotel competes with.
The OTA is not the competitor in this auction. The OTA is the clearinghouse through which competing hotels' marketing budgets are pooled and turned against each individual contributor.
The math
Booking Holdings reported $7.3 billion in marketing expense in 2024, the substantial majority spent on online search engines — primarily Google — alongside affiliate, metasearch, and social channels. Expedia Group's direct selling and marketing expense for the same year was $6.846 billion, exactly half its annual revenue. Combined, the two companies spent more than fourteen billion dollars on traveler acquisition in 2024, the bulk of it routed through Google.
That spend is funded by commissions. The properties that pay the commissions are the properties the OTAs then outbid. The flow is closed: commissions in, performance marketing out, traveler acquisition in, commissions out.
A 60-room independent hotel allocating five thousand dollars a month to paid search — sixty thousand a year — is bidding against a clearinghouse that spends roughly twenty million dollars a day on Booking's side alone, and another nineteen million on Expedia's. The ratio is not ten to one or a hundred to one. It is more than one hundred thousand to one. No realistic budget reallocation closes that gap, because the gap is a function of pooling. The OTA is bigger because it is everyone's marketing budget at once.
Why this is not tactical
The error in framing this as a tactical problem is the assumption that better execution closes the gap. It does not. The Google paid-search auction rewards aggregated bidding capacity by design. A single hotel running an underpowered version of the OTA's strategy is not running the same strategy with less budget. It is running a different kind of bid — an individual one — against a category of opponent that exists because no individual hotel can match it.
Agencies that promise independent hotels they can win the brand-term auction with the right keywords, the right creative, and a slightly larger budget are selling tactics for a problem that does not respond to tactics. The conversion and cost-per-acquisition figures they report are often real, but they describe a marginal recovery — bookings the hotel would have received anyway, surfaced earlier in the funnel. The auction itself has not shifted. The clearinghouse is still bidding the pooled budget.
The corollary is uncomfortable for many hotels: the failure of direct-bidding programs is not a failure of the marketing team or the agency. It is a correctly read market signal.
Where this leaves the hotel
The clearinghouse model works because Google is the auction. That is the load-bearing premise. Recognizing the structural ceiling on paid-search competition is not a counsel of defeat; it is a clarification of where leverage sits, and does not sit. When an independent hotel decides whether to fund a Google paid-search program against the OTAs, the relevant question is not whether the hotel's tactics are good enough. The relevant question is whether the hotel believes it can outbid every other hotel in its category combined. The math says it cannot.
by Markus Busch, Editor/Publisher Hospitality.today
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