By Brian Reeves, Founder and CEO of The roomangel Foundation – 2.21.2025
The hotel distribution landscape is undergoing a seismic shift, one that promises to redefine how properties connect with their guests. For too long, hotels have relied on intermediaries to fill their rooms, ceding control – and a substantial chunk of revenue – in the process. But as the industry evolves, so do the opportunities to reclaim the guest relationship and build a smarter, more sustainable model for growth. The future of distribution isn’t just about technology; it’s about collaboration, innovation, and putting the guest first. This journey will be anything but simple, but it’s a challenge the industry must embrace to thrive in the years ahead.
Let’s review the main factors affecting the hotel distribution landscape and shaping up the way hotels will interact with their guests in the years to come.
Healthier channel mix
The cost of distribution via OTAs keeps rising. OTA commissions that once ranged from 15-20% now reach 30% or higher. Recent studies find hotels paying up to 40% commission when accounting for volume discounts.
With commissions devouring hotel margins, direct bookings emerge as an urgent priority. Skift survey results also show that more than 80% of hoteliers found that direct customers were ‘likely’ or ‘much more likely’ to become return guests compared to third-party customers (Skift, Hotel Distribution Outlook 2024).
While high commission charges are the biggest challenge with third-party distribution, hoteliers also have lots of concerns about not having access to consumer data or control over the booking experience. “The early promise of OTAs to democratize discovery has given way to an oligarchy controlling guest access.” (Jochen de Peuter-Rutten and Youri Sawerschel, EHL Hospitality Business School)
Considering the above, hotels need to find the right mix of distribution channels, taking into account factors such as cost of acquisition, reach, and control over the guest experience. This balance is crucial for maximizing profitability and maintaining a strong market presence.
According to Skift, “by 2030, direct digital bookings will dominate hotel distribution, generating over $400 billion of hotel gross bookings — overtaking the online travel agencies which are expected to bring in a smaller $333 billion of hotel bookings.”
This is a great goal to pursue but how exactly are we planning to make it happen? Is this wishful thinking or do we actually have a chance to achieve it?
One of the key drivers behind intermediaries’ dominance in the travel space is the need for centralized search – a single, convenient place for travelers to compare hotel properties using rich datasets. While hotels prefer bookings via their direct brand channels, they have struggled to attract end consumers who prioritize choice.
Until now, introducing a third-party intermediary has been the only viable solution. This longstanding challenge can only be addressed via a centralized hotel search designed for the customer while delivering reservations via the hotel’s direct channel, eliminating the need for third-party agents. Travellers visit 38 websites on average before making a hotel booking (Skift). With guests demanding seamless booking, customer-centric centralized search for direct bookings becomes mission-critical.
This needs to be a global initiative if we want to present a viable solution to a decades-old problem. A new hotel search and booking platform needs to be directly connected to the hotel partners’ booking engines or property management systems (an initiative driven by the roomangel Foundation). This could be the biggest change in the history of our industry.
Increased personalization and differentiation of offerings
Fundamentally, the rise of experiential travel is leading to a more differentiated, non-commoditized hospitality offering, which is tailoring a more personalized travel experience. Distribution is no longer just about selling hotel rooms — loyalty, experiences, and personalization are increasingly becoming critical differentiators in the battle for hotel market share.
Advanced data analytics and AI are enabling hyper-personalization in guest experiences. This trend extends to distribution, allowing hotels to tailor their offerings and marketing based on individual guest preferences and behaviors. Technologies that optimize conversion across the guest journey enable hotels to gradually shift share.
Loyalty programs are also evolving. There’s a shift towards “point-less” loyalty, moving away from traditional point-based systems to more personalized rewards. This trend influences how hotels use their direct booking channels and loyalty programs in their distribution strategy.
How can we make this a successful journey for our industry? The answer is data, data, and more data. To achieve proper levels of personalized offerings, hotels need to have access to customer data that is only available from direct bookings. This is the only way they can build true digital conversations with their guests and treat them as guests from the moment of inspiration and search, before they arrive at the hotel – “before the door”.
Customer-first approach
Let’s admit it — every time we talk about the “OTA problem,” we focus on how it affects hotels, but we rarely consider the consumer’s perspective.
What’s important to recognize is that, in addition to handicapping hotels, OTAs don’t serve guests particularly well either. These booking platforms don’t prioritize the best value-for-money options; instead, they steer customers toward hotels that pay the highest commissions. They do this through a combination of indexing (where the hotel appears in the search results) and influencing (those messages that persuade customers to book one hotel over another).
Take, for example, the Booking.com ‘Preferred’ and Preferred Plus’ Programs. By increasing commission rates, hotels will receive better search results, more page views and more bookings. Think about this. NOTHING has changed for the consumer, yet they are more likely to find and book high commission-paying hotels. To top it off, the symbol denoting preferred is a ‘Thumbs Up’, which signals a good decision to the consumer. Preferred Plus features a ‘Thumbs Up’ AND a ‘+’ symbol.
OTAs also limit a consumer’s choice. Hotels that offer better value but pay lower commissions may not even appear on the first few pages of search results — and let’s be realistic, nobody really scrolls that far. When some major hotel brands pushed book direct messages on TV, they were moved down the search results on certain OTAs; a practice known as ‘dimming’. This, again, negatively impacts a consumer’s actual freedom of choice.
We’re now seeing that the consumer is becoming the focus of the regulators. The Digital Markets Act (DMA) serves as a prime example. The DMA is a European Union (EU) law designed to make digital markets fairer and more competitive. Proposed in 2020 and enforced as of May 2, 2023, it aims to curb unfair practices by ‘gatekeepers’ — large digital platforms that control transactions between businesses and consumers. This includes Booking.com.
The DMA’s goal is to create a fairer digital marketplace by enforcing strict regulations that prevent gatekeepers from abusing their dominant positions. These guidelines are meant to boost competition and transparency, ultimately benefiting both businesses and consumers.
Ironically, however, this well-intentioned legislation has ended up favoring large U.S. companies (Expedia and Booking Holdings) while negatively impacting the European hotel industry. The reason? The complex dynamics of hotel distribution are difficult for outsiders to grasp. Additionally, due to the nature of dynamic pricing, legislators have historically struggled to regulate hotels based on price. But this is now changing — The roomangel Foundation is introducing an objective measure of value for money in hotel pricing and advocating for consumers in regulatory discussions.
In summary, recent shifts in search engine algorithms and antitrust measures against major tech companies are reshaping the future of hotel distribution.
The dusk of rate parity clauses
Recent legal rulings, including the EU Court of Justice’s decision against Booking.com’s price parity clauses, are reshaping hotel distribution regulations and redefining the relationship between hotels and OTAs.
In response to the EU Digital Markets Act (DMA), Booking.com has announced that rate parity clauses will no longer apply in its agreements with hotels across the European Economic Area. As a designated ‘gatekeeper’, Booking.com must comply with this regulation, allowing hotels to offer lower rates and exclusive promotions on their own websites.
This marks a significant win for hotels looking to boost direct bookings. Without contractual rate parity restrictions, hotels now have the freedom to compete on price. To fully capitalize on this opportunity, hotels must invest in their direct booking channels — upgrading website technology, refining digital marketing strategies, and crafting compelling direct offers that can stand toe-to-toe with OTAs.
According to Pablo Delgado at Mirai, “Inventory and rate parity is no longer a valid strategy. Parity sounds like a 90’s concept. It is the time to redefine a new relationship with the OTAs. A new strategy that allows you to grow your direct channel, reduce the dependency on OTAs, and make more money.” (“Parity is over. Defining a new pricing strategy with Booking.com and Expedia”)
Prioritizing mobile traffic
The mobile booking trend has significantly impacted hotel distribution in recent years, with its influence continuing to grow. In 2023, 68% of online traffic for travel and hospitality websites came from mobile devices (Statista), highlighting the increasing preference for mobile platforms among travelers. This shift has led to a substantial change in how hotels approach their distribution strategies.
By 2024, mobile bookings overtook desktop bookings for UK staycations, with 51.3% of bookings made on smartphone devices, representing a 6.1% increase from the previous year (SHR Group). This trend is not limited to the UK; globally, hotels are seeing a significant rise in mobile bookings. Booking.com reported that more than half of its bookings are now made on mobile devices. Looking ahead, the trend towards mobile bookings is expected to continue its upward trajectory.
Needless to say, a seamless online experience across various channels, with a focus on mobile-first design, is crucial for engaging guests and ensuring a smooth booking process. This trend highlights the importance of optimizing distribution channels for mobile users.
When it comes to mobile apps, historically, only OTAs or major hotel chains have had the scale to make a real impact. Many independent hotels and small chains have tried, but most struggle to drive users and members to their apps. This is largely because consumers favor centralized search platforms, prioritizing choice over loyalty to a specific hotel property — something that The roomangel Foundation is aiming to address with its new platform.
AI Agents
As AI technology continues to evolve, it’s likely to reshape the hotel distribution landscape, offering new opportunities for hotels to optimize their channels and enhance guest experiences. AI agents will play an important role but it’s too early to say how exactly they will impact the world of hotel distribution.
Here are some potential avenues:
Enhanced direct bookings: AI-powered chatbots and virtual assistants on hotel websites or call centers will provide seamless booking experiences, potentially shifting bookings away from Online Travel Agencies (OTAs) to direct channels. An example would be D3X.ai (intelligent autonomous AI agents for hospitality businesses).
Dynamic pricing optimization: AI algorithms will be capable of analyzing more data on market trends, demand patterns, and competitor pricing to adjust room rates in real-time, maximizing revenue while maintaining competitive pricing. Many newly-built Revenue Management Systems have AI/ML algorithms in their core.
Personalized marketing: By leveraging guest data and AI analysis, hotels will be able to create highly targeted marketing campaigns and tailored promotional offers (like Allora.ai, an AI-powered booking platform by Avvio).
Intelligent upselling and cross-selling: AI agents will identify opportunities for additional services based on guest preferences and behavior, potentially increasing revenue per booking (Directful).
Improved visibility and search optimization: While AI chatbots can enhance conversion on hotel websites, hotels need to focus on improving their website content and functionality to boost search visibility and compete with OTAs (Hovr).
The future of hotel distribution is ripe with opportunity, but it demands bold action and collective effort from the industry. From embracing direct bookings and leveraging AI for personalization, to challenging long-standing practices and regulations, the path forward is clear: hotels must reclaim control of their inventory and their guest relationships. This isn’t just about staying competitive; it’s about shaping a hospitality ecosystem that prioritizes innovation, transparency, and the guest experience. By working together to adopt smarter solutions and putting the traveler at the heart of every decision, the industry can transform today’s challenges into tomorrow’s breakthroughs — and finally chart a course toward a more sustainable and profitable future.
Brian Reeves is Founder and CEO of The roomangel Foundation, an industry initiative to take back control of distribution and provide a better way for consumers to search and book hotels.. He was the Founder of Avvio, the multi-award winning booking engine and hotel digital marketing company. Under his leadership, Avvio won four consecutive Deloitte Fast 50 tech awards and he was short-listed for the Ernst & Young Entrepreneur of the Year Award. Brian has spoken widely on the subject of hotel distribution and shares valuable insights on the consumer psychology of hotel search and booking.
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