Distribution
Agency model
A OTA distribution framework where the guest pays the hotel directly upon check-in or checkout, and the property pays the travel agency an agreed percentage commission after the stay is completed. The hotel acts as the merchant of record.
How it is used
Revenue managers use the agency model to maintain control over guest payment data and property pricing, preserving direct guest relationships at check-in. Booking.com historically popularized this framework. Because the property handles payment processing, operators must manage credit card authorization risks, potential late cancellations, and merchant transaction fees. Furthermore, accounting teams must track and reconcile monthly commission invoices sent by the online travel agency, ensuring commission is only paid on consumed, non-cancelled bookings.
Worked example
A hotel sells a room via Booking.com on the agency model for $200 per night for a two-night stay. The guest pays the hotel $400 directly at checkout. Assuming a 15% agreed commission rate, the hotel subsequently pays the agency $60 after receiving the monthly invoice, retaining $340 in net room revenue before merchant processing fees.
Common mistake
Failing to reconcile monthly agency invoices against actual guest stay records can lead to paying commissions on no-shows or cancelled bookings that were never collected.