The OTAs charge 20-30%. This operator paid 1.73%
"We can't compete with the OTAs" is the most expensive sentence in tourism. One Queenstown helicopter operator spent $1,200 on Google Ads in a single month and took $69,494 in bookings. The same revenue through an OTA would have cost $13,898 in commission at 20%, or $20,848 at 30%.
Run the numbers as a commission and the argument settles itself. On that account, ad spend came to 1.73% of the revenue it produced. Include the agency cost and it was 4.24%. The OTA takes 20-30% of every booking, forever, and keeps the customer relationship for itself. You can compete with the OTAs. It costs far less than you think.
Two things keep operators from seeing this. First, broken tracking: most booking-engine handoffs log ad-driven sales as "direct", so the ads never get the credit and the budget gets cut. Second, the OTAs bid on your brand name whether you do or not, quietly taxing customers who were already searching for you. This page walks through both, with the real figures.
One month, one operator, and the maths the OTAs hope you never do
In December 2023, a scenic helicopter company we work with spent $1,200 on Google Ads. Those ads produced $69,494 in tracked revenue. Average booking value: $2,168. Average cost per conversion: $15.01, and the most expensive single conversion all month was $38.06.
Now run those same bookings through an OTA. At 20% commission, $69,494 of revenue costs you about $13,898. At 30%, about $20,848. The Google Ads bill for the same result was $1,200.
If you think of Google Ads as a commission, this operator paid 1.73% of revenue in ad spend. Include the agency cost and it was 4.24%. Against 20-30%, that is not a close contest:
- $1,200 in ad spend versus roughly $13,898 to $20,848 in OTA commission
- An effective commission of 1.73% on ad spend, 4.24% all-in
- Every booking direct, so the customer relationship is yours, not the OTA's
These are real figures from a real Queenstown operator, not a projection. The engine behind them is the same one we run for every client: well-built Google Ads for tourism operators, measured properly.
The OTAs are already bidding on your name
Here is the part most operators miss. Whether or not you run branded Google Ads, the OTAs do. They are the biggest spenders on Google, and your brand name is one of their favourite keywords, because someone searching your name has already decided to book. On a busy search results page there can be four ads and three Google listings before your own organic result appears.
So the choice is not "pay for my own name or get it free". The choice is: pay a few cents per click to own the top of your own results page, or let an OTA sit there, take the booking, and charge you 20% or more for a customer who was searching for you by name.
Branded search is the lowest-cost, highest-return campaign you can run. Even if it is the only campaign you run, it closes the door the OTAs walk through every day. It is also the fastest thing to set up, which makes it the obvious first move for any accommodation or activity operator serious about growing direct bookings.
Why "most of our bookings are direct anyway" is usually wrong
When an operator tells us they do not need ads because most bookings come in "direct", we check the tracking before we believe the number. In our own review of 538 tourism businesses across 44 countries, only 9.5% of sites had cross-domain tracking set up between their website and their booking engine.
Without it, the handoff to the booking system breaks the trail. The customer clicks your ad, browses your site, then lands in the booking flow, and the sale gets logged as "direct". Your report inflates the direct number and starves the ads of credit. You conclude the ads are not working, cut the spend, and hand the demand back to the OTAs, who track everything to the cent.
The helicopter numbers above are only possible because the measurement was right first. Before you judge any channel, get the attribution honest. That is exactly what our analytics and conversion tracking work exists to do.
Direct bookings versus OTAs, answered
Can a small operator really compete with the OTAs on Google?
Yes, and the numbers say it plainly. A Queenstown helicopter operator we work with turned $1,200 of Google Ads spend into $69,494 of revenue in a single month, an effective commission of 1.73% on ad spend, or 4.24% including our fee. The OTAs would have charged 20-30% for the same bookings. You do not need an OTA's budget, because you are not trying to win every search in the world. You only need to win the searches that matter to your business.
Isn't bidding on my own brand name paying for traffic I would get anyway?
Only if nobody else is bidding on it. The OTAs are the biggest spenders on Google and they bid on operator brand names as standard, because a branded search is a customer who has already decided. There can be four ads and three Google listings above your organic result. Branded clicks cost very little, and the alternative is the OTA taking that booking and charging you 20% or more for it. It is the lowest-cost, highest-return campaign you can run.
How does the cost of Google Ads compare with OTA commission?
Think of both as a commission on the booking. On the helicopter account, average cost per conversion was $15.01, the highest single conversion cost $38.06, and the average booking was worth $2,168. That works out at 1.73% of revenue in ad spend, or 4.24% with agency cost included, versus 20-30% through an OTA. The exact percentage varies by operator and season, but the gap between the two models is rarely close.
Should I drop the OTAs completely?
Usually not, and we would not advise it as a first move. OTAs put you in front of people who have never heard of you, and that visibility has value. The problem is dependence: when the OTAs own most of your bookings, they own your margin and your customer relationships. The goal is to shift the mix, so direct becomes your biggest and cheapest channel and the OTAs become a top-up, not the foundation. A Growth Plan Session is where we work out the right mix for your business.
My analytics already says most bookings are direct. Why spend on ads?
Because that number is probably wrong. Only 9.5% of the 538 tourism businesses we reviewed had cross-domain tracking between their website and their booking engine, and without it, bookings that started with an ad get logged as "direct" when the customer crosses into the booking flow. The direct figure looks bigger than it is and the ads get less credit than they earned. Fix the tracking first, then judge the channels on honest numbers.
Book a Growth Plan Session and we will look at your booking mix, your tracking and what the OTAs are really costing you, then tell you straight where the growth is. You get the value either way, whether or not we work together afterwards.
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