Who really owns the customer in 2025? OTAs vs. hotels in the loyalty battle

Key takeaways

1. OTAs are fueling growth through discounts and promotions, costs that are ultimately borne by hotels.
2. OTAs like Booking.com and Expedia are doubling down on customer ownership with loyalty programs, exclusive discounts, and mobile-first booking experiences.
3. You can leverage the power of OTAs by improving your visibility.

Expedia’s Q2 2025 earnings call showed room nights up 7% and revenue up 8% year over year, while Booking Holdings reported an 8% increase in room nights and revenue up 16%. So, what does this mean for hoteliers and revenue managers? Let’s explore why OTAs are winning on loyalty, how this impacts hotel ADR and profitability, and what strategies hotels must embrace to thrive in this OTA-dominated environment.

OTAs are driving growth powered by hotel promotions

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OTAs are reporting growth that looks impressive on the surface, but the story is more complex then it looks.

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• Expedia’s Q2 2025 performance: total gross bookings were up 4%, revenue rose 8%, and booked room nights increased by 7%. But management acknowledged that a “higher percentage of bookings came from promotional rates,” which means suppliers (hotels) were funding this growth through discounts.
  
  
• Booking Holdings Q2 2025: gross bookings climbed to $46.7 billion, with 8% room night growth. Yet average daily rates (ADRs) in the U.S. were flat or declining. CFO Ewout Steenbergen admitted that U.S. consumers are more cautious, forcing greater reliance on promos and loyalty perks.

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For hotels, this means occupancy remains accessible through OTAs, but the trade-off is clear. Higher promotional activity may impact ADR, requiring careful monitoring.

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For revenue managers, the concern isn’t just volume, it’s profitability.

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• Expedia reported ADRs down 2% in Q2.
  

• Booking reported flat ADRs overall, with declines in the U.S. specifically.

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At the same time, room nights are up 7–8%. This tells a troubling story: demand is rising, but guests are booking at promotional rates. Hotels are filling rooms, but earning less per night.

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Why OTAs resonate with guests

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It’s easy to see why OTAs capture so much guest loyalty. Their strategies are designed to make booking seamless, rewarding, and repeatable.

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Loyalty programs that scale

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• Expedia’s One Key program is growing steadily, with more active members moving into higher tiers.
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• Booking.com’s Genius program is even more entrenched, with level 2 and 3 members accounting for about half of room nights.

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Mobile-first convenience

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Most bookings now come through mobile apps, where loyalty benefits and personalized offers are embedded into the customer journey.

Promotions as value drivers

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Vrbo reported that nearly 10% of bookings came from its new promotions strategy. For guests, these deals create a sense of added value, making the OTA relationship stickier.

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This combination of loyalty, convenience, and perceived value positions OTAs as trusted travel companions. For hotels, the challenge isn’t competing against this but finding ways to complement it.

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The impact of AI and guest acquisition

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While OTAs dominate guest loyalty and mobile engagement, a new question is emerging: could AI give some of that power back to hotels?

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Expedia and Booking are already embedding AI into their ecosystems. Expedia noted that traffic from generative AI searches is might convert at higher rates than other channels. Booking is testing tools like Priceline’s AI assistant Penny and Kayak.AI, designed to act as conversational travel planners that guide users deeper into their platforms.

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For hotels, the opportunity lies in using AI in a different way, not to replicate OTA platforms, but to intercept travelers earlier in their discovery process. For example:

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GEO for hotels: preparing for AI-driven discovery

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Generative Engine Optimization (GEO) is the next evolution of SEO. Instead of optimizing only for Google’s traditional search results, hotels now need to ensure their content is structured and relevant so AI-powered assistants like ChatGPT, Copilot, or Google’s AI Overviews can recommend their property directly.

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Imagine a traveler asking, “Find me boutique hotels near Brussels with free breakfast and parking.” If your website is optimized for SEO and structured data, an AI system can pull those details straight from your site and recommend you, bypassing OTAs entirely.

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Here’s how hotels can apply GEO in practice.

Structured data and schema markup

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Add schema tags (e.g., Hotel schema) to your website so AI tools can easily identify key attributes:

• Location: “near Brussels city center”
  
  
• Amenities: “free breakfast, free parking, pet-friendly”
  
  
• Property type: “boutique hotel”

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Practical example: A hotel in Brussels tags its property as “boutique hotel,” adds schema for “breakfast included,” and highlights “free parking.” When a traveler queries an AI tool, these attributes match directly to the request.

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The key is speed. OTAs are already moving fast to own the AI-powered discovery journey. Hotels that act now, by aligning content, optimizing websites, and experimenting with AI-driven marketing, have a chance to capture direct leads before they’re locked into OTA channels.

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How can hotels protect ADR while using OTAs?

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Here’s the core dilemma: hotels cannot simply abandon OTAs. Travelers are there, whether hoteliers like it or not. Pulling away from OTAs would mean sacrificing visibility and occupancy.

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But racing to the bottom with promos is unsustainable. Every discount chips away at profitability and conditions guests to expect lower rates.

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Revenue managers must ask: How do we compete on OTAs without destroying ADR?

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1. Strategic channel distribution

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Channel distribution works best when it’s intentional. The key is to identify where OTAs genuinely add incremental demand and where they simply replace bookings you could have captured directly.

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Measure incremental value

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Analyze your PMS data to see which OTAs bring guests you wouldn’t get otherwise, international travelers, new markets, or longer stays, versus those overlapping with your direct channels.

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Define the role of each OTA

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Position OTAs strategically: Booking.com for European demand, Expedia for U.S. outbound, or niche OTAs for regional reach. This helps avoid overlap and unnecessary commission spend.

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Control promotions and parity

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Use fenced offers (app-only, loyalty-only) to drive incremental bookings without undermining ADR. Keep parity on your core direct channels so repeat guests aren’t trained to “always check OTAs first.”

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Balance cost vs. profitability

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Remember: a direct booking often yields more net revenue than a higher-rate OTA booking once commissions are deducted. Weigh channels by profitability, not just volume.

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2. Optimize OTA performance

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Success on OTAs is not just about adding promotions, it’s about being visible. Travelers rarely look beyond the first page of results, which means ranking well directly impacts how many bookings you capture. The good news is that hotels can improve their ranking and conversion by focusing on momentum, content quality, and smart use of technology.

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One of the most important levers for visibility on OTAs is booking momentum. These platforms reward properties that show consistent demand, which means even a few gaps in your booking pace can negatively impact your ranking. Hotels can maintain momentum by managing availability strategically, using targeted promotions to stimulate demand on softer nights, and monitoring pacing carefully to avoid the visibility dips that occur when bookings slow down. 

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A good revenue management strategy will help you achieve a good booking pace, not only optimizing your visibility on the OTAs, but also helping you rank high in the search results.

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Technology can also amplify these efforts. Otamiser’s innovative ranking management solution, analyzes millions of data points and automatically adjusts both rankings and rates to keep properties competitive.

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3. Harness the Billboard Effect

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In the hospitality industry the Billboard Effect is the phenomenon where OTA listings have the potential to increase direct bookings for hotels by working as a billboard for the hotel. Cornell University research showed that hotels listed on OTAs experienced a 7.5%–26% increase in direct bookings thanks to heightened visibility. 

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A real example showcasing the power of the Billboard effect

Historic Hotels Belgium offers a clear illustration of the Billboard Effect in action. The independent hotel group partnered with Otamiser to enhance its OTA visibility on Booking.com and other platforms. Within a short period, all five properties secured top positions on these channels, boosting both online exposure and occupancy.

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Yet the most striking outcome wasn’t just higher OTA performance. As their revenue manager explained: “The most surprising results have been more bookings through our own website, bringing higher revenues and less commission.”

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This case highlights how, when managed strategically, the Billboard Effect can be a powerful driver of direct business as well as OTA growth. 

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How to balance promotions and ADR in your hotel revenue management strategy

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The key for revenue managers is to strike the right balance, knowing when discounted OTA bookings provide true incremental value and when they simply put unnecessary pressure on ADR. A disciplined approach, guided by forecasting, demand data, and a holistic view of revenue, ensures that promotions work for your strategy rather than against it.

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Use forecasting and demand intelligence

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Forecasting and demand data should guide when to lean on OTA volume and when to pull back. During shoulder seasons or off-peak nights, OTA-driven bookings can add real incremental value by filling gaps in occupancy. But when demand is already strong, overreliance on discounted OTA business can erode rate integrity. 

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That said, your channel distribution mix plays a big role, if direct bookings only account for a small portion of your overall business, you cannot depend on them exclusively, even during high season. In such cases, OTAs remain essential to sustaining visibility and volume.

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Set ADR guardrails

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It’s also important to establish clear guardrails around ADR. Know both the minimum and maximum rates at which your property should operate. On the low end, to avoid sacrificing profitability just to push occupancy, selling more rooms doesn’t automatically translate into higher revenue if ADR dips below sustainable levels. 

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On the high end, looking at your historical maximum rates per room type can provide valuable benchmarks. If you’ve previously achieved a certain ceiling rate on high-demand dates, use that intelligence to guide your strategy rather than undervaluing your property when demand peaks.

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Think holistically about revenue

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Finally, OTA performance must be evaluated within the broader revenue ecosystem. Direct bookings, corporate accounts, groups, and ancillary revenues all contribute to the overall health of your bottom line. In larger and highly competitive markets, avoiding OTAs altogether risks limiting your hotel’s visibility, which can undermine long-term revenue growth. 

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By taking a holistic view, hotels can use OTAs strategically, leveraging them to support occupancy and visibility without letting short-term discounts overshadow profitability or brand positioning.

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Conclusion: reclaiming customer ownership

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So, who owns the customer, OTAs or hotels? Right now, the answer tilts toward OTAs. Their loyalty programs, apps, and AI integrations are pulling guests deeper into their ecosystems. Hotels, meanwhile, are bearing the cost through discounts, eroded ADR, and reduced profitability.

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But hotels aren’t powerless. By rethinking channel strategy, optimizing OTA visibility without over-discounting, and investing in direct traffic (especially via AI-driven discovery), they can rebalance the scales.

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The truth is that with smarter revenue management and ranking management, hotels can turn OTAs into partners for occupancy while protecting long-term profitability. That is exactly what Otamiser’s solution does for hotels, resulting in an average increase of 24% in revenue. Book a call with our experts now, to see how we give back the power to hoteliers. 

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Otamiser is the world leader in OTA optimization, Otamiser helps hotels across Europe, the U.S., and Asia improve OTA rankings and revenue through data-driven pricing and local market insights.

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