Economic Leakage - An Uncomfortable Truth
With some OTA commissions reaching 45%, the gap between what travellers spend and what destinations keep has never been wider. A Glasgow-born entrepreneur living in Turkey believes the industry can fight back.
Every year, billions of pounds flow through the global tourism economy. A substantial portion of that money never reaches the destinations where tourism actually takes place. It does not vanish through waste or corruption. It drains away through the everyday mechanics of how travel is bought and sold online.
Online travel agencies, led by Booking.com, Expedia and their peers, solved a genuine problem when they first appeared. They offered smaller hotels and independent operators a level of visibility that would have been impossible to achieve alone. But the cost of that visibility has grown enormously. Commission rates now range from 15% at the low end to as much as 45%, with revenue processed offshore and contractual clauses that in many cases prevent operators from undercutting OTA prices on their own websites.
The result is a structural transfer of wealth away from the places where tourism happens and towards corporate platforms headquartered far from the beaches, mountains and city centres that travellers come to visit. This is economic leakage, and it matters far beyond the balance sheets of individual hotels. It undermines destination resilience, weakens the customer relationships that properties need to build loyalty, and erodes the financial foundations that make year-round tourism viable.
Martin Rosenberg has watched this dynamic play out at close quarters. A Glasgow-born entrepreneur who has lived in Antalya for the past two decades, he has observed Turkey’s extraordinary growth as a tourism destination alongside what he regards as a deepening dependency on intermediaries that extract more than they contribute.
“The travel industry has always had a certain amount of leakage,” he said in a recent interview for the Balancing Tourism Podcast. “Commissions were being paid, but it was usually around 10 to 15% with a tour operator. And you were getting something for that. It was a two-way conversation. There was an element of value.”
That equation, Rosenberg argues, has shifted dramatically. Where traditional travel agents earned their margin through advice, curation and a genuine service relationship, the OTAs have scaled the transactional side while stripping out the personal element. The commission has climbed, but the value exchange has narrowed.
The numbers are striking. A mid-range, hundred-room Mediterranean hotel charging roughly £100 per night and operating at reasonable occupancy could be generating around £2 million in annual revenue. At commission rates of 20 to 25%, that is £400,000 to £500,000 flowing out of the local economy every year from a single property. Scale that across a resort destination with hundreds of hotels, and the aggregate leakage is enormous. And Turkey’s hotels are frequently far larger than a hundred rooms.
“That’s not even a big hotel by Turkish standards,” Rosenberg pointed out. “You’ve got properties with 400, 500, 600 rooms. And then you’ve got the smaller places, the family-run guesthouses, where even a modest amount of leakage can be the difference between surviving and going under.”
The lost relationship
Beyond the raw financial cost, there is a subtler but arguably more damaging consequence: the loss of the customer relationship. It is the hotel that greets the guest, serves the meals, and delivers the experience. Yet it is the OTA that holds the transactional relationship and owns the data.
Rosenberg is blunt about the industry’s role in allowing this to happen. Hotels, he believes, have too often failed to engage meaningfully with their own guests.
“It’s very rare that I’ve checked into a hotel, stayed for a week, and left after someone has actually sat down and had a conversation with me,” he said. “They might provide a service, give me a nice meal, take money from me at the spa. But nobody is building a relationship. And that’s a big failing.”
The consequences compound over time. Repeat guests continue booking through OTAs because nobody at the hotel thought to convert them to direct bookers. The CRM flags a returning customer, but the front desk never acts on it. The commission bleeds out again and again for the same guest, with the hotel paying each time for a relationship it could have owned.
How did we get here?
Rosenberg traces the roots of the problem to the late 1990s, when the internet first opened up new marketing possibilities. Hotels, he recalls, treated their websites as digital brochures and assumed that simply having an online presence would generate bookings. They cut their marketing budgets, neglected SEO, and failed to promote their own channels. The OTAs, by contrast, invested aggressively in digital marketing and filled the vacuum.
“The OTAs came along at exactly the right time,” Rosenberg said. “They became clever marketers. The hotels sat back and thought, the bookings are coming in through the OTAs, so we don’t really need to do much anymore. They cut back on their own marketing spend, and that’s when the dependency set in.”
He cited industry commentators who suggest hotels should be investing five to seven per cent of turnover in marketing. Most, he said, are spending three per cent or less. That gap has allowed OTAs to consolidate their grip.
Legal challenges have done little to alter the balance. Rate parity clauses have been contested across Europe, and class actions have been filed against major OTAs in several countries. But Rosenberg sees a paradox in the approach. Hotels are suing the platforms they continue to depend on for distribution, and any penalties imposed will likely be funded by the very commissions those hotels are paying in the interim. “You’re actually paying for them to be able to pay you back,” he observed.
A video-first alternative
Rosenberg’s response has been to build Overseas Info TV, a zero-commission, video-first discovery platform designed to connect travellers directly with hotels and tour operators. The idea, which he first conceived in 2008, was rooted in a simple observation: families spending £5,000 or more on a holiday deserve to see what they are actually getting, and video delivers a level of honesty that photographs and written reviews cannot match.
“Photographs can be doctored,” he said. “And most hotel photos are dead. Empty dining rooms, empty bars, empty pools. Video brings it all to life. People want reality. They’re not looking for full-blown productions.”
He pointed to the problem of fake reviews as further justification for the video approach, noting that TripAdvisor itself has acknowledged finding around two million fraudulent reviews per year. Video, while not entirely immune to manipulation, raises the bar considerably.
The platform operates on a flat annual fee rather than commission, with three pricing tiers starting at €300. The logic, Rosenberg explained, is that an upfront commitment encourages hotels to actively participate, whereas a commission-only model creates passivity. “If they’re only paying when an OTA sells a room, what are the hotels actually doing? There’s no partnership in that. Good business is where both sides work together.”
The AI question
The rise of AI-powered booking agents introduces a new dimension to the debate. As tools such as ChatGPT, Gemini and Perplexity begin to influence how travellers research and eventually book their holidays, the question of who captures that relationship becomes urgent.
Rosenberg acknowledged that the major OTAs will invest heavily to ensure AI agents route traffic through their platforms. But he sees a window for properties and smaller platforms that invest in their own AI-readiness. He noted that despite its modest scale, Overseas Info TV has performed well in AI visibility checks, with ChatGPT in particular citing the platform’s video content, independence and direct-booking model as reasons for recommendation.
Whether AI agents will ultimately entrench OTA dominance or open new pathways for direct booking remains an open question. But Rosenberg’s view is clear: hotels that fail to invest in their own digital presence and AI optimisation will find themselves locked out of yet another distribution channel. “They can intercept it,” he said of the AI opportunity, “but they have to put the effort in.”
A sustainability argument
There is a growing case for framing direct booking as a matter of social responsibility. When a traveller books through an OTA, a significant share of their spending exits the destination economy before it can circulate locally. That money does not pay local taxes, employ local staff, maintain local infrastructure or fund the services on which both residents and visitors depend.
Turkey has already taken regulatory action, restricting domestic OTA bookings in part to prevent locally earned income from flowing offshore to platform shareholders. These conversations, Rosenberg noted, are now playing out across Europe and beyond.
“It’s all about sustainability,” he said. “I’m a businessman. If you make an investment and grow a business, of course you’re entitled to make money. But it should be fair.”
The direct booking movement may not displace the OTAs. Rosenberg is realistic about that. But he believes incremental change is both possible and necessary, and that governments, destination management organisations and the industry at large need to start treating economic leakage with the seriousness it deserves. It is, as he put it, a conversation too many conferences are reluctant to have, for fear of upsetting the major platforms.
If tourism is to become genuinely sustainable, the flow of money through the system matters as much as the flow of visitors. And right now, far too much of it is draining away.
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To learn more about Overseas Info TV and its zero-commission discovery platform, visit www.overseasinfo.tv
This article is based on an interview with Martin Rosenberg for the Balancing Tourism Podcast.
Royal Pacific Hotel
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This city hotel enjoys a convenient location, 8 km from the city centre. The establishment is well connected to all parts of the city, with Artarmon railway station lying just 1 km away. The hotel itself is located on the lower north shore of Sydney and is an appropriate base from which to witness the attractions of the city. It is near to the central business district and is especially convenient for the business traveller. Chatswood is 1.5 km away and Sydney Airport is some 15 km from the accommodation.
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The hotel has 65 rooms, which are located on 7 storeys and are reachable by lift. The friendly staff at the reception desk are happy to answer any questions. Amenities include a baggage storage service. Wireless internet access (no extra charge) allows guests to stay connected while on holiday. The hotel has wheelchair-accessible facilities. Additional facilities include a TV room. Guests arriving by car can park their vehicles in the car park. Further services and facilities include room service, a laundry service and a coin-operated laundry. Complimentary newspapers are available.
Rooms
Air conditioning and individually adjustable heating ensure that rooms maintain comfortable temperatures. Rooms include a double bed. An extra bed is available for a fee. A desk is provided. Additional features include a refrigerator, a microwave and a tea/coffee station. An ironing set is provided for guests' convenience. A direct dial telephone, a television with satellite/cable channels, a DVD player and WiFi (for a fee) are provided as well. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer. For extra comfort in the bathrooms, guests are offered cosmetic products. The hotel has family rooms and non-smoking rooms.
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The sports and entertainment facilities at the hotel ensure that guests have plenty of activities to choose from during their stay. Guests can enjoy a refreshing swim in the outdoor pool area. There are many ways to relax or stay active at the hotel, including a gym and aerobics.
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Dining facilities include a restaurant, a dining room, a café and a bar. A delicious breakfast provides energy for the rest of the day.
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The following credit cards are accepted at the hotel: American Express, VISA, Diners Club and MasterCard.
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Hotel Casa del Mar
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This adults-only boutique hotel lies at the heart of Santa Monica and has great romantic views. Transfer time to Huatulco airport is around 25 minutes.
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The resort has 23 junior suites, 2 suites, apartments, studios, 8 single rooms and 13 double rooms. Check-in and check-out are possible at any time at the 24-hour reception desk. Services and facilities include a cloakroom, a safe, a currency exchange service, room service and a conference room. Wireless internet access allows guests to surf the internet and catch up on email. A garden provides extra space for rest and relaxation in the open air. Guests arriving by car can park their vehicles in the car park.
Rooms
Air conditioning ensures that rooms maintain comfortable temperatures. A balcony is included as standard in some rooms. Rooms have a double bed or a king-size bed. A safe and a minibar are also available. Additional features include a refrigerator and a tea/coffee station. A washing machine is provided for guests' convenience. A direct dial telephone, a television with satellite/cable channels and WiFi are provided as well. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer.
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The outdoor pool complex provides invigorating refreshment. Sun loungers and parasols on the terrace invite guests to relax and unwind. The hot tub in the pool area promises pure relaxation. For guests who wish to keep active, golf and horse riding are available. With windsurfing, jet skiing, motorboat rides, diving and aquafit available, fans of water sports will have plenty to choose from. The fitness rooms are perfect for a comprehensive workout. A spa, massage treatments and solarium are available in the wellness area.
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The resort accepts the following credit cards: American Express, VISA, Diners Club and MasterCard.
Fiesta Americana Acapulco Villas
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This hotel is situated in the tourist centre of Acapulco. Located just a few minutes from the centre of the city with its numerous pubs, restaurants and a lively nightlife. The public transport network is easily reached on foot.
Facilities
The property includes 324 villas/houses as well as 324 rooms. The reception desk is open round the clock. To ensure guests a comfortable and relaxing stay, the hotel provides various services and facilities, including room service, a conference room and a business centre. Wireless internet access (for a fee) allows guests to stay connected while on holiday. A lift and wheelchair-accessible facilities are available. There are also a number of shops that make for great strolling and browsing. Children can enjoy the playground. Parking facilities available to guests include a garage (for a fee) and a car park (for a fee).
Rooms
Air conditioning and individually adjustable heating ensure that rooms maintain comfortable temperatures. A balcony is included as standard in some rooms. Valuables can be securely stored in a safe. Extra comforts include a tea/coffee station. An ironing set is provided for guests' convenience. Other features include a direct dial telephone, a television with satellite/cable channels and WiFi. Bathrooms are equipped with a shower and include a hairdryer. The hotel has family rooms and 221 non-smoking rooms.
Sports/Entertainment
The outdoor pool complex includes a children's swimming area and is ideal for working out or just relaxing. The sun loungers are perfect for soaking up some sun. The hot tub in the pool area promises pure relaxation. Leisure activities available for a fee at the hotel include a gym and massage treatments. The hotel offers an entertainment programme for adults.
Meals
Various dining options are available, including a non-smoking restaurant, a dining room and a bar. At breakfast, guests serve themselves at the generous buffet. Various dishes can be ordered à la carte for lunch and dinner.
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