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.
Novotel Solo
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Located in the city centre, this hotel is only a few minutes' walk to the shopping centre and the batik fabric market, as well as Sriwedari Park's restaurants and recreational facilities.
Facilities
141 rooms are available. Check-in and check-out are possible at any time at the 24-hour reception desk. The hotel provides a safe, a currency exchange service, a TV room, room service, a conference room and a business centre. Wireless internet access is provided in public areas. Guests arriving by car can park their vehicles in the car park.
Rooms
Air conditioning ensures that rooms maintain comfortable temperatures. Some rooms have a balcony, which gives guests additional space for rest and relaxation. Rooms have a double bed or a king-size bed. A safe and a minibar are also available. Additional features include a refrigerator, a mini fridge and a tea/coffee station. Equipped with a direct dial telephone, a television with satellite/cable channels and WiFi, the rooms provide many ways for guests to stay connected and entertained. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer. The hotel has family rooms and non-smoking rooms.
Sports/Entertainment
The outdoor pool complex provides invigorating refreshment. Sun loungers and parasols on the terrace invite guests to relax and unwind. A variety of refreshing drinks await guests at the pool bar. There are a variety of leisure facilities and services to choose from, including a gym, table tennis, billiards, callisthenics, a sauna and massage treatments. Parents can unwind while the kids can participate in an entertainment programme full of fun activities.
Meals
Various dining options are available, including a restaurant, a dining room, a breakfast room and a bar. Bed and breakfast is offered as a catering option. A continental breakfast gives guests many delicious reasons to rise and shine. At lunch and dinner, guests can order à la carte or choose a set menu.
Payment
The hotel accepts the following credit cards: American Express, VISA and MasterCard.
Emporio Acapulco
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This luxurious hotel is situated directly beside Diana Monument cross roads, around 30 minutes away from the international airport and 10 minutes from the congress centre. In addition, guests are within easy reach of one of the most beautiful attractions, Acapulco Bay.
Facilities
Units include 422 rooms located in a 14-storey main building and 2 auxiliary buildings. Check-in and check-out are possible at any time at the 24-hour reception desk. Amenities include a safe and a currency exchange service. Wireless internet access is provided in public areas. The hotel has wheelchair-accessible facilities and a lift. There are a number of shops as well. The grounds of the hotel feature a playground and a lovely garden. Guests arriving by car can park their vehicles in the car park. Further services include a babysitting service, medical assistance, translation services, room service (for a fee), a laundry service, a hairdresser and a coin-operated laundry.
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, a mini fridge and a tea/coffee station. An ironing set is provided for guests' convenience. A direct dial telephone, a television with satellite/cable channels, a radio and WiFi are provided as well. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer. Wheelchair-friendly rooms can be booked. The hotel has 24 non-smoking rooms.
Sports/Entertainment
Whether more active or in need of rest and relaxation, guests can unwind at the pool complex, which includes a children's area and a total of 3 swimming pools. Parasols on the terrace are also available. There is a poolside snack bar as well. For those who wish to stay active while on holiday, the hotel offers beach volleyball. The fitness rooms are perfect for a comprehensive workout. The hotel offers a range of facilities in the wellness area. Options include a spa and, for an additional fee, a sauna, a steam bath and massage treatments. Parents can unwind while the kids can participate in an entertainment programme full of fun activities.
Meals
Various dining options are available, including a dining room and a bar. Guests can indulge their palates at the non-smoking restaurant, which features air conditioning and a separate area for smokers. Catering options include bed and breakfast and full board. A generous breakfast buffet guarantees a great start to the day. At lunch and dinner, guests can choose between a buffet, à la carte and a set menu. Special meals, including diet meals, are also available.
Payment
The hotel accepts the following credit cards: American Express, VISA and MasterCard.
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This beach hotel is located in a quiet neighbourhood in Malinska.
Facilities
The hotel has a lift and features 155 non-smoking rooms. The friendly staff at the reception desk in the lobby are happy to answer any questions. Amenities include a safe and a currency exchange service. Wireless internet access in public areas allows guests to stay connected. Souvenirs can be purchased at the gift shop. The grounds of the hotel feature a playground and a lovely garden. Additional amenities include a newspaper stand, a TV room and a playroom. Guests arriving by car can park their vehicles in the garage or in the car park. Further services and facilities include a childcare service, room service, an alarm call service, a laundry service and a hairdresser. Lectures, presentations and meetings can be held in one of the 4 conference rooms.
Rooms
Rooms are equipped with air conditioning and central heating. Guests can enjoy the sea view from a balcony or terrace. All rooms are carpeted and include a king-size bed and a sofa bed. Children's beds and extra beds can be requested for younger guests. A safe, a minibar and a desk are also available. Guests will also find a mini fridge included among the standard features. A telephone, satellite television and WiFi ensure optimal comfort. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer. 5 family rooms are available for parents with children.
Sports/Entertainment
Guests can enjoy a refreshing swim in the outdoor pool area. A sun terrace, sun loungers, and parasols are available. The hot tub in the pool area promises pure relaxation. For guests who wish to keep active, tennis and crazy golf are available. A wide range of sports are available, including water sports such as water skiing and aquafit or, for a fee, diving. The fitness rooms are perfect for a comprehensive workout. There is a wellness area with a spa and a beauty salon and, for an additional fee, a sauna, massage treatments and a solarium. Additional leisure activities include an entertainment programme, a kids' club, a kids' disco and live music.
Meals
Dining facilities include 2 restaurants, a dining room and a bar. Half board can be booked. A delicious and varied buffet is prepared for breakfast and dinner. Gluten-free meals and vegetarian dishes can be prepared on request. Non-alcoholic beverages are available.
Payment
The hotel accepts the following credit cards: American Express, VISA, Diners Club and MasterCard.
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Hotel Villa Garden
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Corinthia Baška Sunny Hotel by Valamar
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Ask MeLocation
This hotel is located about 700 m from the centre of Krk.
Facilities
The hotel has a lift and features 431 rooms. The friendly staff at the reception desk in the lobby are happy to answer any questions. Amenities include a safe, a currency exchange service and a cash machine. Wireless internet access allows guests to stay connected while on holiday. Souvenirs can be purchased at the gift shop. Children can enjoy the playground. Additional amenities include a TV room and a playroom. Parking spaces are available to guests travelling by car. Other services include a childcare service, room service, a laundry service, a hairdresser and a hotel shuttle bus. A bicycle hire service gives guests the opportunity to explore the surrounding area independently.
Rooms
Air conditioning and central heating ensure that rooms maintain comfortable temperatures. Guests can enjoy the sea view from a balcony or terrace. All rooms are carpeted and include a double bed and a sofa bed. Separate bedrooms are available. Children's beds and extra beds can be requested for younger guests. A safe and a desk are also available. A telephone, satellite television and WiFi provide all the essentials for a comfortable holiday. A hairdryer and bathrobes are available in the bathrooms, which are equipped with a shower and a bathtub. Family rooms are available for parents with children.
Sports/Entertainment
There are indoor and outdoor pools and a children's swimming area. Pure relaxation in the hot tub (no extra charge), fun on the waterslide and refreshing drinks at the pool bar – guests will experience just how rich and varied a day in the water can be. A sun terrace, sun loungers, and parasols are available. The hotel offers an extensive outdoor sports programme, including cycling/mountain biking, tennis, beach volleyball, volleyball, basketball and crazy golf. Guests can take part in a comprehensive water sports programme, which includes windsurfing, kayaking and diving, with water skiing, banana boat rides, canoeing and sailing available for a fee. Sport and leisure facilities at the hotel include a gym and table tennis. There is a wellness area with a spa, a beauty salon and anti-ageing treatments and, for an additional fee, a sauna, a steam bath, massage treatments and a solarium. Leisure facilities include an entertainment programme, a kids' club and a kids' disco.
Meals
Dining facilities include an à-la-carte restaurant, a dining room, a breakfast room, a café and a bar. Catering options include bed and breakfast, half board, full board and all-inclusive. A generous breakfast buffet, lunch and dinner offer plenty of delicious variety. Special meals, including vegetarian dishes, are also available. The chefs prepare delicious specialities during the show cooking.
Payment
The hotel accepts the following credit cards: American Express, VISA, Diners Club and MasterCard.
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Verified BusinessHermitage Hotel Prague
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