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.
Fusion Boutique Hotel
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Located in the heart of San Francisco, this hotel is located at the heart of all that guests will want to do and see in the city. They can catch a cable car to Chinatown or Fisherman's Wharf; or experience the arts just a few blocks away at Yerba Buena Center for the Arts. Sports enthusiasts can catch a ballgame at AT&T Park and connoisseurs can take a walk to the Ferry Building Marketplace where food senses will come alive.
Facilities
The hotel has a lift and features 124 rooms. The 24-hour reception desk makes arrival and departure effortless. Valuables can be stored safely and conveniently in the safe. Wireless internet access allows guests to stay connected while on holiday. Guests arriving by car can park their vehicles in the car park.
Rooms
Air conditioning, central heating and a fan ensure that rooms maintain comfortable temperatures. 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. Other features include a direct dial telephone, a television with satellite/cable channels, a radio, an alarm clock and WiFi. A hairdryer and bathrobes are available in the bathrooms, which are equipped with a shower. Wheelchair-friendly rooms can be booked.
Sports/Entertainment
After an eventful day, guests can work out and recharge in the gym.
Meals
Various dining options are available, including a non-smoking restaurant, a breakfast room and a bar. A continental breakfast guarantees a great start to the day.
Payment
The following credit cards are accepted: American Express, VISA and MasterCard.
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Extended Stay America - San Jose - Morgan Hill
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This hotel is located in Morgan Hill. The nearest airport is San Jose - Municipal (SJC).
Facilities
92 rooms await guests at this hotel, which includes a reception desk. A laundry service is available to guests. Wireless internet access allows guests to stay connected while on holiday. Wheelchair-accessible facilities are available. Guests arriving by car can park their vehicles in the car park.
Rooms
Rooms are equipped with air conditioning. Rooms include a double bed. A refrigerator, a stovetop, a microwave and a tea/coffee station are standard features. A telephone, a TV and WiFi provide all the essentials for a comfortable holiday. The hotel has 61 non-smoking rooms and 1 smoking room.
Sports/Entertainment
The sports and entertainment facilities at the hotel ensure that guests have plenty of activities to choose from during their stay. There are many ways to relax or stay active at the hotel, including golf and a gym.
Meals
Bed and breakfast can be booked.
Masai Mara National Park
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SponsorThree Day Tour Of Eryri, Snowdonia, North Wales
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Days Inn San Diego Hotel Circle Near SeaWorld
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This family-friendly value-for-money city hotel is located on the famous Hotel Circle an around 5-minute drive from the beach and 10 minutes drive from the town centre.
Facilities
Units include 280 rooms located in a 3-storey main building and 2 auxiliary buildings. Staffed 24 hours a day, the reception desk provides a smooth check-in/check-out service. The hotel provides a cloakroom, a playroom, a conference room and a business centre. Wireless internet access in public areas allows guests to stay connected. The hotel has wheelchair-accessible facilities and a lift. Guests arriving by car can park their vehicles in the car park. Other services include a hotel shuttle bus.
Rooms
Air conditioning and individually adjustable heating ensure that rooms maintain comfortable temperatures. All rooms are carpeted and have a double bed or a king-size bed. Valuables can be securely stored in a safe. There is a fully-equipped kitchenette with a refrigerator, stovetop, microwave and 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. The hotel has non-smoking rooms and smoking rooms.
Sports/Entertainment
The pleasantly heated water of the outdoor pool area guarantees comfortable swimming. Parasols are available to guests. The hot tub in the pool area promises pure relaxation. There are many ways to relax or stay active at the hotel, including tennis, a gym and a spa. Additional amenities include an entertainment programme for children with a number of fun activities.
Meals
Various dining options are available, including a dining room, a café and a bar. A number of specialities await guests in the air-conditioned, non-smoking restaurant. A wide variety of dishes are served at all three main mealtimes. Guests can enjoy lunch and dinner as a set menu.
Payment
The hotel accepts the following credit cards: American Express, VISA, Diners Club and MasterCard.
Villablanca
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This beach hotel is situated in between Tangolunda Bay and Santa Cruz Bay, just 200 m from Chahúe Beach. Guests are around 10 minutes away from the centre of Huatulco. The surrounding area of the hotel features the restaurant Le Charlote, the tavern Citrix as well as the tourist centre of Huatulco. Cristobal Colón (Christopher Columbus) bus station, the handicrafts market as well as Plaza el Madero are all within a 5 minute drive. The golf course in Tangolunda as well as Playa la Entrega and Playa Maguey are approximately a 15-minute car journey away. In addition, Huatulco airport lies around 18 km from the hotel.
Facilities
61 rooms, including 16 junior suites, 6 suites, 8 single rooms and 30 double rooms, are available to guests in a 2-storey main building and a 2-storey auxiliary building. The 24-hour reception desk makes arrival and departure effortless. Services and facilities include a cloakroom, a safe, a currency exchange service, room service and a conference room. Wireless internet access allows guests to stay connected while on holiday. Wheelchair-accessible facilities are available. A garden provides extra space for rest and relaxation in the open air. Guests arriving by car can park their vehicles in the garage or in the car park. Bicycles can be kept in the bicycle storage area.
Rooms
Air conditioning ensures that rooms maintain comfortable temperatures. A balcony is included as standard in some rooms. All rooms are carpeted and include a double bed or a king-size bed. A safe provides secure storage for guests' personal property. Extra comforts include a tea/coffee station. Internet access, a direct dial telephone and a television with satellite/cable channels are provided as well. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer. Guests can also book wheelchair-friendly rooms with wheelchair-accessible bathrooms. Family-friendly hotel has non-smoking rooms.
Sports/Entertainment
The outdoor pool complex includes a children's swimming area and is ideal for working out or just relaxing. Sun loungers and parasols are available on the terrace, where guests can enjoy a quick break or relax for hours. The hot tub in the pool area promises pure relaxation. For guests who wish to keep active, tennis and golf are available. With windsurfing, jet skiing, motorboat rides, canoeing, sailing, catamaraning and diving available, fans of water sports will have plenty to choose from. After an eventful day, guests can work out and recharge in the gym. The wellness offerings the family-friendly hotel include a spa and massage treatments.
Meals
Various dining options are available, including a café and a bar. Guests can dine at the non-smoking restaurant, which includes a separate area for smokers (high chairs are available). Bed and breakfast is offered as a catering option. A continental breakfast buffet guarantees a great start to the day. At lunch and dinner, guests can order à la carte. Set menus are available at dinner. Family-friendly hotel also offers special catering options.
Payment
The following credit cards are accepted: American Express, VISA and MasterCard.
Extended Stay America - Santa Barbara - Calle Real
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This hotel is located in Santa Barbara. The nearest airport is Santa Barbara - Municipal (SBA).
Facilities
The hotel has 104 rooms and includes a lift and a reception desk. A laundry service is available to guests. Wireless internet access allows guests to stay connected while on holiday. Wheelchair-accessible facilities are available. Guests arriving by car can park their vehicles in the car park.
Rooms
Rooms are equipped with air conditioning. Rooms include a double bed. A fully-equipped kitchenette with a refrigerator, stovetop, microwave and tea/coffee station, as well as a complete set of utensils, is a standard feature. A TV and WiFi ensure optimal comfort. The hotel has 92 non-smoking rooms and 1 smoking room.
Sports/Entertainment
Active guests can enjoy golf.
Meals
Bed and breakfast can be booked.
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Embassy Suites San Diego La Jolla
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Conveniently located in the upscale neighbourhood of University Town Center, the business hotel is within walking distance to shops and restaurants. PETCO Park is approximately 14 km away, as is the famous Gaslamp Quarter. The nearest beach on the Pacific coast is just 5 km from the city hotel. It is also convenient to many of San Diego's major tourist attractions such as San Diego Zoo (12 km away), Qualcomm Stadium and the Old Town (both 8 km away), and San Diego Convention Center (14 km away). The business hotel provides easy access to San Diego International Airport
Facilities
340 suites are located on 12 storeys and can be reached by lift. Staffed 24 hours a day, the reception desk makes check-in and check-out easy. Services and facilities include a safe, a newspaper stand, room service, a laundry service, a conference room, a business centre and a coin-operated laundry. Wireless internet access allows guests to stay connected while on holiday. Souvenirs can be purchased at the gift shop. Guests arriving by car can park their vehicles in the car park. Services include a hotel shuttle bus.
Rooms
Rooms include air conditioning and individually adjustable heating. Rooms have a double bed, a king-size bed or a sofa bed. Separate bedrooms are available. A refrigerator, a microwave and a tea/coffee station are standard features. An ironing set is provided for guests' convenience. A telephone, a television with satellite/cable channels, a radio and WiFi (for a fee) are provided as well. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer. Wheelchair-accessible rooms can also be booked. The holiday village has 340 non-smoking rooms.
Sports/Entertainment
The indoor pool complex is ideal for relaxation and exercise. A sun terrace is a great place to while away the hours. The hot tub in the pool area promises pure relaxation. There are many ways to relax or stay active at the complex, including cycling/mountain biking, golf, a gym and a sauna. Parents can unwind while the kids can participate in an entertainment programme full of fun activities.
Meals
The complex includes a bar. The restaurant has air conditioning and high chairs for children. Bed and breakfast can be booked. A wide variety of dishes are served at all three main mealtimes. Guests can enjoy lunch and dinner as a set menu.
Payment
The following credit cards are accepted: American Express, VISA and MasterCard.
Positano
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SponsorThe Gower Guided Tour - Mumbles, Three Cliffs And Worms Head
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