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.
Hilton La Jolla Torrey Pines
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The beach hotel sits atop the bluffs of La Jolla, overlooking the legendary Torrey Pines golf course and the majestic Pacific Ocean. Nearby places of interest include Sea World (15.5 miles away), Birch Aquarium at Scripps (4 miles away), La Jolla Cove (6 miles away), University of California-San Diego (3 miles away) and Torrey Pines state beach (5 miles away). The golf hotel is also conveniently located just 15 miles from the San Diego International Airport and Downtown, and only minutes from La Jolla and Del Mar.
Facilities
394 rooms and 17 suites are located on 4 storeys and can be reached by lift. The friendly staff at the reception desk are happy to answer any questions. Amenities available at the hotel include a baggage storage service, safe, currency exchange service and cash machine. Wireless internet access (no extra charge) is provided in public areas. The tour desk offers assistance with booking excursions. The hotel has wheelchair-accessible facilities. There are a number of shops, including a supermarket. A garden provides extra space for rest and relaxation in the open air. Additional amenities include a newspaper stand and 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 page service. Complimentary newspapers are available.
Rooms
Air conditioning and individually adjustable heating ensure that rooms maintain comfortable temperatures. Most of rooms include a balcony or terrace as a standard feature. An extra bed is available for a fee. A safe, a minibar and a desk are also available. Additional features include a refrigerator 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 and WiFi (for a fee). A turndown service provides guests with additional comfort in the evening hours. A hairdryer and bathrobes are available in the bathrooms, which are equipped with a shower and a bathtub. For extra comfort in the bathrooms, guests are offered cosmetic products. Guests can also book wheelchair-friendly rooms with wheelchair-accessible bathrooms. The hotel has family rooms and non-smoking rooms.
Sports/Entertainment
Guests can enjoy a refreshing swim in the outdoor pool area. Refreshing drinks at the pool bar and a relaxing soak in the hot tub offer the perfect way to unwind. Comfortable sun loungers are available on the terrace. For guests who wish to keep active, tennis and golf are available. With water skiing, jet skiing and diving available, the hotel also caters to water sports enthusiasts. Sport and leisure facilities at the hotel include a gym and aerobics. A wellness area with a spa is available at the hotel. 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 (with high chairs), a café and a bar. In addition to breakfast, the hotel also offers lunch and dinner à la carte.
Payment
The hotel accepts the following credit cards: American Express, VISA and MasterCard.
Agora
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Best Western Plus Sunset Plaza
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This hotel is located in the heart of Los Angeles.
Facilities
The hotel has a lift and features 100 rooms. The friendly staff at the reception desk are happy to answer any questions. Amenities include a baggage storage service and a safe. Wireless internet access (no extra charge) allows guests to stay connected while on holiday. The tour desk offers assistance with booking excursions. Wheelchair-accessible facilities are available. A garden provides extra space for rest and relaxation in the open air. Additional facilities include a library. Parking spaces are available to guests travelling by car (for a fee). Other services include room service, a laundry service and a coin-operated laundry. Complimentary newspapers are available.
Rooms
Rooms feature a kitchen and a bathroom. Air conditioning ensures comfortable temperatures. Children's beds can be requested for younger guests. A safe and a desk are also available. Additional features include a refrigerator, a mini fridge, a microwave and a tea/coffee station. An ironing set is provided for guests' convenience. A telephone, a TV, a radio, an alarm clock and WiFi are provided as well. Bathrooms are equipped with a shower and a bathtub, as well as a hairdryer. Wheelchair-friendly rooms with wheelchair-accessible bathrooms are also available. The hotel has family rooms and non-smoking rooms.
Sports/Entertainment
The sports and entertainment facilities at the hotel ensure that guests have plenty of activities to choose from during their stay. The outdoor pool complex is ideal for exercise and relaxation. A sun terrace is a great place to while away the hours. Leisure activities available at the hotel include a gym. In addition, golf is are offered by third-party operators.
Meals
Dining facilities include a restaurant, a dining room, a breakfast room and a bar. Bed and breakfast can be booked.
Payment
The following credit cards are accepted: VISA, AMEXCO, Diners Club and MasterCard.
Maclean Bruce
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SponsorGlasgow City Chambers
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SponsorItaly - Live In The Moment
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Chalet del Sole
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The hotel lies at the bottom of Monte Genevris in Sauze d'Oulx, with direct access to the ski slopes. The resort consists of 400 km of ski area, with more than 200 ski slopes. There is a spa centre within 900 metres of the hotel and the city of Turin is an hour’s drive away.
Facilities
The family-friendly hotel has 6 rooms, including 5 junior suites and double rooms. The friendly staff at the reception desk are happy to answer any questions. Services and facilities include a baggage storage service and a TV room. Wireless internet access in public areas allows guests to stay connected. Guests arriving by car can park their vehicles in the car park.
Rooms
The family-friendly hotel's rooms feature central heating. Some rooms have a balcony, which gives guests additional space for rest and relaxation. Children's beds can be requested for younger guests. A TV ensures additional comfort. Bathrooms are equipped with a shower and a hairdryer. Family-friendly hotel has non-smoking rooms.
Sports/Entertainment
The pool complex promises pleasant and carefree swimming. Fine weather can be enjoyed on the terrace.
Meals
Various dining options are available, including a restaurant (with high chairs), 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 guarantees a great start to the day. At lunch and dinner, guests can choose between à la carte and a set menu. Family-friendly hotel also offers special catering options.
Payment
VISA is accepted as payment the family-friendly hotel.
Qinn Hotels
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Savoia Hotel Rimini
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The hotel is located on the coastline of Rimini, close to the beach and about 1 km from the train station.
Facilities
The hotel has a lift and features 110 non-smoking rooms. The friendly staff at the reception desk in the lobby are happy to answer any questions. A safe, a TV room, a childcare service, room service, a conference room and a business centre are available. 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 garage or in the car park. A bicycle hire service provides all the necessary equipment for exploring the surrounding area.
Rooms
Air conditioning and central heating ensure that rooms maintain comfortable temperatures. Guests can enjoy the sea view from a balcony or terrace. Rooms include a double bed. Children's beds can be requested for younger guests. A safe and a minibar are also available. Guests will also find a mini fridge included among the standard features. Equipped with a telephone, a TV, a radio and WiFi, the rooms provide many ways for guests to stay connected and entertained. Bathrooms are equipped with a shower and a hairdryer. Family rooms are available for parents with children.
Sports/Entertainment
Guests can work out or just relax in the outdoor and indoor pools. Kids can splash about in a special swimming area just for them. Sun loungers and parasols are available on the sun terrace. A variety of refreshing drinks await guests at the pool bar. Leisure options at the hotel include cycling/mountain biking, a spa and a sauna. For a fee, guests can also enjoy a steam bath and massage treatments. A dance club offers fun and entertainment.
Meals
Various dining options are available, including an à-la-carte restaurant, a dining room, a café and a bar. Half board is offered as a catering option. A generous breakfast buffet and dinner are served every day.
Quality Hotel Entry
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This hotel is located in Oslo. The nearest airport is Oslo (OSL).
Facilities
A pleasant ambience awaits guests in 155 non-smoking rooms. A conference room is available to guests. Wireless internet access is provided in public areas. Guests arriving by car can park their vehicles in the car park.
Rooms
A range of amenities complete the standard furnishings. Amenities include a mini fridge and WiFi.
Sports/Entertainment
Additional amenities include an entertainment programme for children with a number of fun activities.
Meals
The hotel includes a restaurant and a dining room. Bed and breakfast can be booked.
SponsorWine Tasting In Dubrovnik
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Scandic Byporten
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This hotel lies at the heart of Oslo and offers direct access to the main train station. Its convenient location ensures that the hotel is good point of departure for exploring all areas of Norway's splendid capital city. The famous Karl Johann Street begins right in front of the hotel. It is a 45-minute train journey to Oslo's airport, or 20 minutes by taxi.
Facilities
Guests have a choice of 239 non-smoking rooms. The reception desk in the lobby is staffed round the clock. Services and facilities include a 24-hour security service, a laundry service and 2 conference rooms. Wireless internet access is provided in public areas (no extra charge). There are a number of shops as well. A garage is available for parking (for a fee). A bicycle hire service provides all the necessary equipment for exploring the surrounding area.
Rooms
Amenities include a desk, an ironing set, a TV and WiFi (no extra charge). A hairdryer is provided in the bathrooms. Cosmetic products ensure additional comfort. Wheelchair-accessible rooms can also be booked. Family rooms are available for parents with children.
Sports/Entertainment
Fine weather can be enjoyed on the terrace. After an eventful day, guests can work out and recharge in the gym.
Meals
Various dining options are available, including a bar and a lobby bar. A generous breakfast buffet guarantees a great start to the day. Gluten-free meals, vegetarian dishes, organic food and lactose-free food can be prepared on request.
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