Agency Model

Agency Model (also called the commission model) is an OTA distribution model in which the OTA acts purely as a booking agent: the guest pays the hotel directly, typically at check-in or check-out, and the hotel pays the OTA a commission after the stay.

How it works

1. The hotel loads a public rate (usually BAR) into the OTA.
2. The guest books on the OTA at that rate.
3. The guest pays the hotel directly during the stay.
4. After check-out, the hotel pays the OTA an agreed commission (typically 15–20%, sometimes higher with extras like Visibility Booster or Preferred Partner programs).

Pros for the hotel

• Direct guest relationship — the hotel collects the guest's data and payment
• Cash flow — the hotel receives revenue at the time of stay
• Simple reconciliation — single commission invoice from the OTA
• Easier upselling — the hotel can offer upgrades and add-ons at check-in

Cons for the hotel

• Higher cancellation risk — agency bookings are typically free cancellation
• No payment guarantee — credit card chargebacks and no-shows fall on the hotel

Agency model vs merchant model

• Agency — guest pays hotel, hotel pays OTA a commission
• Merchant — OTA charges guest, OTA pays hotel a net rate

Booking.com built its dominant position on the agency model, while Expedia historically favored the merchant model. Today, both OTAs offer both options to most hotels.