Revenue Retention

The distribution of revenue in the travel industry varies significantly depending on the product (hotels, flights, or packages) and the intermediaries involved. The following outlines the typical revenue retention percentages for each player in the value chain, based on a hypothetical $100 paid by the traveler.

1. Revenue Retention – Hotels

When travelers spend on accommodation, hotels typically retain a significant portion, up to 88% of the amount paid. The remaining share is distributed among various intermediaries.

• Supplier Retention: Hotels retain $85-88 out of every $100 paid by the traveler. This high retention encourages large hotel chains with the scale to build and operate direct distribution channels, aiming to bypass intermediaries.

• Intermediary Share (for every $100 paid by traveler):
  • Metasearch: These platforms typically take $2-3 (up to 3%) for directing traffic.
  • Agents (RTAs/OTAs): Their share can range from $3-15 (3% to 15%). The higher end of this range is notably more than their share in flight distribution.
  • Bed banks: These aggregators typically retain $7-8 (up to 8%) for their role in providing hotel inventory to agents.