How Much Should Hotels Spend to Win Direct Bookings?

How much should hotels pay for direct bookings?

How much do Indonesian hotels and villas spend to secure a direct booking? Its size is determined by the rate of the OTA commission, fees for processing payments and the cost of attracting guests directly.

Jason Kemp from Kiyo offers tips on how to calculate break-even acquisition cost in this simple, practical guide using a fictional six-villa property, Indonesian booking research and published fees from Midtrans and DOKU.

The Million Rupiah Question

If a digital agency promises to get direct bookings for about Rp500,000 each for a villa owner in Canggu, how does the owner know if the price is a good deal? If the owner and his manager cannot calculate the maximum amount they should be willing to spend, how can they possibly make an informed decision?

Payment processing fees can alter the equation

How much processing you do can have a large impact on what your property can afford to spend on direct acquisition.

This article compares card payments with bank transfers via virtual accounts with the example of a booking of Rp6.6 million. Card fee is 2.9% + Rp2,000 via Midtrans. Virtual-account fees are about Rp4,000 via the providers we’re looking at (DOKU has Rp4,500 for BCA).

The suggested figures show that the difference between card and virtual account processing could be as high as Rp190,000.

That difference could be added to the customer acquisition budget, or help fund a direct-booking benefit.

However, there are two important caveats as the article points out:

Published payment processing fees may not include VAT, depending on the provider’s terms and applicable laws. The property should verify the final charge directly with the payment provider.

It's not possible to insist all customers pay by bank transfer when international guests may want to pay by card.

The pragmatic approach to offering options is to make the cheaper payment options clear, but keep the convenient options for guests.

How to Use the Break-Even Ceiling

The calculated break-even ceiling can be used in decision making on marketing proposals.

Operators should compare the expected cost per booking to the ceiling for that booking’s value and payment method before approving a campaign. They should also track actual acquisition costs, rather than relying solely on an agency's projections.

With this calculation operators can consider whether to factor in paid advertising, direct-booking discounts and loyalty benefits. Consider the cost of each incentive, along with payment processing and other direct channel specific expenses.

The result is a more complex view of marketing activity – rather than asking if direct bookings are cheaper in general, owners can ask if a specific campaign will deliver bookings at a cost that makes sense financially for their property.

Conclusion: Know Your Figure Before You Spend

Direct bookings for hotels and villas in Indonesia can help reduce the dependence on OTA commissions, but direct guests don’t come for free.

The first step is to find out the break-even acquisition ceiling for a similar stay. OTA commission rates, payment processing fees and marketing costs will affect the results.

Knowing a property’s ceiling allows it to evaluate advertising offers, discounts and payment options based on real figures, rather than assumptions. This will make it easier to identify campaigns that improve booking profitability and avoid spending more than a direct booking is worth.

This is a common predicament for independent hospitality operators – many know their OTA commission rate, but have never worked out the real value of securing a guest direct.

Without this figure it is much harder to make marketing decisions. Some properties overspend on direct guest acquisition, and some don't do any direct marketing at all because they think it should be free.

A better approach is to set a break-even ceiling for each direct booking. This provides hotel owners with a practical benchmark when evaluating advertising campaigns, discounts and loyalty benefits.

The OTA Commission Is a Cost, Not a Penalty

Online travel agencies provide exposure and access to customers that may have not otherwise found a property. Their commissions are one of the costs of this reach.

In a survey in August 2025, Katadata Insight Center of 542 Indonesian respondents found that 87.2% had used OTAs to book hotels or accommodation.

OTA commissions are often cited in the 15%–20% range as a general rule of thumb, based on published European research. However, commission rates in Indonesia can vary and promotional programs can increase the effective cost.

Hotel owners should not benchmark internationally but should use their own OTA contracts and booking statements for an accurate comparison.

The basic idea is simple – the commission a property would pay for a similar OTA booking provides a benchmark for how much it can spend to get that booking directly.

How to Calculate Break Even Cost of Direct Bookings

To calculate break-even, you compare the cost of getting the same booking through an OTA vs. through direct means.

OTA commission - fee for direct payment processing Break-even direct acquisition cost

This calculation compares for a similar stay:

OTA Cost = Booking value * OTA commission rate.

Direct payment cost: The booking value multiplied by the payment-processing rate, plus any fixed transaction fee.

Break-even acquisition ceiling: OTA cost less direct payment cost.