What Is a Booking Fee?

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How it works

When a guest makes a reservation on an OTA, the platform automatically calculates and adds the booking fee to the total amount due at checkout. This fee serves as a primary revenue source for the OTA, covering marketing, technology, and support services.

For direct bookings, hosts can use a platform like Lodgify to add a custom booking fee to cover their administrative costs or payment processing charges through their own booking engine. The fee can be a fixed amount or a percentage of the reservation value.

Why it matters

Booking fees directly impact the final price a guest pays and the total revenue a host receives. For hosts, understanding how OTAs apply these fees is crucial for competitive pricing and accurately forecasting revenue.

By offering direct bookings without a guest-facing booking fee, hosts can provide a price advantage and encourage guests to book directly, increasing their profit margins.

Examples

• An OTA charges a guest a 14% 'guest service fee', which is a type of booking fee, on top of the nightly rate and cleaning fee.
• A property management company adds a 5% booking fee to all reservations made through its direct booking website to cover the cost of its reservation staff and software.
• A host lists their property on a platform that charges them, the host, a 3% commission on the booking total as a host-side booking fee for every reservation.
• A guest finds the same property listed on an OTA and on a host's personal website. The total is $50 cheaper on the direct site because the host absorbs the payment processing costs instead of charging a separate booking fee.