notitur.com August 24, 2026

Distribution

Merchant model

In the merchant model, the OTA charges the guest upfront and then pays the hotel its net rate, keeping the difference. The hotel gives up control of the payment and the guest data in exchange for volume. It is Expedia's typical model and contrasts with the agency model, where the hotel does the billing.

Example In the merchant model, the guest pays Expedia and the hotel receives its net after check-out.

Related terms

Distribution

Agency model

In the agency model, the guest pays at the hotel and the hotel later settles the commission with the OTA. The...

 Distribution

OTA

An online travel agency is a channel that sells accommodation and travel online in exchange for a commission....

 Distribution

Commission

Commission is the percentage a channel keeps for each booking it brings the hotel. It is the cost of selling...

 Distribution

Wholesaler

A wholesaler or bedbank buys rooms at a net rate and resells them to agencies, tour operators and other OTAs...

FAQ

What is the merchant model in travel and hospitality?
The merchant model is a hotel distribution system where the online travel agency (OTA) charges the customer the full room price upfront and then pays the hotel a pre-negotiated net rate, keeping the difference as profit. For example, if a hotel sets a net rate of 80 euros and the OTA sells the room for 100 euros, the OTA retains 20 euros.
How does the merchant model work in practice?
In the merchant model, the OTA handles the customer payment and transaction management, while the hotel receives payment from the OTA later, usually after deducting the agreed margin. This means the hotel gives up control over the booking process and customer data in exchange for increased exposure and volume.
How is the merchant model different from the agency model?
The key difference is who collects the payment from the customer: in the merchant model the OTA collects it and then pays the hotel, whereas in the agency model the hotel collects it and then pays a commission to the OTA. Additionally, in the merchant model the hotel does not receive the customer's contact details, unlike the agency model where it does.

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