do hotels favor cpa or cpc? is there any study about this?
The hotel industry is sharply divided between CPA (Cost-Per-Acquisition / Commission) and CPC (Cost-Per-Click).
- Psychologically and operationally, most hotel owners and general managers heavily favor CPA (specifically Pay-Per-Stay) because it eliminates financial risk.
- Financially and strategically, revenue managers, large hotel chains, and specialized hospitality agencies favor CPC (or Target ROAS) because it yields a significantly lower effective cost of distribution and higher booking volume.
Several major studies and benchmark reports from hospitality research firms—including Kalibri Labs, Mirai, Koddi, and Triptease—illustrate why this gap between preference and profitability exists.
The Fundamental Divide: Why Hotels Lean Toward CPA
In surveys and client data across hotel tech providers (such as Mirai, Cloudbeds, and Sojern), independent hotels and smaller operators consistently choose CPA whenever it is available:
- The "Accounting Trick" (Marketing Expense vs. Distribution Cost):
- As hospitality consultancy Mirai has documented, in a hotel’s Uniform System of Accounts (USALI), CPC is classified as a Sales & Marketing line-item expense. It requires upfront budget sign-off and sits on an operational P&L ledger that general managers hesitate to increase.
- CPA is classified as a Cost of Distribution / Commission (treated as a deduction from gross room revenue, identical to an OTA commission). Hoteliers do not need board or ownership approval to spend "unlimited" commission, making CPA friction-free internally.
- Cancellations and Length of Stay: Travelers frequently book hotel rooms with flexible policies and cancel them later (average hotel cancellation rates hover between 20% and 40%). With pure CPC, the hotel pays for the click regardless of whether the guest cancels or no-shows. Under a net CPA/Pay-per-stay model, the platform absorbs that loss.
What the Empirical Studies and Data Show
1. Koddi: The CPA "Control Penalty" and Volume Gap
In a comprehensive benchmark study on cost models in metasearch, marketing technology firm Koddi analyzed client migrations between CPA and CPC models:
- The Finding: While CPA guaranteed a predictable return metric, it acted as a governor on total revenue and impression share. When publishers (like Google, Trivago, or TripAdvisor) run CPA auctions, they internally de-prioritize commission bids during high-demand or low-converting periods to protect their own yield.
- The Result: Properties running actively managed CPC campaigns achieved consistently higher impression volume, higher direct click share, and lower net acquisition costs than those on fixed CPA tiers. Koddi concluded that CPA works best for risk-averse brands without optimization resources, but it caps growth potential.
2. Kalibri Labs: The Real Cost of Direct Acquisition
Kalibri Labs, led by Cindy Green and Mark Lomanno (in collaboration with the Cornell Center for Hospitality Research), conducted landmark research analyzing over 25,000 hotels and hundreds of millions of transactions to track the Net RevPAR (revenue after distribution costs) across direct and indirect channels:
- The Finding: Direct bookings acquired via paid search and metasearch (CPC) cost an average of 4% to 9% in total direct acquisition costs (including click costs and engine fees).
- Comparison to Commission: Third-party commissions (OTAs) cost between 15% and 25%, while platform CPA/commission models typically sit at 10% to 15%.
- Conclusion: Hoteliers often prefer commission-based channels out of a misconception that they are "safer," even though the actual mathematical drag on net room profitability is twice as high as running a disciplined, paid-per-click marketing program.
3. Mirai & Triptease: ROAS and Conversion Thresholds
Studies by Mirai (benchmarking over 1,000 hotels across Europe and the Americas) and Triptease examined the breakeven math between CPC and Commission:
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When a hotel possesses good rate parity (direct rate is equal to or cheaper than OTAs) and a decent booking engine conversion rate (above 2.5%–3.0%), CPC consistently beats CPA by 30% to 50% in net return:
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On a $1,000 booking, a standard 12% CPA model costs the hotel $120.
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On CPC, if clicks average $1.50 and the site converts at 3%, it takes ~33 clicks to generate the booking: 33×$1.50=$49.5033 × $1.50 = \mathbf{$49.50}33×$1.50=$49.50 (an effective distribution cost of under 5%, or a 20x ROAS).
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The Reversal: If the hotel has poor rate parity or a substandard mobile checkout (CVR drops below 1.2%), the CPC model quickly becomes unprofitable, spending $125+ per booking. In that specific scenario, CPA acts as a safety net.
Comparative Overview
| Dimension | Cost-Per-Acquisition (CPA / Commission) | Cost-Per-Click (CPC / Smart Bidding) |
|---|---|---|
| Industry Preference | Favored by independent properties, boutique hotels, and operators without marketing teams. | Favored by chains, asset managers, and revenue agencies (e.g., Marriott, Hilton, Accor). |
| Financial Risk | Zero. Costs only occur on realized revenue. | Moderate to High. The hotel pays upfront and absorbs cancellations. |
| Typical Cost of Sale (CoS) | Fixed at 10% – 18% (higher effective cost). | Variable; typically 4% – 8% when optimized. |
| Auction Visibility | Platform-controlled. The ad may be suppressed if conversion probability dips. | Direct control over bids, position, and impression share. |
| Management Effort | "Set-and-forget" / low operational overhead. | Requires continuous bid adjustments, parity tracking, or smart ML targets. |
Summary Takeaway
Hotels instinctively prefer CPA because it fits their legacy accounting structure, acts like an OTA commission, and carries zero cash-flow risk. However, every empirical study confirms that hotels leave money on the table with CPA.
For any property with a modern booking engine and solid rate parity, CPC (or Target ROAS) delivers 30%–60% higher net margins and significantly more booking volume than fixed-percentage commission models.