Direct booking vs third-party platforms in budget hotels : the case of Nuwara Eliya, Sri Lanka
Jayaram, Diwyaprasad (2025)
2025
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https://urn.fi/URN:NBN:fi:amk-2025120532908
https://urn.fi/URN:NBN:fi:amk-2025120532908
Tiivistelmä
This thesis explores how budget hotels, guest houses and homestays in Nuwara Eliya balance direct bookings and online travel agencies. The main aim is to compare how these two channels perform in terms of visibility, profitability and long term customer relationships. The study is built on channel management theory, the Technology Acceptance Model and relationship marketing.
The empirical part is based on a survey of 35 decision makers, mostly owners and managers. The results show that, on average, 48.8 percent of bookings come from OTAs and 52.7 percent from direct channels, so most properties actually operate with a mixed structure. International oriented hotels report around 85 percent OTA share, while more domestic focused ones show only about 21.8 percent. The most common commission band is between 10 and 15 percent.
A key finding is that higher OTA share does not always mean lower profit. Hotels with profit margins above 30 percent often have a strong OTA presence, mainly because OTA guests, especially foreign travellers, accept higher fixed prices, while walk in guests tend to bargain. At the same time, direct bookings handled through WhatsApp and phone are clearly linked with repeat guests and stronger relationships. The study concludes that there is no single best channel. A balanced strategy, using OTAs for visibility and direct channels for loyalty and margin protection, seems to be the most sustainable approach for small accommodation providers in Nuwara Eliya.
The empirical part is based on a survey of 35 decision makers, mostly owners and managers. The results show that, on average, 48.8 percent of bookings come from OTAs and 52.7 percent from direct channels, so most properties actually operate with a mixed structure. International oriented hotels report around 85 percent OTA share, while more domestic focused ones show only about 21.8 percent. The most common commission band is between 10 and 15 percent.
A key finding is that higher OTA share does not always mean lower profit. Hotels with profit margins above 30 percent often have a strong OTA presence, mainly because OTA guests, especially foreign travellers, accept higher fixed prices, while walk in guests tend to bargain. At the same time, direct bookings handled through WhatsApp and phone are clearly linked with repeat guests and stronger relationships. The study concludes that there is no single best channel. A balanced strategy, using OTAs for visibility and direct channels for loyalty and margin protection, seems to be the most sustainable approach for small accommodation providers in Nuwara Eliya.