Merchant Model

What is the definition of OTA Merchant Model in the hotel industry?

In hotel revenue management when speaking about a Merchant Model, we are mentioning to the saleable model of an OTA (online travel agency). The main characteristic of a Merchant Model OTA is that the guest wages the OTA at the time of reservation of a room, and the OTA afterwards pays the hotel when the real stay happens.

In this case hotels give the OTA a net rate, to which a mark-up is applied to regulate the sell rate to the end consumers. Usually the mark-up or brim for the OTA is determined in the spreading partnership contract between the hotel and the OTA.

Third party websites that use the OTA Merchant Model, or merchant rate package, include Expedia, Priceline, Agoda and Getaroom.com. On these websites the hotels obtain a so-called desired (direct) listing, and the hotel property is placed above product foundations from other providers.

Beside the BAR (best available rate) Merchant Model OTA also offer extra advertising rate levels, for hotels to appeal more demand. Examples are concessions for dynamic packages, permitting the OTA to package the hotel room composed with a flight or car rental, creating competitive proposals.