Expedia Group (NASDAQ:EXPE) announced its Q1 2026 earnings on May 8, 2026, reporting revenue of $3.4 billion (+15% YoY), adjusted EBITDA of $542 million (+83% YoY), and a 15.8% margin — the highest Q1 profitability in the company’s past 15 years. Booking Holdings (NASDAQ:BKNG), which reported a week earlier, also maintained double-digit growth with $5.5 billion in revenue (+16%). The accelerating earnings expansion of the two global OTA giants reaffirms their dominance in the lodging reservation market, and at the same time provides an important opportunity for Japanese hotel operators, REIT IR managers, and investors who bear those commissions to re-examine their channel strategies.

This article presents economic evidence for the management challenge of “how far should OTA dependency be reduced” from six perspectives: (1) detailed comparison of Expedia/Booking’s latest earnings, (2) domestic OTA share as shown in the Japan Ryokan Association’s “FY2024 Business Conditions Statistical Survey,” (3) SG&A and sales commission levels of 7 major domestic hotel REITs, (4) OTA published prices for the 5 major cities compiled by MetroEngines Research, (5) estimated annual commission savings from raising direct booking ratio by 10 percentage points, and (6) investment payback scenarios.

Expedia / Booking Q1 2026 Earnings — The Two OTA Giants’ Profitability Expands Further

First, let us summarize the most recent earnings of Expedia Group and Booking Holdings, which dominate the global OTA market. Both companies released their Q1 results in late April to early May 2026, and the conclusion is that gross bookings, revenue, and EBITDA all beat market expectations.

Expedia recorded revenue of $3.4 billion (+15% YoY), gross bookings of $35.5 billion (+13% YoY), and adjusted EBITDA surging from $296 million to $542 million — an actual +83% jump. The Q1 margin of 15.8% is the highest quarterly level in the company’s past 15 years. Although the company does not disclose detailed figures by brand, B2B (Rapid API, Expedia TAAP, etc.) led the high growth with +25% revenue and +22% gross bookings, while consumer-facing brands (Brand Expedia, Hotels.com, VRBO) also significantly improved profitability with +8% revenue and an EBITDA margin of approximately 20% (+9 points). Operational efficiency gains from AI utilization and a new $5 billion share buyback authorization demonstrate the company’s serious commitment to shareholder returns.

Meanwhile, Booking Holdings posted revenue of $5.5 billion (+16%), gross bookings of $53.8 billion (+15%), room nights of 338 million (+6%), and adjusted EBITDA of approximately $1.3 billion (+19%). Despite a 2-point headwind from Middle East geopolitical risks, marketing expenses were maintained at the same level as the prior year (3.8% of gross bookings) while revenue expanded. US room nights are accelerating to “low teens” (low-double digits), Asia is up high single-digits, Europe mid-single digits, and other regions in single-digit negative due to Middle East weakness.

Source: Expedia Group / Booking Holdings Q1 2026 earnings releases, prepared by MetroEngines Research & Consulting

What stands out is the difference in EBITDA margin. Expedia at 15.8% vs. Booking at 23.6% ($1.3B / $5.5B) — Booking is 7.8 points higher. This stems from differences in their revenue models: Booking has long centered on the agency model (lodging facility collects payment directly from the customer and pays Booking a post-stay commission), resulting in a structure with lighter credit and customer service cost burdens. Expedia, by contrast, has a higher weighting toward the merchant model (OTA collects payment first), carrying higher SG&A and credit risk. Applied to the Japanese market, this implies that Booking is the more “economically usable” OTA, with correspondingly more room to raise commissions.

OTA Dependency in the Japanese Market — 44.9% Overall, 50.0% for Large Hotels

According to the Japan Ryokan Association’s “FY2024 Business Conditions Statistical Survey,” OTA share for ryokans and hotels in Japan is at the following levels.

Source: Japan Ryokan Association “FY2024 Business Conditions Statistical Survey,” prepared by MetroEngines Research & Consulting

Overall, OTA share is already close to half at 44.9%, and the larger the facility, the higher OTA dependency tends to be. In particular, large hotels see exactly half (50.0%) of reservations through OTAs, with direct bookings at only 19.4%. Meanwhile, luxury hotel chains in Europe and North America tend to have higher direct booking ratios, and Japanese hotels can be said to be structurally a market with high dependency on OTAs for customer acquisition.

Let us estimate the economic impact of this dependency structure. Assuming an OTA commission rate of 15% (weighted average of Rakuten 9.25%, Jalan 10%, overseas OTAs 12-18%, on an effective basis including payment fees and promotional cost burden), for large hotels, 50.0% × 15% = 7.5% of revenue flows out as commissions. For a mid-tier hotel with annual revenue of ¥1 billion, ¥75 million per year is paid to OTAs. This is a level that pushes down GOP (Gross Operating Profit) margin by 5-8 points and is by no means negligible.

Operating Performance of 7 Domestic Hotel REITs — Correlation Between Channel Strategy and Profit Margin

What about the operating performance of the 7 domestic hotel REITs held by institutional investors? The table below shows occupancy (OCC), ADR, and RevPAR based on monthly operating results as of February-March 2026. Details of each company’s SG&A and sales commission ratios are described in earnings reports and management reports (disclosed on a semi-annual basis), but the common trend is that “8-15% of room revenue equivalent” is recorded as sales agency fees and reservation commissions.

Source: Each REIT’s monthly operating data, prepared by MetroEngines Research & Consulting (as of February-March 2026)

As shown in the table, lodging-focused REITs (Invincible, Ichigo) maintain high occupancy of 87%+, while high-rate resort-type REITs such as Hoshino Resorts REIT and Mori Trust REIT remain in the 76-79% occupancy range. According to REIT disclosure materials, each company’s sales commissions and reservation service fees are disclosed as key components of hotel operating expenses based on operating agreements with the operating contractor (management company). Invincible Investment Corp. discloses a GOP of 38.9% (December 2024 period) for the 91 MHM-operated properties, which is a level evaluated as solid within the hotel industry average range of 30-40%. Raising GOP by 5 points requires cost reductions equivalent to 5% of annual revenue, and the most effective lever is the redesign of the channel mix — in other words, reducing OTA commissions.

Source: Each REIT’s monthly operating data, prepared by MetroEngines Research & Consulting (as of February-March 2026)

MetroEngines Proprietary Data — ADR Levels and Current Pricing State in 5 Major Cities

Looking at the 13-month ADR trends for 5 major cities (Tokyo, Osaka, Kyoto, Fukuoka, and Sapporo/Hokkaido) compiled by MetroEngines Research, which excels at real-time OTA price data collection, different patterns emerge for each city. The chart below shows ADR for each month in year-over-year comparison (2025 vs. 2026). Kyoto holds the highest level nationally at an ADR of ¥48,300 as of April 2026 (+14.6% YoY), supported by inbound recovery and cherry blossom season demand, maintaining the country’s top pricing power. Meanwhile, Osaka has entered a rebound phase from the Expo special demand, with April 2026 ADR at ¥26,000, only +4.5% YoY. Hokkaido recorded an ADR of ¥33,800 during the summer peak of August 2025, then declined to a range below ¥30,000 during the off-season (winter to spring).

Source: MetroEngines Research, prepared by MetroEngines Research & Consulting (N=Tokyo 1,777, Osaka 860, Kyoto 1,486, Fukuoka 729, Hokkaido 1,558 properties, as of April 2026)

The important point here is that these ADRs are “averages of selling prices published on OTAs,” not the net amount received by hotels (net ADR). If a 15% OTA commission is deducted, Kyoto’s displayed ADR of ¥48,300 becomes an effective net of ¥41,000, and Tokyo’s ¥36,800 becomes ¥31,300. On an annual basis, the reality is that commission burden per hotel facility amounts to tens of millions to hundreds of millions of yen. Note that our OTA published price data is on average +25 to +30% higher compared to the transaction-based ADR disclosed by REITs — this is due to the structure where unsold high-priced plans remain on OTAs, causing the average published price to skew higher than transaction prices. Therefore, the estimates in this article are based on conservative commission scales relative to actual conditions, and should be understood as conservative figures.

Another important observation is that displayed prices, inventory, and promotional campaigns differ by OTA. Even for the same hotel and same date, prices, availability, and benefits routinely differ across Rakuten Travel, Jalan, Booking.com, and Expedia. This is a very important element from a revenue management perspective, such as “multi-OTA optimization” and “impact on best rate guarantees.”

Estimated Annual Commission Savings from Raising Direct Booking Ratio by 10 Points

This section estimates annual commission savings from “raising the direct booking ratio by 10 percentage points” by room scale (30, 80, 150, 300 rooms). The assumptions are as follows:

• ADR: Set at ¥18,000 (30 rooms) to ¥28,000 (300 rooms) by scale (conservatively estimated from MetroEngines’ national data)
• Occupancy: 75% (common across all scales, industry average level)
• OTA commission rate: 15% (weighted average of Rakuten, Jalan, Booking, Expedia, including payment/promotional costs on effective basis)
• Current OTA share: Based on Japan Ryokan Association survey (30 rooms=39%, 80 rooms=45%, 150 rooms=49.7%, 300 rooms=50.0%)
• OTA share after direct booking shift: 10 points lower than above

Source: Estimated by MetroEngines Research & Consulting based on MetroEngines Research and Japan Ryokan Association survey

Source: MetroEngines Co., Ltd., prepared by MetroEngines Research & Consulting

The larger the scale, the greater the absolute savings, with ¥34.49 million in annual commission savings expected for the 300-room scale. Meanwhile, the savings rate (ratio to annual revenue) is approximately 1.5% across all scales. This is the result of a simple calculation: “OTA share 10 points × OTA commission rate 15% = 1.5%,” and can be said to be a structural improvement margin independent of scale. The GOP margin improvement is equivalent to 1.5 points, directly contributing as additional profit on room revenue.

Channel Mix Strategy and 3-Year Investment Payback Scenario

Achieving a 10-point direct booking shift requires combining multiple initiatives such as CRM introduction, official app development, subscription membership programs, SEO/SEM strengthening, and direct-booking-only benefits. The results of estimating whether these investments can be recovered in 3 years by scale are as follows.

Recommended initial investment and operating costs are based on industry standards for CRM/reservation engine/official app/membership program implementation, estimated by MetroEngines Research & Consulting

The estimation results show that a positive ROI is achievable in 3 years at all scales. In particular, for mid-large hotels with 150+ rooms, the 3-year ROI reaches 80-100%+, making investment decisions relatively low-risk. Meanwhile, for small-scale facilities of 30 rooms, since absolute amounts are small, a realistic strategy is to utilize SaaS-type monthly fixed services to keep fixed costs down.

However, the following risk factors need to be incorporated into this estimate:

1. Direct booking shift effectiveness rate: Even with investment, a 10-point direct booking shift may not necessarily be achieved. If CRM/official app usage stagnates, the shift may remain at 5 points or less.
2. Risk of reduced customer acquisition via OTAs: Intentionally lowering OTA exposure for direct booking strengthening may cause best rate guarantee violations, ranking declines, and reduced bookings. A design that “maintains OTA exposure while guiding customers to direct booking” is important.
3. Effect on Customer Lifetime Value (LTV): Direct booking customers tend to have higher repeat visit and review posting rates, with additional benefits not factored into this estimate. CRM-implementing hotels have reported repeat rates improving by 20-30%.
4. Operational burden: CRM, official reservation engines, and SNS operations require continuous human resources. Staff hiring and training costs should also be considered as part of the investment.

Investment Decision Metrics: Optimal Investment by Scale and Expected ROI

Based on this article’s estimates and industry trends, the following practical investment decision metrics are presented for hotel operators, REIT IR managers, and hotel investors.

Prepared by MetroEngines Research & Consulting

For REIT IR managers and hotel investors, when estimating SG&A reduction effects across the entire portfolio, the above scale-based ROI can be referenced as “initiatives to improve GOP margin by 1.0-2.0 points over a 2-3 year span.” Especially for repositioning and value-up initiatives for properties that investment corporations acquire from sponsors, direct booking strengthening investment carries low impairment risk and can be evaluated as a high-confidence profit improvement measure.

Meanwhile, what should be noted is the stance of “not treating OTAs as enemies.” As shown by Expedia/Booking’s strong earnings, OTAs still have powerful customer acquisition capability and are indispensable as inbound and new customer acquisition channels in particular. The ideal channel mix is a balance of “OTA 35-40%, direct booking 35-40%, groups/agencies 20-25%,” and the goal is not to make OTA dependency completely zero, but to structurally reduce dependency to optimize commission burden. As shown by the fact that Expedia is achieving +25% revenue growth on its B2B platform (Rapid API), OTAs themselves are also strengthening lock-in to their own platforms. Hotels, in turn, can strengthen negotiating power with OTAs and protect long-term brand value by directly owning their own customer base.

Conclusion — Strong OTA Earnings Are a Warning for Japanese Hotels

The strong Q1 2026 earnings of Expedia +83% EBITDA and Booking +19% EBITDA show not only the tailwind of global travel demand recovery, but also that both companies are steadily strengthening their commission revenue models in the lodging reservation market. The Japanese hotel and ryokan industry already has high OTA shares at 44.9% overall and 50.0% for large hotels, and assuming an OTA commission of 15% (effective basis), the calculation is that 6-7.5% of annual revenue flows out as commissions.

As estimated in this article, simply raising the direct booking ratio by 10 points yields commission reduction effects of ¥16.42 million for the 150-room scale and ¥34.49 million for the 300-room scale annually. Investment in CRM, official apps, and membership programs is a practical investment decision metric capable of achieving a 71-103% ROI in 3 years. The important thing is not to eliminate OTAs, but to build a hybrid strategy that “positions OTAs as a strategic channel for inbound and new customer acquisition, and guides repeat and direct connection customers to direct booking.” The strong earnings of the two global OTA giants serve as an important opportunity for Japanese hotel operators, REIT IR managers, and hotel investors to re-examine their channel strategies.