There exists two models of OTA:

The merchant model has its roots in the individual wholesale and tour operator segments and is also known as the 'net contracted rates' model. Net contracted rates are agreed between hotels and wholesalers/tour operators for the sale of a fixed number of hotel rooms and have to be marked up by an agreed-upon percentage if not sold as a part of a bundle with other services (such as air, transportation, sightseeing tours and so forth). These rates are generally calculated using the expected best available rate for a specific period, minus a 25-30% mark-up, and sold to the wholesalers and tour operators (also referred to as B2B wholesale net rates). 

Initially, the merchant model was also applied by OTAs on an online platform, but most of the biggest players have switched to the agent model, which entitles OTAs to a so-called 'success fee' for each booking generated. This model guarantees a fixed commission per booking (on a per room and per night basis) to the OTA and leaves the client with the option of paying either upfront at the time of booking or at time of check-out at the hotel. Commissions payable by a hotel depend on the market share and exposure guaranteed by the OTA as well as the buying power of the hotel (independent hotels generally have limited buying power compared to large hotel chains, which leaves them with little negotiation power and thus generally higher commission rates than those achieved by larger hotel chains). Whereas independent hotels and small hotel brands might be facing OTA commissions as high as 30% of rooms revenue, larger chains might be able to squeeze them to as low as 15%. However, large OTA players, given their global exposure and market strength, tend to have the upper hand and manage in most cases to charge commissions ranging between 15-25%.

The agent model allows hotels to be more flexible in terms of rooms to be allocated to OTAs and they can thus manage their inventory more flexibly and react to sudden market changes.