Back in December 2003, Smith Travel Research published a much discussed article titled, ‘The Billion Dollar Leak - The Impact of The Merchant Model on US Hotel Profits.’ In this article the authors attempted to quantify the financial impact of third party sites on U.S. hotel industry room revenues and profits. To describe this loss, they coined the term ‘leakage’: i.e. revenue ‘leaked’ from the hotel industry to third party sites in the form of abnormally high merchant commissions of 25% and higher.
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