Hotel budgeting season is right around the corner, so it’s the perfect time to look at your hotel digital marketing mix. We know you need more context on return on investment (ROI) to make an informed decision on how to budget your spending.
In other words, what are the highest converting and retention-driving digital investments? How can your hotel digital marketing efforts support your hotel’s broader goals of maximizing revenue and profit?
We’re breaking down everything you should consider so you can answer these questions for yourself. Keep reading to learn more!
While digital marketing budget sizes vary, we see some commonalities when it comes to the hotel marketing mix. Most hotel marketers dedicate about half of their digital marketing budget to search and display (see table 1).
Beyond the marketing budget, another consideration is the cost of distribution from OTAs. In a hotel’s profit and loss center (P&L), these OTA costs often show up in the cost of goods sold. Depending on the type of commission cost, it may not even show up in the P&L at all.
So what might this mean for you? It may weaken any direct booking efforts, including brand.com and email marketing investments.
The (potential) payoff
eMarketer research shows that email still drives at least 4x higher ROI than all other marketing methods. They also found email marketing is the most effective digital tactic for driving customer acquisition, retention, conversions, and return guests.
In fact, it converts 3x higher than social media marketing. Social media is absolutely important, but it’s more of a long-term branding play than a conversion strategy.
Moreover, leveraging email marketing for guest acquisition supports a shift away from OTAs. If you haven’t acquired the guest yet, how do you get an email address?
Common email acquisition tactics include website signup or on-property initiatives. For example, many front desk agents collect emails from OTA bookers or offer free Wifi in exchange for an email. These third-party lists can then be imported to your database.
Yet email often receives the lowest marketing budget allocation.
Optimal hotel marketing mix
So what does all this mean?
In a nutshell, determining the right marketing mix for your organization is critical. Benchmarks can help you understand how your peers are investing, but the most important lens is your ROI.
Step 1: Get a complete ROI view of all your digital investments, including OTA commissions. You may need to work with other departments like revenue management to find true OTA spend and how that compares to your hotel marketing budget.
Step 2: Make changes to your digital marketing mix to optimize your best-performing channels. For example, smart hoteliers reallocate their spend from paid search and display to email marketing, given the retention and conversion benefits.
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