Food for thought: systemic underinvestment in hospitality marketing
With the 2025 budgeting season in hospitality underway, it’s not too late to compare marketing spend in hospitality to the broader economy. As per Gartner CMO Spend Survey, the average 2024 marketing budgets are 7.7% of total revenue, the lowest post-pandemic spend.
What is the situation in hospitality? Traditionally, hoteliers spend less than 2.5% of room revenue on marketing, including marketing spend AND payroll for the sales and marketing team. This is way below the broader economy’s average.
Compare this to Expedia, which spent on sales and marketing 54% of its 2023 revenue to the tune of $6.9 billion.
Underinvestment in technology, marketing and talent is the direct online channel “killer”. Hospitality invests in technology 2.75% of room revenue, compare this to 15%-17% for the OTAs.
Unless the hospitality industry spends at least 4%-6% on marketing, and invest adequately in technologies like CRM, RMS, chatbots, ORM, guest messaging and issue resolution applications, the industry will continue to suffer from the dominance of the OTAs and other intermediaries, and continue to pay them commissions to the tune of $75 billion/year.
