What's Happening?
As the 2026 budgeting season approaches, the hospitality industry is evaluating its marketing expenditures in comparison to other sectors. According to the Gartner CMO 2025 Spend Survey, the average marketing budget across industries is 7.7% of total revenue. However, U.S. hoteliers are spending less than 2.5% of room revenue on marketing, which includes payroll for sales and marketing teams. In contrast, major online travel agencies (OTAs) like Expedia are investing significantly more, with marketing expenditures reaching 54% of their revenue. This disparity highlights the competitive challenge faced by hoteliers in attracting direct bookings.
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Why It's Important?
The underinvestment in marketing by hoteliers compared to OTAs has significant implications for the hospitality industry. OTAs' substantial marketing budgets allow them to dominate the booking landscape, often at the expense of hotels' direct booking channels. This can lead to increased dependency on OTAs, which typically charge high commission fees, thereby reducing hotels' profit margins. For hoteliers, increasing marketing spend is crucial to enhancing brand visibility, attracting direct bookings, and ultimately improving profitability. The current trend underscores the need for strategic marketing investments that leverage digital platforms and data-driven insights to compete effectively in the market.
What's Next?
Hoteliers may need to reassess their marketing strategies and budgets to remain competitive. This could involve reallocating resources towards digital marketing, content creation, and customer engagement initiatives. Additionally, there may be a push towards adopting advanced technologies such as AI to optimize marketing efforts and personalize guest experiences. As the industry evolves, collaboration with marketing experts and leveraging data analytics will be key to developing effective strategies that drive direct bookings and enhance customer loyalty.
Beyond the Headlines
The marketing spend disparity between hoteliers and OTAs raises broader questions about the sustainability of current business models in the hospitality industry. It highlights the need for innovation and adaptation in marketing practices to meet changing consumer expectations and technological advancements. Furthermore, it emphasizes the importance of building strong brand identities and customer relationships to reduce reliance on third-party platforms and improve long-term business resilience.
