What's Happening?
As the 2026 budgeting season approaches, U.S. hoteliers are evaluating their marketing expenditures in comparison to other industries. According to the Gartner CMO 2025 Spend Survey, the average marketing budget across industries is 7.7% of total revenue. In the hospitality sector, however, U.S. hoteliers typically allocate less than 2.5% of room revenue to marketing, including payroll for sales and marketing teams. This is significantly lower than the retail industry standard, where companies often spend between 5% and 10% of their gross revenue on advertising and marketing. In highly competitive markets, this figure can exceed 10% to maintain competitiveness. The global hotel revenue for 2025 is projected to reach $443 billion, suggesting a potential marketing spend of $11 billion if all hotels were to allocate 2.5% of their revenue to marketing.
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Why It's Important?
The disparity in marketing budgets highlights the challenges U.S. hoteliers face in competing with larger online travel agencies (OTAs) like Expedia, which spent 54% of its 2024 revenue on marketing, amounting to $6.9 billion. This represents a 12% increase over the previous year. The combined marketing expenditure of major OTAs reached $17.8 billion in 2024, underscoring their dominance in the distribution market. For U.S. hoteliers, the lower marketing spend may impact their ability to attract customers and compete effectively, potentially leading to a loss in market share to these larger entities.
What's Next?
U.S. hoteliers may need to reassess their marketing strategies and budgets to remain competitive. This could involve increasing their marketing spend or exploring more cost-effective marketing channels to enhance visibility and customer engagement. As the budgeting season progresses, hoteliers will likely consider these factors to better position themselves against OTAs and improve their market presence.
Beyond the Headlines
The ongoing struggle between hoteliers and OTAs raises questions about the sustainability of current marketing practices in the hospitality industry. Ethical considerations regarding the allocation of resources and the impact on smaller businesses may also come into play, as hoteliers seek to balance profitability with competitive pressures.
