What's Happening?
The hospitality industry is currently debating the appropriate level of marketing investment as the 2026 budgeting season approaches. Industry experts have highlighted a significant disparity between hotel marketing budgets and those of Online Travel Agencies (OTAs), with OTAs spending billions on marketing. Max Starkov argues that hotels need to increase their marketing spend to at least 4-6% of total revenue to compete effectively with OTAs. Experts suggest that new hotels should allocate up to 10% of projected revenue, while luxury hotels may require up to 8%. The discussion also emphasizes the importance of smarter allocation of marketing budgets, focusing on measurable outcomes and leveraging AI-driven engagement.
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Why It's Important?
The debate over marketing spend is crucial for the hospitality industry as it seeks to reclaim market share from OTAs. By increasing investment in marketing, hotels can enhance their direct booking channels and reduce reliance on OTA commissions. The focus on smarter spending and strategic allocation can lead to improved guest engagement and incremental revenue. This shift in marketing strategy is essential for hotels to remain competitive in a rapidly evolving digital landscape.
What's Next?
Hotels are encouraged to invest in channels where OTAs cannot compete, such as social media, influencers, and event activations. Aligning marketing spend with corporate goals and market conditions will be key to maximizing ROI. The industry must also agree on common definitions of what constitutes marketing to ensure precise benchmarking and effective strategy development.
Beyond the Headlines
The discussion around marketing spend highlights the need for the hospitality industry to adapt to changing consumer behaviors and technological advancements. Embracing AI-driven engagement and content marketing can provide hotels with a competitive edge, fostering innovation and creativity in marketing strategies.
