Tambourine reveals answers to the ultimate hotel marketing question
What's the budget?
By Dave Spector, Partner at Tambourine
The wrong way:
1. "Whatever you can give me, I'll do the best I can."
On the surface, this happy answer would appear to position you as an easygoing team player, but it's actually the most dangerous answer of all! Essentially, you are allowing ownership/senior management to determine the resources you have to achieve revenue targets. If you fall short and are held accountable for missed targets, you will deeply regret not having asked for the proper amount before you accepted responsibility.
2. "I didn't spend all of last year's budget, so I don't need as much next year."
This answer only works if you exceeded revenue targets while under-spending the budget… which doesn't happen very often. Unfortunately, if you are good enough to pull off that amazing feat, be prepared to be asked to do it again every year!
3. "Our sales goals are 20% more than last year, so I need 20% more budget"
It's not that easy. Revenue rarely correlates in an exact linear fashion with marketing budgets. Instead, think about where the expected revenue increases are expected to come from and what kind of budget you need to achieve it? Perhaps the increased target is from meetings and groups, which takes less budget to generate leadflow than transient/leisure. Conversely, if the targeted revenue increases are expected to come from channels that cost more to penetrate, be ready to ask for more budget to attack those channels.
The Right Way
Last week we covered the wrong ways to answer the question: how much should our marketing budget be…?" Now, let's focus on better ways to answer the question that will determine your success and quote possibly your career longevity!
1. "The budget needs to be aligned to sales/revenue projections… what are the sales & revenue projections?"
It's always a bit awkward to answer your boss' question with a question of your own, but it's impossible to determine the proper hotel marketing budget without knowing the overall revenue targets AND how each sub-segment is expected to contribute to the total revenue pie. Once you know the actual revenue targets, you can carefully consider the resources you need to "climb the hill" that's been put in front of you. And then, even after you know how "high" the hill is… you need time to put your plan and ultimate budget request together.
2. "I need $____ in funding. ____ new people. _____ product changes to be made. And _____ department to report to me."
Whoa. Does that sound bold and frightening?
We understand if it does, but budgeting time means its time to put on your big boys and girls pants and tell ownership EVERYTHING you need to deliver the results they are mandating! Surprisingly, many senior tourism and hotel marketing folks think they are restricted to simply asking for advertising money. If you need more people on your staff to achieve the revenue target, then you need to ask and be prepared to make a simple business case for the added overhead. Same goes for changes to the product; if your physical product or service experience requires additional investment, now is the time to ask! And last but not least, if someone else's department is inhibiting your results, ask for control of it…. Or forewarn ownership that results may be hampered by folks you have no ability to manage and improve.
3. Last year, we achieved a marketing CPS of X. To achieve next year's budget, I need $_______ ."
CEOs and property owners no longer want to hear about "branding initiatives" or logo colors… they expect their senior marketing leaders to contribute to revenue in a measurable way, communicate in number-speak and be accountable for tangible results. So its important to have complete fluency in the KPIs that affect the bottom line. As an example, if you know last year's marketing cost-per-sale (CPS), you should be able to extrapolate that against future revenue targets to determine the budget required. But remember, you will also be expected to reduce your CPS over time as you learn and tweak your programs.
Think it through!
Remember, when ownership asks you for your budget request, take time to think carefully think about your answer. This may be the first and last time you get to ask for the things you really need to achieve the goals they have set for you.
Partner: Tambourine Hotel Marketing
Tambourine is transforming hotel ecommerce. The Firm has become an instrumental partner for elite hoteliers, hotel management and asset management firms seeking to outperform their compset, improve bottom line profitability and decrease OTA-dependence.
We deliver an all-inclusive managed service program that ensures maximum traffic and conversions across all digital channels. Our team utilizes our own best-in-class technology to empower your property… giving you the confidence and ability to achieve your ownership's revenue goals.
The firm is celebrating its 33rd year in business. For more information about Tambourine, visit www.Tambourine.com