How much should hoteliers be spending on marketing?

Question

With the 2026 budgeting season in hospitality rapidly approaching, it's not too late to compare marketing spend in hospitality to the retail industry and the broader economy. As per the authoritative Gartner CMO 2025 Spend Survey, the average 2025 marketing budgets are 7.7% of total revenue, same as in 2024.

Hospitality is a retail industry - selling hotel rooms and auxiliaries to travel consumers. A common rule of thumb retailers is to spend between 5% and 10% of their of their gross revenue on advertising and marketing. In highly competitive markets and industries this allocation is 10% or more to keep pace with competitors.

HubSpot reports that companies generally spend around 9.1% of their total revenue on marketing. The U.S. Small Business Administration suggests that small businesses should allocate between 7% and 8% of their revenue to marketing.

What is the situation in hospitality? On average, U.S. hoteliers spend on marketing less than 2.5% of room revenue, including payroll for the Sales and Marketing Team (STR). The global hotel revenue in 2025 is projected to reach $443 billion. Even if all hotels were willing to spend 2.5% of that on marketing (which I doubt), then hoteliers' global spend on marketing would be $11 billion.

Compare this to Expedia, which spent on sales and marketing 54% of its 2024 revenue to the tune of $6.9 billion, 12% increase over the previous year. The big OTAs spent the whopping amount of $17.8 billion on marketing in 2024. No wonder hoteliers are losing the distribution war with the OTAs.

So, the question is: what percentage of total revenue should hoteliers be spending on marketing?

Peter O’Connor

Professor of Strategy at University of South Australia Business School

Reading this initially, I was tempted to say "It depends".

But on reflection, the answer is much clearer and is simply "Much more"!

Hotels typically spend less than 3% on sales and marketing, and then complain when a quarter to a third of their rooms remain unfilled. And also complain about having to pay 15% to 20% or more to online platforms for business.

These figures set the limits for what they should be spending - more than right now and less that what we would pay an OTA for the booking. In addition to being less costly, direct bookings bring a host of benefits in term sof upselling, cross-selling and loyalty, so it stands to reason that we can invest more in driving business through direct channels.

Remember there is no such thing as a free lunch.

View all 9 views in this viewpoint

Adam Mogelonsky · Answer

The industry average of 5-10% of total revenue makes sense for budgeting purposes. What's more important is HOW you spend your budget. Comparing a hotel's marketing budget ratio to Expedia is apples to oranges; hotels are in the service sector whereas OTAs are tech businesses. Their operating models are fundamentally different, even though they both serve the same customers: travelers. Hence, why even try to compete or compar yourself against them? Instead, get creative with how you market your brand. I'm not suggesting you completely toss aside all adwords, programmatic, OTA billboard spend or other mainstay channels. Rather, look to channels and tactics where the OTAs can't compete: social media (and dare I use a bad word: influencers), event activations, CRM-driven personalized newsletters, FAMs or other PR activities, agreements with travel agents or trusted travel advisor networks, developing cobranding relationships with MICE or consortia companies, and good old-fashioned word of mouth. There's no silver bullet or panacea in this 'how', only a ton of hard work by a well-coordinated commercial team. You just have to start by getting creative.

Erik Muñoz · Answer

According to HotelMarketingWorks.com, most hotels allocate between 4-8% of their total revenue for marketing activities. New hotels: 10% of projected revenue Established properties: 4-6% of actual revenue Luxury hotels: Up to 8% of revenue Seasonal adjustments are also recommended as follows: High Season: Increase budget by 20-30% Shoulder Season: Maintain regular budget Low Season: Reduce budget by 20-30% or redirect to advance bookings

Frederic Gonzalo · Answer

The question of what percentage of total revenue should hoteliers be spending on marketing should not be answered by comparing with OTA, but rather by looking at product lifecycle and corporate goals. By product lifecycle, we mean where the hotel is standing in terms of lifetime existence: launching stage, early growth, maturity, descaling or declining? It's usually recognized that marketing spend should be much more important during launch stage - anywhere between 15-25% of total expected revenue, sometimes even more. But when a hotel (or other travel experiences such as resorts, restaurants or attractions) has reached maturity, and is well established within various target markets, 5-10% can suffice, sometimes even less. As for corporate goals, they can also hold great influence on marketing spend. Are there more or less hotels in the area due to economic downturn, or mergers and acquisitions? Has there been substantial changes to the property, change of management or spike of interest in the city for external reasons? These factors can justify increasing marketing budgets in oder to take advantage of a given situation or context. Steering marketing efforts towards direct bookings should always prevail, but working with OTA remains a must. No matter the budget!

Scott Falconer · Answer

As budgeting season approaches, hoteliers should focus less on matching industry averages and more on aligning marketing spend with clear, measurable goals like incremental revenue, Return on Ad Spend, uplift in occupancy, RevPAR, and guest engagement. The purpose of marketing is to connect with travelers at the right time and in the right places with the right offer. That means being visible across the traveler's purchase journey – meeting travelers where they are, while keeping messaging and branding consistent. The goal isn't to match some industry average for percentage of revenue spent on marketing, but to spend smarter: using data to find high-value audiences, tailor campaigns to traveler intent, optimize timing to match booking windows, and accurately measure marketing effectiveness. When hotels invest in multi-channel visibility and align their efforts with actual demand, even small budgets can deliver powerful results. The takeaway? Effective marketing isn't about spending a certain percentage of revenue – it's about making every dollar work harder to drive demand, build relationships, and support long-term growth.

Max Starkov · Answer

Underinvestment in marketing is the direct online channel "killer". The less you invest in marketing, the greater the dependence on the OTAs. Hoteliers are risk averse by default. They are not willing to invest adequately in marketing because they consider it a risky spend and there are no guarantees. As if there are any guarantees in life! But they don't mind spending 25% and more on OTA commissions and discounts, because it is risk free. One of the main reasons for the systemic underinvestment in marketing is the lack of "ownership" of the direct online channel. In my 30 plus year career in hospitality, and tens of thousands of hotel clients, I have never seen a DOSM - director of sales and marketing - or any marketing manager whose compensation or bonuses are tied directly to the property website bookings. Unless hoteliers budget and spend on marketing at least 4%-6% of total revenue, not including payroll, 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.

Linchi Kwok · Answer

Thank you, Max, for initiating a provocative topic with such a clear data snapshot. I can see a side-by-side comparison of the marketing budgets here: Hotels: 2.5% of room revenue (including payroll) Retail: 5 – 10% of sales General businesses: 9.1% of total revenue Small businesses: 7 – 8 % of revenue (recommended) Expedia: 54% of revenue or $6.9B (up 12% YoY) Top OTAs combined: $17.8B No wonder OTA continues to outperform hotels in bookings. My take is - hotels must invest more in marketing, but also, smarter. A baseline of 5% of room revenue is a practical target. Yet, an even more critical question emerges – where should the money go? In light of AI-powered search and booking behaviors, content marketing deserves urgent attention, as this panel noted in a few of our earlier discussions. Furthermore, hotels should be asking: How much will we invest in AI-powered loyalty programs? How about AI-driven social media engagement? If these are hotels' strategic priorities, and they should be, 5% may not even be enough. Expedia's strong Q2 2025 results were driven in part by its AI integration. For hotels aiming to compete, a marketing budget closer to 10% will be necessary.

Peter O’Connor · Answer

Reading this initially, I was tempted to say "It depends". But on reflection, the answer is much clearer and is simply "Much more"! Hotels typically spend less than 3% on sales and marketing, and then complain when a quarter to a third of their rooms remain unfilled. And also complain about having to pay 15% to 20% or more to online platforms for business. These figures set the limits for what they should be spending - more than right now and less that what we would pay an OTA for the booking. In addition to being less costly, direct bookings bring a host of benefits in term sof upselling, cross-selling and loyalty, so it stands to reason that we can invest more in driving business through direct channels. Remember there is no such thing as a free lunch.

Simone Puorto · Answer

Whenever we talk about "how much", the first question I ask is not about percentages, but about definitions. What exactly lives under the umbrella of "marketing"? Does OTA advertising count, or should it be relegated to the distribution column? Is metasearch advertising a marketing expense, or is it revenue management wearing a different suit? The answer to those questions changes the budget conversation entirely. My approach is less about chasing an industry average and more about anchoring spend to a healthy cost of acquisition for direct business. As a general rule, I never let the cost per acquisition for direct bookings exceed 10-12%, although the context may justify a lower or higher rate. If you stay focused on the lower funnel, then 10% of total revenue is a comfortable and sustainable figure. If you want to expand into mid-funnel activity, 15% is a better benchmark. And your ambition is to own the top of the funnel (building awareness in new markets, launching a property, or relaunching after a renovation), then a 20% is more realistic. The real danger lies in the delusion we can achieve OTA-level reach with budgets that would not keep a metasearch campaign alive for a month...

Mark Fancourt · Answer

How long is a piece of string? Like any good strategy or tactic it should be tied in to a measured outcome. Depending on individual circumstances naturally there would be no hard and fast rule as objectives differ. Across industries the range is 7 - 10%. In our industry things treand a little lower from 4-6%. Although as our business moves further toward the digital in all things there should be a natural shift. One of the challenges is that there is no hard and fast rule of what is included. Sometimes this includes technology, which in my view is not a marketing investment or expense vs. the programs that are executed on those platforms.

How much should hoteliers be spending on marketing?

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