How much should your property budget for marketing?

I've wrestled with this for two decades, and here's what I've learned: the percentage matters far less than where you're actually spending it. I see hoteliers budget 6% and still be handcuffed to OTAs, or budget 4% and own their revenue. The real question isn't "how much?" but "where are the gaps?" If OTAs own 70% of your business, throwing money at digital ads is just rearranging deck chairs. You need to build your corporate relationships, strengthen your direct channels, and protect your rate. That's where the money is. RevPAR tells the real story, not occupancy.

A percentage of revenue is a useful check, but it can scale the wrong way. A property performing strongly on ADR or occupancy can often spend well below 4-8% and still hit its numbers. A smaller, lower-ADR property may need proportionally more simply to be visible. The formula tends to hand the largest budgets to the properties that need them least.

There also needs to be agreement on what the marketing budget includes. Agency and media fees, clearly. SEO, PR, events, a website rebuild? Some of that is recurring and some is a one-off on a different time horizon, and a single ratio hides the difference.

The more pertinent question is where and why the money is being spent. For performance-facing activity, OTA commission of 15 to 20% is a fair benchmark, because that is what these bookings already cost. But a property with an occupancy problem also needs visibility, and that work cannot be judged on direct ROAS at the outset. Held to that standard immediately, it gets cut before it has done anything.

So budget to the actions the property actually needs doing. The percentage is a sanity check afterwards, not the decision you make first.

Most hotels rely for their occupancies on a handful of feeder markets and customer segments, not on random travelers from around the world. This is the Pareto Principle at its best! 

The Pareto Principle in hospitality means that hotels get 80% of their business from a handful of feeder markets and customer segments. Hoteliers that invest their limited marketing dollars in these markets that bring 80% of their business are the winners. The remaining 20% of the markets generating occasional bookings? Leave them to the OTAs.

So, how much should hoteliers budget for their marketing in 2027?

The magic number is between 4%-6% of room revenue WITHOUT payroll included! Combining sales and marketing into one budget line item results in most of the funds being allocated to payroll for DOSM and the sales team, and only a meager portion for pure marketing. The typical director of sales and marketing is de facto a director of sales whose salary/bonuses are tied to sales, not marketing. 

Most independent hotels simply cannot afford to hire a full-time marketing manager. Outsourcing to a professional digital marketing agency specializing in hospitality is the only prudent way. The other option is to delegate the property marketing to the OTAs.

It starts with a gap analysis and commercial alignment on goals. Start by asking these questions:

-Where are you on group pace? Are you ahead or behind? How does that measure against transient demand YOY?

-Do you have a separate budget for group and transient, as well as outlets and ancillary?

-What segments do you underperform against the comp set? Is that a job for sales or marketing?

-What was the budget last year? What did or did not work?

-Is there new hotel competition in the market?

-Are there core digital touchpoints that you are not activating? ie Email, SEO/GEO, Content Strategy

I've never seen using a percentage of room revenue get approved. It could be a comparison point but no owner will approve spend that way.

Do a gap analysis versus the competition, align on commercial goals and target segments, define a strategy to accomplish all of the above. Then, and only then, can you determine what budget is needed for marketing.

A percentage is where you start, not where you land. Take a figure from the 4%, 6% and 8% range, treat it as an opening position for the year, and let performance move it from there.

What moves it is return on ad spend: more where the return holds, less where it does not. Obvious enough, and it only works if the return you are reading is accurate. Two things usually distort it.

The first is that your direct channel is under-counted. Consent refusals and the hop to your booking engine's domain both lose bookings your analytics never sees, while commissioned channels report their own performance in full. The comparison is skewed before you make it.

The second is the time horizon. Return measured on the first stay ignores what a direct guest is worth over years: someone who comes back, books direct again, and costs nothing to reacquire.

So fix those two numbers before arguing about the percentage. Once you trust what each channel produced, and what its guests are worth over a lifetime rather than a booking, you will spend what the returns justify. The opening percentage will have done its only job.

I tend to take a broader view. Rooms are but one product a hospitality operation has for sale. The richer the property, the broader the product and service offering, which will have a direct impact on the requirements for marketing the distinct products and the combined offerings.

Based upon that lens, the spend becomes relevant to the positioning and performance of each of those revenue centres. Sometimes you are up. Sometimes you are down. But when you're neither up nor down.. I digress.

In today's world, marketing, sales and distribution is no longer solely focused on rooms. It is a multi-faceted across business discipline enabling all revenue streams of the business.

Are you approaching things in this way?

The universal 4%, 6%, or 8% rule can provide useful reference points, but the appropriate investment depends on various factors, including a property’s competitive position, OTA dependency, customer mix, direct-booking performance, and growth objectives.

A hotel heavily dependent on OTAs, for example, may need to invest more aggressively in direct acquisition, loyalty, content, CRM, AI search visibility, and paid media. Conversely, a property with strong brand recognition, repeat business, and an established direct channel may not need the same percentage.

More importantly, hoteliers should distinguish between marketing expense and distribution cost. Spending more on marketing can be justified if it reduces dependence on higher-cost OTAs, improves customer data ownership, and generates profitable incremental demand. The bottom line is that every expense should be justified by its return or contribution to profitability.

In today’s AI-mediated marketplace, I recommend that businesses budget backward from strategic goals rather than forward from a fixed percentage. For instance, hotel marketers should ask: “What level of investment will produce the right mix of direct bookings, customer acquisition, retention, and long-term profitability?”

Applying this to your marketing budget

How much should your property budget for marketing? My opinion, inspired by value innovation, is that the number matters less than the approach: deliver a leap in value to guests at lower cost, and let the efficiencies fund the parts of your marketing that matter.

Four questions get you there:

Eliminate. Which marketing spend exists mainly because every property in your comp set has it, not because it moves revenue for your hotel?

Reduce. Where are you spending more than the return justifies?

Raise. Which factors should be raised above what's typical for your category?

Create. What could you offer that the industry has never offered?

The first two free up budget. The second two decide where it goes. Applied to marketing, that might mean cutting blanket OTA visibility spend and generic paid social reaching the same shoppers repeatedly, and redirecting savings into first-party data capture and guest re-engagement: the CRM and post-stay sequence that turns an OTA booker into a direct repeat guest.

That's the value innovation move: not spending more to stand out, but cutting where value isn't created so you can fund, cheaply, the places it is.

The benchmarks tell you a range. This tells you what's working inside it.

For an established hotel, you should budget 4% to 6% of your revenue for marketing. If you are launching a new hotel or rebranding, increase that to 10% to 15% to build fast awareness.

To get the best returns, spend about 45% on digital ads (like Google Hotel Ads), 35% on email loyalty campaigns, and 20% on smart website technology. Always measure your success by actual profit, not just full rooms, and spend more during your peak booking seasons.

Let's take a step back. Before diving into traditional budget allocation, given travelers' growing openness to adopting AI-enabled services (over 70%, according to Accenture's 2026 study), hotel properties should start considering Agentic AI as a primary customer acquisition channel.

What does customer acquisition via Agentic AI look like? An illustrative example from a consumer's perspective is as follows: A traveler delegates part of their hotel-booking decision to an AI assistant, which then makes the property searchable, comparable, and bookable. From a hotel property's side, the following trends and pathways, driven by corporate-level decisions, are worth noting for application and implementation: A) An app in the leading AI companies' app stores (e.g., the Radisson Hotels app on ChatGPT) and B) An in-house AI assistant within the hotel corporate websites and systems (e.g., Hilton AI Planner).

Let's face it. Agentic AI integration into hotel corporate digital infrastructures is already underway. Given the business cases above, it is time for hotel properties to prioritize AI marketing spend over traditional SEO and OTA CAPEX.

I’d encourage hoteliers to approach budgeting from a slightly different direction. Every reservation that comes from an OTA costs 15% to 18%… or more. And too many hotels receive too large a share of their revenues from OTAs. 

Consider a very conservative example. A 150-room, $180 RevPAR hotel receiving 35% of their sales from OTAs typically pays $500,000-$600,000 per year for those reservations. That’s a bit over 5% of total hotel revenue. And, remember, that’s conservative. 

What would you be willing to invest in your own marketing to cut those numbers in half? Or to support the millions in revenue OTAs don’t provide? 

Marketing’s job is to drive revenue. They’re usually pretty good at it, especially when given the resources they need to do the job properly. OTAs, meanwhile, use your money for their marketing, capture your guest data, and build loyalty programs designed to grow their brands… not yours. 

OTAs can be a useful tool for driving revenue you can’t easily find on your own. But, if you’re willing to pay them 5%—or more—of your total revenue each year, it might be worth thinking about investing at least that much on building your own brand.

Timely question. My approach has always been that a marketing budget answers what the property needs to accomplish. The percentage may come out between 4%-6%-8 %, but the benchmark is a place to check the final number (if you even want to). It's not where hoteliers start.

I start with the jobs marketing has to do, and then I sort them by where they sit in the guest experience: discovery, engagement, conversion, retention, analysis. That way, you can see which stages are funded and which are starved. A hotel should fund what it needs. A new property with no awareness has to top-load, meaning discovery is the job: getting found and driving more traffic. The issue is when a hotel keeps top-loading its budget to acquire new guests while allocating very little to bring back guests or convert OTA guests.

The independent hotels I work with land near 6%. That's not a big budget, but it goes far because it targets the right stages.

A budget is an investment expecting a return. Want more back next year? Put more in. The goals set the budget, and the industry percentage can confirm it, but it doesn't drive the day.