Hotel Budget Planning: Your 2023-2024 Hotel Marketing Budget
Hotel budget planning season is upon us. Or did it ever actually end? Honestly, it feels like just yesterday we were huddled together in a conference room, presenting PowerPoints and brainstorming on whiteboards; going over what worked this year, what didn't, what our comp set is doing, and how we want to grow the business next year.…
Whether you’re responsible for a luxury hotel marketing budget in the soaring six-figures, or look after a small, mom-and-pop bed and breakfast — there’s a lot to think about.
Your 2023 hotel budget is just about spent.
(I know, crazy right? Where does the time go?)
So it’s time to shift gears and think about what you’re going to include in 2024 hotel marketing budgets.
Understanding the Hotel Budget: Where to Start
What is a hotel budget?
Hotel budgeting involves creating a financial plan that outlines all the hotel's expenses and revenues.
Budgeting is crucial in ensuring the hotel's financial stability and growth, as it helps hotel managers make informed decisions about how to allocate resources and manage costs effectively.
Creating a hotel budget involves several steps, including identifying all the hotel's expenses, such as utilities, employee salaries, and maintenance costs, and forecasting the hotel's revenue based on occupancy rates and other factors.
The budget should also include a contingency plan for unexpected expenses or revenue shortfalls. Hotel managers should review and update the budget throughout the fiscal year to ensure that it remains relevant and accurate.
The importance of budgeting in the hotel industry
Most of this article will focus on your hotel marketing and advertising expenses, but that’s only part of the puzzle.
Effective hotel budgeting requires a deep understanding of the hotel's financial operations and market trends.
If you’re a marketing manager in a hotel, your level of involvement with the above will vary. You should still familiarize yourself with the hotel industry and the factors that affect the business, such as competition, seasonality, and economic conditions.
One of my favorite resources on this topic is David Lund, The Hotel Financial Coach.
I was lucky enough to attend one of his hotel budget training sessions early in my career and it helped me understand the financial leadership side of the business so much.
I highly recommend checking out some of his blog posts on this topic, starting with this one.
You’ll still be part of the hotel budget planning process, whether you’re in a junior marketing role or a Director.
The hotel budget planning process
So what is the hotel budgeting process anyway? Typically, hotel budget season involves every department spending time reviewing the previous year and coming up with ideas for the following year.
Teams will gather and look back on historical data covering at least the last three years. (With some understanding, of course, that 2020 and 2021 may have been extremely skewed!)
Then, you’ll consider what worked and what didn’t, come up with new ideas to try, and determine what resources they’ll need to support those ideas.
Most operations departments will be looking at their hotel operator expenses and outlining a staffing guide.
For Sales & Marketing departments, that means building your hotel marketing plan.
With your revenue manager involved, look at year-on-year booking trends, occupancy levels, rate fluctuations, cost per room nights, market conditions, etc.
Then, think about what new demand drivers there might be in the coming year — is Taylor Swift bringing the Eras Tour to your city, for example? (Lucky you!)
Next, come up with strategic and creative ways to reach new customers or engage with existing ones.
You and your team should ask questions like:
Have you noticed changes to your target audience in the last year?
What new feeder markets are picking up, local or otherwise?
What sort of lead times are you seeing in the current year for new bookings?
How about trends related to cancellations?
What kind of events and meetings are you logistically capable of producing? Do you want to do more or different types?
How has your restaurant or bar business shifted?
Have you tried any new revenue streams, like coworking or day rates? What worked and what didn’t?
Answering those questions will help you determine realistic objectives for 2024 — and which specific digital marketing channels to focus on.
What goes into a hotel marketing budget?
Creating a hotel marketing budget involves determining marketing expenses and allocating funds for different marketing channels. A well-planned budget can help hotels optimize their marketing efforts and maximize their return on investment.
Sounds great, but what exactly goes into it?
The answer tends to be, “it depends.” (Sorry.) Every hotel is different. Your budget needs to cover the expected costs of whatever you need to drive the business forward.
This typically includes some combination of the following:
Your hotel website (maintenance/upkeep or a complete redesign, if needed)
Advertising campaigns (PPC, SEM, etc.)
SEO
Professional photography
Video production
Email marketing
Metasearch
Paid listings on partner websites
Software and tools (find a mix of free and low-cost hotel marketing tools here)
Training, learning and development
Outsourcing
Generally, the bulk of your hotel marketing budget will go into digital marketing — ie. your website, content creation, SEO, and various advertising campaigns.
How much should your hotel spend on marketing in 2024?
I’m going to start sounding like a broken record, but “it depends.” It is essential to allocate funds based on the potential return on investment for each marketing channel.
Hotels should also consider the target audience, market trends, and the competition while allocating funds.
Start by budgeting for what you KNOW works — ie. your most profitable channels.
Then, if you’re able to, try to budget something (even just a small amount) for channels you want to TRY.
Now and throughout 2024, you should revisit your hotel marketing budget regularly. Be flexible, and ready to shift or reallocate your funds quickly as you see your business needs evolving.
If you’re part of a branded hotel chain, there may already be a corporate hotel digital marketing program you can opt in to — Marriott Digital Services, for example, is an in-house program designed to deliver comprehensive digital agency services to Marriott’s hotels. Hilton offers a similar solution.
Whether you’re a branded or independent hotel, do your own due diligence before deciding which marketing channels you want to invest in.
What should we include in our hotel marketing budget in 2024?
1. Your hotel website
Your hotel website should be one of the first things you evaluate come budget season. It’s the main driver of your direct booking channel, your brand — everything.
A good place to start is this article on hotel website features you really need. In it, I explain the importance of mobile-first web design, user experience (think GDPR and ADA compliance), schema and other back-end technical bits, SEO, page load speed, and more.
If you’re part of a chain, you don’t have much flexibility here. I don’t typically encourage chain hotels to create standalone websites — domains like marriott.com or hyatt.com have a lot of built-in trust and authority, in addition to other branding and loyalty benefits.
Plus, it’s very confusing for customers to find multiple websites for the same hotel…
If you’re managing your own independent hotel website, you probably hired a web developer or agency to create it. Chances are, it’s built on a content management system (CMS) like Wordpress. To make sure it’s running smoothly on the back end, expect to budget about $300-500 USD for monthly maintenance.
Web design best practices are fast-moving and evolve constantly. If your current website is more than three years old, it’s already outdated.
Now, there are lots of different website builders and templates out there — I’m a fan of Squarespace, personally! — and DIY-ing your own website would, of course, be cheaper than hiring a professional.
I don’t recommend this for hotels, for a number of reasons.
Most importantly, you need seamless integration of your booking PMS to drive your direct booking strategy. Figuring this out yourself using a template site like Showit or Squarespace is going to take a lot of time and energy, and it’s not likely to yield as good a result as hiring a professional.
Investing in a professionally-made, well-branded hotel website is ALWAYS a good idea.
How much does a hotel website cost? It varies, of course. Installation of a new template or simple redesign will run you about $2,000-3,000 USD. For a brand new hotel website, built from scratch, expect to budget at least $10,000-15,000 USD.
Read Next: What Features Do You Really Need On Your Hotel Website?
2. Content creation
The term “content creation” is a little vague, but actually includes a lot. Your hotel content marketing efforts fuel every other marketing channel — that’s why content is an important consideration come budget time.
Content could include:
Professional photo shoots
Image licensing from bloggers/influencers
Video production
Written content, like blog posts, captions, emails, or website copywriting
How much should hotels spend on photography, video, and content creation? Costs vary widely for each of these elements and depend on many factors, including your location and property size.
If your hotel is part of a bigger brand, you likely have to choose from a short list of “approved” hotel photographers or videographers with pre-set package rates. Independent hotels can source their own, of course.
Either way, expect to budget a few thousand dollars for content, depending on how many photo shoots you need, whether you need rooms/building photography or styled food detail shots, drone photography, video editing, etc.
For small hotels and/or smaller budgets, consider hiring bloggers/influencers to create the content you need. Again, costs definitely vary… With a little effort and vetting, it’s absolutely possible to find a creator capable of producing professional-quality images or video for your hotel.
If writing is just not your jam, consider hiring a professional hotel copywriter for specific one-off projects or even a monthly retainer.
Budget-wise, you can get a sense of my rates as an experienced copywriter on my Work With Me page or feel free to get in touch for a customized quote.
Content creation is important not only for your hotel website, but all the other marketing channels it fuels.
Read Next: What Does a Hotel Copywriter Actually Do?
3. Advertising
Unless you’re currently sitting pretty at 100% occupancy, you need to have some ad campaigns running.
In an ideal world, you’ll have a consistent ad campaign running across multiple channels. Some of the effective methods of paid advertising for hotels include:
Paid search (Google, Bing or other search engine ads)
Paid social media (Mainly Facebook and Instagram ads, but there’s advertising available on other social platforms hotels can consider)
Metasearch
Display
This is a big one, and each of these channels frankly deserves a full-length article!
How much do hotels spend on advertising? Sit tight. In the next section, I’ll dive deeper into each of these channels to explain how hotels budget for advertising campaigns.
4. Tools & Technology
Having access to the right technology can help hotel marketers work more efficiently, automate simple tasks, create beautiful content, save time, and measure results.
Many of the best hotel marketing tools are actually pretty easy on the budget — or completely free!
Again, a caveat for folks working in a chain hotel setting: You might not have as much say in the tools and technology you use for marketing. Corporate may negotiate a great discount on an Enterprise tool and expect all hotels to opt-in.
There are pros and cons to this, naturally.
One of the best resources I’ve seen for vetting different hotel technology is Hotel Tech Report. They gather reviews on all sorts of hotel industry software, from review site management platforms to email and CRM providers. 👍
How much should hotels spend on tools and technology? Thankfully, most tools have a fixed price, making technology a lot easier to budget for than some of the other items in this article.
My advice is to audit your existing tools first. What are you actually using and how often do you use it? Determine what you absolutely NEED to be successful as a hotel marketer in 2021.
If you’re paying for a social media management tool but not using it, ask yourself whether it’s actually important or helpful to you — if not, get rid of it.
Another tip: Make yourself a “wish list” and shop around for the best prices. If you’re part of a hotel group with multiple properties, you could also negotiate your contract, potentially at a discount, by signing up multiple hotels at once.
Read Next: 36 Best Hotel Marketing Tools (All Free Or Budget-Friendly)
5. Team learning and development (Plus, outsourcing)
One of the best ways to keep your hotel marketing strategy evolving year-round is to continue learning and developing your skills.
The hospitality industry is primed for significant change in 2023 and beyond. As marketers, we were already facing serious challenges and threats from OTAs and alternative accommodation providers.
You might want to send your hotel marketing manager to a conference or pay for their membership to a professional organization like Hospitality Sales and Marketing Association International (HSMAI).
Since the pandemic, many of these conferences started offering hybrid or virtual attendance.
And of course, there are plenty of free courses for hotel management online, too.
How much should hotels budget for learning and development? I’ve seen this number vary wildly across different hotel positions… But you know what? I’ve also seen a $2000 training budget sit there, unused, ignored, and rolled over or absorbed into another column.
Please don’t do this.
Whether it’s $50 or $5000, whatever amount you agree to set aside for marketing development and training, USE IT.
As it’s directly related to skills and development, I also want to talk about outsourcing here.
In hotels, we tend to hire marketing generalists and expect them to “do it all” — from copywriting and graphic design to PR and digital media.
It’s pretty rare to find a hotel marketing manager specialized in every single function. Long-term, I strongly believe you should be investing in your team and supporting their continued development.
To fill some of those knowledge gaps in the short-term, hiring different agencies or freelance specialists could help your hotel move projects forward more efficiently.
How much should hotels budget for outsourcing? Take stock of the tasks or projects that either, A. Keep falling off your marketer’s to-do list, or B. Require specialized knowledge and seem to take “longer” to complete.
Think of outsourcing as streamlining the day-to-day — getting things off of your plate so you can focus on the work you’re passionate about, deeply skilled in, and move the business forward.
Read Next: Free Online Hospitality Management Courses You Can Take Right Now
How much should hotels spend on advertising in 2024?
Search Engine Marketing (SEM)
Let’s start with paid search. This refers to bidding on specific keywords to show a text ad placed at the very top of the search engine results page. Bidding is auction-style, so the #1 placement theoretically goes to the highest bidder.
You can imagine that, in major markets like London or New York City — and popular destinations like Bali or Cancún — that “winning” bid for the most competitive keywords can get pretty high.
When you hear someone refer to “Google Ad Words” that’s paid search on Google. For Bing, it’s Bing Ads.
When you hear someone refer to “PPC” that’s Pay-Per-Click — which is the advertising model used on most top search engines, but could be applied to social media ads, too. PPC means, quite literally, you pay the publisher every time your ad is clicked.
Now, if budget is tight and your hotel is in an expensive ad market, I recommend focusing on one or both of these paid search strategies, in order:
Bid on super-specific, long-tail keywords that apply to your property. Think high volume, low competition.
If budget allows, bid on your actual hotel brand name to ensure your website is the #1 result, over OTAs or competitors.
How much should hotels spend on paid search? As a hotel digital manager, I’ve seen properties run profitable Google Ad Words campaigns with monthly spend as low as $500 and as high as $10,000.
My rule of thumb? Talk to revenue management — you should be BFFs anyway! — and determine together what your optimal Return On Ad Spend (ROAS) looks like.
Every booking made online, direct or not, has some sort of cost attached. It’s important that any advertising campaign you run comes in well below the cost of your OTA commission, for example.
And if you decide to outsource your paid search ads to an agency, expect to pay a service fee ranging from 10-30% of your media spend.
Read Next: How Hotels Appear On Search Engine Results Pages (SERPs)
Social Media Advertising
Paid social media entails running ads on any social platform — for hotels, we mainly use Facebook and Instagram.
If you’ve watched The Social Dilemma on Netflix, you know that Facebook’s advertising platform is, um, pretty powerful, to say the least. We don’t need to get too much more into that, but the bottom line is, advertising on Facebook (and by extension, Instagram) can be extremely effective. Take that as you will.
For hotels, social media advertising is a great way to reach a desired audience in target markets, promote niche special offers, or retarget website visitors who looked, but didn’t book.
How much should hotels spend on social media advertising? Campaign costs vary, of course… (sigh).
The great (and somewhat scary) thing about social media advertising is that you can have major impact whether your budget is $50 or $5,000.
I’ve personally managed hotel social media ads that delivered 9:1 ROI on average booking value. I’ve also seen a $50 Facebook ad single-handedly sell out a large, ticketed hotel event in two days. 🤷♀️
In times like these, my advice for paid social is to set aside whatever you can spare, and focus on nailing these three elements:
Well-defined target audience
Compelling creative (see my previous point about budgeting for content creation!)
Tempting offer
Of course, full-service hotels with multiple business segments to support should expect to spend more than a select service property.
The smaller your hotel advertising budget, the less time you have to test and improve on any given ad campaign. If you’re able to spread budget for a single campaign out over several weeks or months, you can A/B test and really hone in on exactly which creative or targeting is most effective.
Read Next: The 6 Most Important Social Media Marketing Platforms For Hotels
Metasearch
Metasearch engines — like Google Hotel Ads, TripAdvisor, or Kayak — aggregate all the rates published across multiple hotel booking sites to show the customer the best available price for their dates.
As I explained in my article about search engine results pages, one of the first elements you’ll see after Googling a hotel-related keyword is a map with various rates and hotel deals displayed. The map itself is Google Hotel Finder, but the listings are powered by Google Hotel Ads.
Google Hotel Ads are designed specifically for finding and booking hotel rooms. It’s just one example, but Google Hotel Ads are a separate advertising service from Ad Words — that’s paid search, remember!
How much should hotels spend on metasearch? Enough to compete, frankly.
If you’re losing a significant amount of bookings to OTAs, investing in metasearch is a good idea — but ONLY if you can offer a better direct booking incentive, either with the best price or an exclusive inclusion like free breakfast.
Make sure you and your revenue manager are on the same page, because price parity is critical here. Remember, all of the major OTAs are already connected. If you’re not showing up with the best rate on your own website, you stand to lose even more bookings to third-party retailers.
Hotels can win the customer by maintaining competitive pricing, updated availability, and an attractive direct booking incentive.
Read Next: Hotel Marketing Trends To Try—and a Few Fads to Avoid
Display Advertising
The last advertising channel I want to mention is display. Wait… what the heck is display advertising?
I like to describe display as those annoying banner ads that seem to follow you around the internet, getting in the way while you read a breaking news article or try to figure out which Disney princess you are. (I’m definitely Belle, BTW.)
In more technical terms, display advertising refers to the placement of ads on relevant third-party websites, using a publisher network such as Google Display Network (GDN) or even Facebook.
Unlike search ads, display ads are usually more visual in nature — think animated banners and images, sometimes with text.
In my humble opinion, display advertising is NOT a tactic hotels should invest in without ALSO running ad campaigns on search or social.
That’s because display is largely a brand awareness channel.
Search ads are more likely to capture booking intent while display ads tend to garner more impressions. (Though, the actual impact of those impressions is a little less clear — let’s face it, most of us have become pretty numb to this type of advertising.)
If you’re running a larger ad campaign on another channel, supplementing that with display could be a good idea.
There are two approaches to consider:
Prospecting — reach as many folks as possible; a wide audience; your objective is brand awareness
Retargeting — reach only the people who have engaged with you before, either on social or by visiting your website; a narrower audience; your objective is a conversion/booking
How much should hotels spend on display advertising? Expect to invest at least $500-1,000 USD monthly for either type of display campaign to have measurable impact.
How can I make the most of a small hotel marketing budget?
Earlier in this article, I said you should budget for what works — as in, your most profitable channel.
More often than not, the “most profitable channel” is Direct. That’s why most of my recommendations here are geared toward digital marketing tactics that drive direct hotel bookings.
But depending on your market and unique business situation, it may make sense to prioritize bookings through OTAs and agents instead. (Yes, seriously.)
If agents and OTAs are consistently sending you more business than you can afford to nab on your own, now is not the time to rock the boat.
Some marketing tactics — like organic social media and blogging — require minimal to no upfront cost. You will invest your time, but these channels tend to require consistent effort (…and time) to make an impact.
Long-term, the benefits are huge: You need content to power all of your marketing channels. When you do manage to find budget to spend on an advertising campaign, your website and brand need to be on-point — and ready to convert that warm traffic.
If you don’t have an advertising budget — or still don’t have much inbound travel — my advice is to get your house in order: Improve your website content, engage on social media, and work on SEO.
This strategy puts you in a better position to run more effective ad campaigns when the times comes.
Read Next: Hotel Business Recovery Strategy Ideas Post COVID-19
Final Thoughts
How much should you budget for hotel marketing in 2024? Sorry, but it’s impossible to provide a blanket statement answer to this question.
Average hotel marketing budgets always vary. Your boutique hotel marketing budget probably won’t look much like that of the select-service property over by the airport.
Generally speaking, the bulk of your resources will go into powering the most effective digital marketing strategy for hotels. Your hotel website should be a top priority to drive direct bookings. Otherwise, consider budgeting for content creation, low-cost tactics like social media or blogging, and outsourcing tasks that clutter your day-to-day.
How are you feeling about budget season? Did this article spark any new marketing ideas for next year? Let me know in the comments below!