How Much Should Hoteliers Be Spending on Marketing?

With the 2026 budgeting season around the corner, the question of marketing investment has once again become front and centre. In a recent Hospitality Net Viewpoint, Max Starkov set the stage by highlighting a striking imbalance: while U.S. hotels typically spend less than 2.5% of room revenue on marketing (including payroll), OTAs invest billions — Expedia alone allocated 54% of its 2024 revenue, or $6.9 billion, to marketing. Collectively, major OTAs spent $17.8 billion in a single year, dwarfing the combined marketing budgets of hoteliers worldwide.

Starkov argues that underinvestment in marketing is the direct channel’s “killer.” Unless hotels are willing to dedicate at least 4–6% of total revenue to marketing, excluding payroll, and invest in enabling technologies such as CRM, RMS, guest messaging, and online reputation management, the industry will continue to cede ground to OTAs.

His provocation triggered a lively exchange of views among industry experts, who offered their own perspectives on how much hotels should spend — and, perhaps more importantly, how they should spend it.

The Benchmark Debate

Many experts agreed that hospitality’s marketing budgets lag behind other industries. Adam Mogelonsky pointed to the retail benchmark of 5–10% of total revenue, noting that this figure is a reasonable starting point for hotels. Erik Muñoz added that new hotels should allocate up to 10% of projected revenue, luxury hotels up to 8%, while established properties can manage with 4–6%, with adjustments across high, shoulder, and low seasons.

Frédéric Gonzalo highlighted the importance of product lifecycle: a new property or relaunch may justify 15–25% of revenue, while mature hotels can settle closer to 5–10%. Peter O’Connor was blunter: the answer is simply “much more” than hotels spend today, but less than the cost of OTA commissions.

Competing with OTAs – Or Not

Several contributors cautioned against drawing direct comparisons with OTAs. Mogelonsky stressed that OTAs are tech companies, not service providers, and their operating models make marketing spend ratios inherently different. Simone Puorto agreed, arguing that what matters is not matching OTA spend, but managing cost of acquisition: ideally 10–12% for direct bookings, 15% for mid-funnel expansion, and up to 20% for top-of-funnel brand building.

Defining “Marketing”

A recurring theme was the lack of clarity around what falls under “marketing.” Puorto warned that OTA advertising and metasearch should not necessarily be lumped into the same category as brand marketing. Mark Fancourt echoed this, noting that technology platforms should not be considered marketing investments in themselves, but the programs executed on them should. Without common definitions, benchmarking remains imprecise.

Smarter, Not Just Bigger

While most experts called for higher spend, several underlined the importance of smarter allocation. Scott Falconer argued that marketing budgets should be tied to measurable outcomes such as incremental revenue, RevPAR, occupancy uplift, or guest engagement, rather than arbitrary percentages. Linchi Kwok added that the real question is where the money goes, pointing to AI-powered loyalty, AI-driven social engagement, and content marketing as strategic priorities for the years ahead.

Beyond Percentages: Creativity and Context

Finally, many emphasised that success depends on context and creativity. Mogelonsky urged hotels to invest in channels where OTAs cannot compete — such as social media, influencers, event activations, PR, and partnerships with trusted advisors or consortia. Gonzalo suggested aligning spend with corporate goals and market conditions, including opportunities arising from renovations, management changes, or external demand shifts.

Five Conclusions

1. Hospitality underinvests in marketing: with most hotels allocating less than 2.5% of room revenue, the industry is far below retail and small business benchmarks.
2. Benchmarks vary by context: new, luxury, or repositioned hotels may need 10–25% of revenue, while mature properties can sustain with 5–10%.
3. Stop comparing directly with OTAs: their tech-driven models make direct comparisons misleading. Hotels should instead focus on cost of acquisition and maximising direct channel ROI.
4. Smarter spending matters as much as bigger budgets: tying investments to measurable outcomes, leveraging data, and embracing AI-driven engagement will yield more impact than raw spend alone.
5. Creativity and definition are key: marketing should extend beyond ad spend to PR, partnerships, and direct relationship-building. But first, the industry must agree on what truly belongs under the marketing umbrella.

Read full expert opinions here.