Hotel Marketing Budgeting Philosophy: Let Your Goals Be Your Guide

Last year we tackled the elephant in the room by addressing just how much hoteliers should be spending on hotel marketing? If you missed it, follow the link. 

This year as budgeting season approaches, we’re tackling that same elephant, but in more practical way. 

Every year, budgeting season rolls around and every year hotel marketers return to their crystal balls, asking themselves 

“Just how much should I be budgeting for marketing?”

But the truth is—the budget is the last piece of a much larger puzzle. What hotel marketers need to ask themselves first...

What Are My Goals?

If you haven’t established clear goals, budgeting can look a whole lot like guessing. But with clearly defined and clearly articulated goals, you’ll give yourself and your marketing team the tools they need to build a defensible hotel marketing budget. 

Let Your Goals Guide You

When it comes to defining your hotel marketing goals, one of the biggest mistakes hoteliers make is not breaking out their goals by segment. 

For example, a property might include a healthy mix of Leisure Transient, Weddings and F&B. Each segment is different, with different challenges, different marketing KPIs, and ultimately different definitions of success. With that in mind, hoteliers should be allocating the appropriate resources to each segment. In other words, each segment should have its own strategy and therefore its own budget. 

Segment By Segment

Leisure/Transient

Is arguably one of the more complicated segments to budget for. In part because your goals may change over time. Understanding where your property is in its lifecycle is the key here.

For example, your property might be new or has recently rebranded, which means it lacks brand awareness in your given market. Or your property might be 10 years old and looking to shift share away from the OTAs.

It’s important to note, these are not the same goals. Therefore, it would be a mistake to approach them the same way when it comes to budgeting.

The truth is... developing brand awareness in a given market will likely require a larger budget (greater reliance on the OTAs, Non-Branded Keywords, etc…) than trying to win back a few points from the OTAs.

Understanding where your property is in its lifecycle gives you the clarity you need to request and allocate your marketing budget appropriately.

Weddings

The wedding business is booming. And hotels looking to capture a piece of that business need to take a long hard look in the mirror. 

Is it time to re-invest in collateral? 

Despite living in the Pinterest era, hotels continue to drop the ball on wedding photography. It’s nearly impossible to push weddings when you lack the basic ingredients to compel soon-to-be-brides. Your hotel gets a regular budget for photography, why shouldn’t your weddings product get a budget for wedding setups and mock weddings?

Do you have a lead flow issue? Or quality of lead issue? 

Again, it’s important to note, these are different problems. For instance, you might be getting a steady flow of leads from third-party sites like The Wedding Wire, but you’re finding they aren’t as qualified as you’d like. Maybe it’s time to redirect those efforts to more cost-effective channels? 

What are your follow up practices?

How soon is a wedding planner making contact? How often are they following up? Is anyone holding them accountable? Is it time to invest in more robust nurturing campaigns? 

It’s important to budget for the full success of a segment. Understanding where your marketing gaps are in each segment provides clarity when it’s time to ask for a budget. 

Budgeting on a per lead basis.

First, consider what the potential average revenue would be from a lead converted into a sale. For example, maybe the average revenue from a wedding is $15K. How much are you willing to spend to close one? 

According to Kalibri Labs, hoteliers spend as much as 25% of revenue on hotel marketing. For the sake of this example, let’s cut that in half. Multiply 12% by your goal for total annual weddings revenue and you’ve got a budget you can defend to ownership. 

F&B

Promoting your hotel’s restaurant can be a powerful contributor to its success, but sadly, hotel dining outlets are often neglected when budgeting season rolls around. 

Who is your audience?

First, you’ve got to decide who the customer is. Are you trying to bring in more locals? Or are you simply trying to get your guests to dine in?

It’s not just that these are different audiences, but the marketing tactics and cost of the tools you might use to identify each audience are completely different as well. 

The struggle to show ROI

Unlike budgeting for direct bookings or wedding RFPs, a hotel’s F&B budget can’t be directly measured against hard ROI. In other words: You likely won’t be able to show how much you spent and how many people walked in the front doors of your restaurant because of that ad. 

Difficulty tracking ROI might be the single greatest reason hoteliers don’t dedicate marketing funds to F&B. Because they can’t track ROI, they either dedicate no spend to F&B or worse, they dedicate a small spend that doesn’t make an impact. 

Tracking ROI is a difficulty when it comes to F&B, but that’s why it’s even more important that hoteliers build a defensible strategy and then budget accordingly. 

Budgeting for impact

Budgeting for impact means budgeting for the highest share of voice in a given market. In other words: you’ve got to understand exactly how big your market is, how many people you can hit in that market and how many times you can hit them. This is a particularly useful way of budgeting for your hotel’s F&B. 

Example: One way to do this is with the Facebook/Instagram ads platform. The ads platform allows you to draw a 5 to 10-mile circle around your local audience. Once you’ve determined the size of your audience, you can budget for reach (number of unique people hit) and frequency (number of times you hit them) based on your budget. 

Instead of walking into an ownership meeting and asking for a few extra dollars to run social ads. You walk in and ask for the exact amount of money it would take to hit 50% of that local market 5 times.