How Hotel Marketing Stats Mask Profitability Problems
At O’Rourke, we love celebrating high Return on Ad Spend (ROAS) figures with our hotel partners. It simply feels good – what’s not to love about earning $40 for every dollar spent on ads? That’s why so many agencies proudly share them when they report to clients. Everyone understands these results and why they matter.
However, ROAS is not the full story, and it’s not our principal measurement. It’s one dimension of ad performance that risks overlooking a range of key performance indicators (KPIs) that would certainly interest hotel operators much more, notably cost-per-acquisition and earned revenue. If your marketing agency doesn’t share these essential baselines, it’s time to start asking questions. Let’s dig into how we measure marketing at O’Rourke, and why ROAS is only part of the story.
Marketers Can Easily Manufacture High ROAS
The easiest way for an agency to hand a hotelier 50-to-1 ROAS is to spend most of the advertising budget on surefire channels, notably branded search. This means, in other words, bidding on the brand name of your hotel.
When a traveler types your property’s name into a search engine, they know who you are, they’ve likely shortlisted you, and they are highly motivated to book. Bidding on brand terms very likely leads to clicks, and those clicks very likely lead to bookings. And, while this tactic sometimes earns a spot in a hotel’s ad budget, it just as often spends on user intent that a strong organic link would pick up at no cost.
Remember: ROAS is a measurement of one advertising channel’s efficiency. An aggregate number for all channels shows how they work together. But oftentimes, higher earnings result from broader strategies where paid media is only one contributing factor.
Insist on Measuring Your Marketing Investment on Profitability
Some guests are more valuable than others. They book premium rooms, stay longer, and spend on amenities at a higher rate. Hotels can, and should, pay a premium to outcompete other hotels and land these bookings.
Conversely, during low-demand seasons, filling up inexpensive inventory may net the highest possible margins, and require a very different marketing strategy. Both have a place. And our marketers understand how to adapt as demand, traveler motivations, and other factors influence our clients’ businesses.
However, it takes an entire marketing ecosystem to orchestrate this approach to generating revenue for a hotel. This may involve targeted paid ads to showcase your brand to new potential guests, overhauling website content for AI search, or specialized offers to distinct audience segments. Each also carries a distinct set of measurements, and the appropriate mix depends on your hotel’s market and opportunities.
Let’s review some numbers to know.
Useful KPIs to Know When Measuring Hotel Marketing Performance
Your marketing mix should work together to attract and convert travelers. Our media buyers watch KPIs like these to help shape where we spend ad dollars, and where we recommend new creative and content to join your campaigns.
- Organic conversion rate tracks how effectively your website answers travelers’ search queries and intent, proving that your organic visibility translates into bookings.
- Paid ad conversion rate measures the percentage of paid traffic in a given channel, say, Google search or Meta, that completes a reservation. This indicates whether your ad campaigns attract qualified buyers.
- Clickthrough rate (CTR) is not a direct measure of revenue, but it serves as a vital early indicator for awareness campaigns by proving your creative assets are compelling enough to win a traveler’s attention.
- Blended ROAS compares your total marketing investment against your total direct revenue, which can show, for example, whether non-revenue-generating awareness ads result in more revenue from lower-funnel campaigns.
- Cost Per Acquisition (CPA) shows you what it costs to secure a single booking, letting you measure efficiency and potentially push more budget to maximize revenue.
Remember: ROAS is a ratio, not dollars in the bank. Some low-ROAS tactics are worth pursuing as part of a larger growth strategy, and hotel marketers should insist on understanding how these pieces fit together in order to assess their agency’s performance.
When O’Rourke delivers double-digit ROAS for independent hotels, it tells our clients that our campaigns successfully line up audience intent with ad spend. This serves as a model for scaling revenue because we know our ads are spending efficiently. Ready to build a revenue-first marketing ecosystem? Talk to our team of strategists today.