< Blog

4 Tips for Planning Your 2022 Hospitality Marketing Budget

4 Tips for Planning Your 2022 Hospitality Marketing Budget

Brian Fitzgerald
Brian Fitzgerald August 12, 2021
4 Tips for Planning Your 2022 Hospitality Marketing Budget

Budgeting season has arrived in the hospitality industry, and if you’re like most hoteliers, you’re in the middle of planning your budget and marketing tactics for the year ahead.

Getting started on an annual marketing plan can be overwhelming if you’re approaching it correctly. Creating a marketing budget and choosing how to allocate your funds isn’t as simple as determining your spends for the year and plugging numbers into a spreadsheet. The best marketing budgets are built strategically, taking into account your goals for the year and then allocating your budget to marketing tactics that will help you get there in the next 12 months.

While some websites offer marketing budget templates, there is no such thing as a cookie-cutter budget, at least not in the hospitality world. The right spending breakdown will vary based on your hotel type and brand, location, audience, and more. Before determining how to build your budget and where to spend marketing dollars, you need a plan of action.

Here are four tips to follow as you begin putting together your 2022 budget.

1. Set realistic, measurable goals

When all is said and done, every hospitality marketer has the same goal: Drive bookings. It’s fine for that to be your end goal, but for your marketing plan to be successful in the year ahead, you need specific, measurable goals. Without goals, your marketing efforts will likely end up unorganized and done on a whim, which isn’t a recipe for success.

When you have goals, they give your hospitality marketing efforts purpose and ensure your budget is spent wisely. In today’s environment, you can’t afford to waste dollars on unproductive tactics. Discuss these goals with your marketing team and key stakeholders to ensure you have alignment. As a simple guide to putting together marketing plan goals, you should:

  1. Ensure you have marketing and sales alignment. Before you sit down to put your goals together for the year ahead, talk with your sales team and higher-ups to make sure there is alignment. Before putting a plan together you need to be sure everybody is on the same page and has shared expectations.
  2. Look at the performance of your hotel over the last year, including website and advertising data, average daily rate (ADR), revenue per available room (RevPAR), and more. Not sure where to begin in your lookback analysis? Expedia has an overview of the metrics hoteliers should focus on.
  3. Set specific and measurable goals. After reviewing your data, you should have a better idea of achievable and realistic goals. Don’t just say you want to increase bookings in Q1 of 2022. Set a goal such as: Convert 15% of commission-based bookings in Q1 to direct bookings. With a specific goal, you can now determine which marketing tactics will help you get there.

What marketing tactics do you need in your marketing plan? Your goals will guide the way.

  • Want to drive more direct bookings to cut down on commissions? You may want to invest in metasearch and other proven advertising methods.
  • Looking for more qualified traffic? A Search Engine Optimization (SEO) and content strategy could help you increase your hotel website’s organic traffic.
  • Need to increase brand awareness? Display and social media advertising can help you target a specific audience and get your hotel’s image out there.

In the end, knowing your overall goals will help you set your marketing budget. As you begin trying to pinpoint that number, know this: The U.S. Small Business Administration recommends spending 7% to 8% of gross revenue on marketing and advertising. Still, this will vary depending on if you’re an independent hotel or a branded one. In fact, a study from Gartner found that marketing budgets are on average around 11% of total revenue. Many hoteliers work with a hospitality marketing agency for expertise in determining the proper budget for their hotel.

2. Determine who your ideal audience is

The best marketing is done when you know who your target audience is. It can be challenging to market to everybody, so it’s best to break your efforts down into segments.

As Expedia Group notes, “Narrowing your focus on a specific group allows you to tell a truly compelling story about why your property is perfect for their needs and support your claim with example amenities, photos and glowing reviews from previous guests who are like them. This enhanced appeal will help you win more business with the guests you want most.”

Does your hotel cater to the business traveler? Or are you focused more on the leisure traveler? Maybe your location makes your hotel a top destination for families. You may already know these answers innately, but there are some reference points to help with your ideal audience.

  • Location: Hotels near the airport or conference centers have a much different audience than ones near a ballpark, zoo, or other attractions.
  • Amenities: Does your hotel feature its fast-speed Wi-Fi, business center, and room service? Or are you more focused on the pool and spa, shuttle to downtown, and your hotel’s restaurant?

There is a good chance you already know these answers, but keeping them in mind during the planning and budgeting process will help you stay on track. More importantly, it’s good to think about your target audience to ensure you’re deploying the right strategy to reach your goals.

You can also use both internal and third-party data from Online Travel Agencies (OTAs) to get more insight into your audience. Does your hotel get a lot of last-minute bookings? Where is your website traffic coming from? What age group tends to interact with your ads and website? This data and more can play an important role in your marketing plan.

3. Know your operating costs before planning

You may have heard of the 5% rule, which advised businesses to spend 5% of total revenue on their marketing budget. As mentioned before, that percentage tends to be higher today, ranging from 7% to 11% for many businesses. A marketing strategist can help set an exact budget total, but it’s important to take several factors into account first.

Your hotel marketing budget should include all marketing, advertising, and promotional campaigns for the coming year. Before you even get to the marketing channels, there are a number of costs your hotel likely has set in stone:

  • Marketing staff and employee costs
  • Software and website costs
  • Marketing research costs
  • Outsourced work costs

Once you have those (and other) predetermined costs down, it’ll be easier to see what remains and set a budget that is realistic and can help get your hotel where it wants to go.

4. Evaluate resources, marketing agencies, and tactics

Now comes the fun part.

With specific goals, a target audience, and budget in mind, you should be able to begin putting together a strategic marketing plan to reach that audience and those goals. In marketing, many people refer to the Pareto Principle, a concept that says 80% of action comes from 20% of causes. Translated to hospitality marketing, roughly 80% of your results will come from 20% of your marketing channels. That doesn’t mean hospitality marketers shouldn’t use all of the channels at their disposal, but it does make some channels more important and effective.

Key marketing tactics to consider include (in alphabetical order):

  • Conversational Marketing
  • Display Advertising
  • Email Marketing
  • Local SEO
  • Metasearch Marketing
  • Pay-Per-Click Advertising
  • Onsite SEO
  • OTA Advertising
  • Reservation Recovery
  • Social Media Advertising
  • Social Media Management
  • SEO Content Creation
  • Technical SEO
  • Vanity Website (Branded Hotels)
  • Website Design

The above are the tactics your hotel should be considering. Interested in which of the above tactics you Must Have, should Strongly Consider, and ones that are Nice to Have? You can find more information on each channel and their importance in our Planning Your 2022 Marketing Budget for the Hospitality Rebound guides for both Independent and Branded Hotels. 

Once you determine what channels are right for your hotel, either internally or with the help of a hospitality marketing strategist, you’ll want to set budgets for each tactic. From there, knowing the resources you have available, you can best determine which marketing efforts can be handled internally and which ones might be best handled by working with an agency.

At the end of the day, no hospitality marketing plan or budget is created equal. Every hospitality marketer needs to determine their goals based on their hotel’s audience and situation. To have the most marketing success in the year ahead, a marketing plan should be unique.

If you have questions, reach out to talk with our team. In the meantime, read the hospitality marketing trends to know as you prepare to build your 2022 budget.