Many hotels are working on their marketing budgets right now. We will examine the biggest factors to consider when planning your Internet marketing budget, 11 major categories hotels should budget for, and finally 3 basic hotel budgeting approaches.
This advice comes from my own real-world experience as the marketing manager or consultant for dozens of leading organizations around the world — and also as the owner of three companies. When your own company’s money is on the line, you tend to take a very pragmatic approach to marketing, and that’s what I intend to do in this article.
Factors to consider while planning your hotel marketing budget
Many industry professionals recommend you start with the industry average marketing budget. I disagree. Every business success I’ve been involved with has been contrarian. If you spend your resources like everyone else, you’ll get average results. Breakthrough campaigns often require unusual approaches. You decide what works for you.
Be aware of industry standards, but don’t feel bound by them. It can be helpful to know the average prices hotels are paying for individual marketing tactics — if only for a point of reference.
Start with an internet marketing plan for the year. Sounds simple, but true. If you don’t know how you want to spend your money, calculating the amount will be extremely difficult! Some tactics to include are explained below.
A good budget will take into mind past results your company experienced — but will also realize that things change. What worked five years ago may not work over the next five years.
Remember your primary business objective. Do you want more overall sales, to build your brand, or consolidate your profits? Each requires a different approach, which we’ll cover later.
Know your marketing priorities. Separate the “musts” from the “wants.” So many things can happen along the way that cause you to deviate from a plan made months ago. Having priorities ensures the essential gets done.
Identify which marketing strategies you don’t need to implement. There are a seemingly unlimited number of marketing tactics you could try, so identifying the non-essential helps you focus and cut costs. Every hotel doesn’t need to do every tactic out there.
Be aware of trends, and budget appropriately. Some organizations on annual budget cycles approve money for trends way too late — and missed the boat. Make sure the resources that you’re dedicating to a tactic or strategy will be valid 1, 2, 5 years from now. You don’t want to outdate yourself.
I personally recommend most hotels abandon all traditional marketing and advertising in favor of any Internet focused strategy: 75% of budget for web-based communications, 25% for PR. You can discount this advice as someone who has worked in web marketing his entire career, but the numbers don’t lie. In the campaigns that I’ve been involved in, we have achieved phenomenal return on investment… and received media coverage an organization our size shouldn’t normally be entitled to.
Separate your marketing costs into two categories. Initial development costs include research and strategy development, website design, content creation, marketing systems set up. Ongoing expenses and maintenance include e-mail marketing, pay per click advertising, search visibility improvement, website maintenance and development, consulting fees, and analytics and tracking analysis.
Ensure that you are sufficiently capitalized. Many marketing tactics will take several months to show results, and often the best results are obtained by sticking with your marketing plan month after month — for the next 12 months. You may have to adjust your marketing plan to enable this, but make sure your budget is sufficient to accommodate consistent execution.
Be aware that your most important marketing investments may not even be under the traditional ‘marketing’ budget category. For example, introducing a fabulous collection of guest amenities can cause your guests to promote your hotel for you. At the end of the day, your guest experience is the marketing. Money you spend to create an amazing guest experience at your hotel has some of best ROI.
Finally, think of your marketing program as an investment. If you are promoting properly, every dollar that you spend on marketing will come back to you many times over. Good hotel marketing budgets are never an expense, and it’s important we remember this.
11 most important hotel marketing budget categories
Staffing expenses. Whether it’s a content writer or social media marketing assistant, a major shift in marketing strategy usually requires a shift in HR priorities. These salaries can be a big expense. But it’s important to remember that good employees are always free: they earn your company more money than you pay them in salary.
Training fees. I personally spend a large portion of my money to train and educate my employees. This includes everything from paying them read articles and important books to registration fees for workshops and seminars. Your people are one of your most important resources, and an investment into making them more effective marketing professionals will always pay off.
Consulting fees. There will always be times when you cannot do everything in-house. If you have a short-term assignment, it can make sense to bring in outside expertise to help. Look at your Internet marketing plan and budget for this type of help appropriately.
Website optimization. The vast majority of hotels have at least a halfway decent website up. The big challenge is making sure it runs well: turning browsers into bookings. This is website optimization, making sure your website sells well and is easy to find in search engines. It’s an ongoing process, but your biggest investment will be at the start — having a professional analyze and make the changes.
Search visibility improvement. Earning top rankings in search engine results is important for bringing new visitors to your website. It needs to be an ongoing part of your Internet marketing campaign: both to improve position and to keep up with competitors that are doing the same thing. Top budgeting priorities for hotels include adjusting the website for important keywords, and building links through various tactics.
Pay-per-click advertising. This is one of the only advertising methods I recommend most hotels budget for. The flexibility and return on investment can be impressive. You’ll need to budget for campaign management, and the actual clicks that you purchase from search engines. This can cost several thousand each month, but the return on investment is typically much better than other advertising options.
Online reputation management. I tend to talk a lot about this on this blog, and you are probably aware, this falls into two major categories: monitoring your Web presence, and proactively encouraging positive content. Monitoring expenses include software and/0r someone to scour the web for data. Reputation building requires the development of a savvy outreach program.
E-mail communications. E-mail software is usually a relatively small expense, so your investment in e-mail marketing will be in people. Specifically, two types of people: the content writers and the marketing specialists. E-mail is a writing-intensive medium, so you need to allow someone to spend the time to develop this content. The marketing expertise is important to make sure your communications are effective — reaching the right people and generating the right response.
Content development. This includes all of the information you publish on and off the web. It includes blogs, websites, articles, and more. Many hospitality companies hire outside freelance journalists to help them with this. The good news is that much of it can be re-purposed for other formats.
Media production. Producing high-quality photos and videos of your hotel is more or less a one-time expense, but very important for future marketing efforts. You can reuse great photography and videos in many ways, online and off.
Press relations & media outreach. This category includes outbound communications such as press releases and media kits, the development of content that interests the media, and relationship building with journalists and media outlets. Even for mid-sized properties this can be a full-time job — but the return can be excellent. When your hotel gets positive coverage in the media, you get credibility and increased awareness that you cannot buy. This is the reason I spend a full 25% of my marketing budgets on media relations. This figure is typically higher if you are a new business.
3 marketing budgeting approaches I’ve observed
The ‘increase overall sales’ hotel budget. This strategy is often used by companies that are brand-new and want to get the word out. In this case, the budgeting focus is on tactics that bring in immediate new sales now. As long as the campaign is profitable, there is less focus on low cost marketing, and more priority on high volume. Advertising and media relations take priority over content-based tactics.
The ‘build our brand’ hotel budget. This strategy is used for hotels that want to establish a great reputation and word-of-mouth. The budget will reflects this with low cost, but labor-intensive content marketing tactics. You either need to have a great team of people in house, or hire an outside agency to develop this. The great thing? Once the campaign is developed, your ongoing cost is usually quite low.
The ‘save our profits’ hotel budget. Several older, established hotels I’ve worked with seem to be on marketing cruise control. They already have an outstanding reputation among their target audience, and they’re not in a big hurry to try new things. This can be one of the cheapest strategies, but also the least likely to increase sales.The big challenge here is to make sure their online presence matches their great off-line presence. Hotels using this strategy may invest in guest relationship management tactics such as e-mail. The spending priority is more on people that can manage this, and less on new technology.
The hotel marketing budget approach I recommend
As mentioned earlier, companies I own or manage have obtained excellent results through a hybrid online communications and media outreach system.
But every hotel and organization is different. You need to take into consideration factors I described earlier, along with your hotel’s unique priorities, and put together a budget to meets your needs.
Good luck with planning your hotel marketing budget. Remember, if you need any help I’m just an email away.
