How much should a hotel spend on marketing?

Every guide on this subject answers with a percentage of revenue. Four to six percent, or eight to twelve if you are in growth mode. Those numbers come from chain budgeting, where marketing is a line item competing with other line items across hundreds of rooms.

For a thirty-room independent property the percentage is close to useless, because it tells you what to spend without telling you what you are buying instead.

Start from the commission, not the revenue

You already have a marketing budget. It is called commission, and you pay it every time a room sells through an online travel agency.

That reframing does most of the work. If 60 percent of your rooms sell through OTAs at an effective 15 to 20 percent, you are spending a substantial share of revenue on distribution already. The question is not whether to spend on marketing. It is whether the next unit of spend goes to a channel that rents you a guest once, or one that gets the guest to book direct next time.

A useful sizing rule: your direct marketing budget can be justified up to the commission it displaces. Spend a shekel to save a shekel and you have broken even on cash while gaining the guest relationship.

What the money actually goes to

Most budget guides split by channel. That hides the more important split, which is between money that buys attention and money that buys labour.

The production line is where independents overpay. A retainer covering campaign build, copy, creative and reporting can equal or exceed the media budget it manages, which means more than half your marketing money never reaches a guest.

Why percentage-of-media pricing distorts decisions

Some agencies charge a percentage of ad spend, often 10 to 20 percent. The problem is structural rather than moral: it pays more when you spend more, whether or not the spend produced bookings.

Flat pricing has the opposite property. It gets cheaper as a share of spend when campaigns scale, and the provider only keeps the account if results hold. When comparing quotes, model both at double your current media budget and see which one still makes sense.

A floor worth respecting

Ad platforms need volume to optimise. Below roughly 100 shekels per day per audience group, Meta cannot gather enough conversion signal to learn, and the campaign underperforms in a way that looks like the channel failing when it is really the budget starving it.

Practical consequence: fewer audiences funded properly beats many audiences funded thinly. Two segments at a real daily budget will outperform six at a token one.

How to know if it is working

• Direct bookings attributable to campaigns, not total bookings.
• Cost per direct booking, compared against the commission you would have paid on the same room.
• Share of room nights sold direct, tracked monthly. This is the number that compounds.
• Return on ad spend over a full booking window, not the first week of a campaign.

If your booking engine is not passing conversion data back to the ad platforms, none of the above is measurable and you are budgeting on instinct. Fix that before increasing spend.

Common questions

Is there a minimum budget worth starting with?

Yes, and it is set by the platforms rather than by strategy. Plan on a real daily budget for each audience you want to reach, and start with one or two audiences rather than spreading thin.

Should the budget change by season?

It should change by booking window, which is not the same thing. Spend when guests are deciding, which for most Israeli properties is two to six weeks before the stay. Advertising into a weekend that is already full is the most common waste we see.

What about a year with no marketing history?

Set a deliberately small budget, run it for a full booking cycle, and treat the first months as buying data rather than buying bookings. Then size properly once you know your cost per booking.