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Let's kick off today's Booking Boost with a bit of Q&A.
Question #1: What's your food cost?
You probably have an answer already.
Question #2: What's your CPOR (cost per occupied room)?
Is that answer on the tip of your tongue, too?
Question #3: What's your total customer acquisition cost?
🤔 Did things just get a little foggy?
This Booking Boost article will help you get that answer.
But first...
We've all heard that listing on the OTAs has a great benefit known as the "billboard effect."
The billboard effect means online travel shoppers often find your hotel on the OTA platform and then book through another channel.
Research shows that the average hotel shopper does extensive online research before booking. They visit 25 travel sites.
If the OTA billboard effect influences a booking like a print ad...
shouldn't we count their commission fees as a marketing expense?
Surprisingly, few hotels calculate OTA commissions as marketing expenses.
Instead, they're considered a distribution cost and are deducted from gross revenue as part of COGS (cost of goods sold), not as marketing costs.
What? Yep, it's true.
This often means that OTA commissions aren’t scrutinized by ownership in the same way marketing expenses are.
Wait a minute.
Christine, do you mean that the OTAs act like a billboard for marketing but are treated differently in financial statements?
Yes. That's it, exactly.
Here’s another kicker.
Gross Revenue - OTA Commissions = Net Room Revenue
Your marketing budget comes from net revenue and is sometimes on the chopping block!
What happens then?
Your direct channel efforts can suffer (I'll save that discussion for another day.)
And, you could be overlooking a critical financial puzzle-piece when reviewing your marketing spend.
Yikes!
Why Hotels Archaic Accounting Systems Need to Change
To understand your acquisition costs clearly, you need to include the OTA commissions.
These fees are significant, especially for properties relying heavily on OTAs for bookings.
And when they aren’t factored into your acquisition cost, you only see part of the picture.
This incomplete data makes it hard to assess your distribution and revenue management efforts.
Tracking these costs is crucial. It is a key measure of your hotel's financial health and growth potential.
Want to Take Control of Your Acquisition Costs?
The first step to gaining a clearer picture of your acquisition cost is to see where your money is going.
I made a tool to help hoteliers like you.
It lets you quickly assess your acquisition costs (OTA and direct channels).
Watch this video 👇 to see how it works so you can use it for your property.
Want your own Cash Calculator?
Grab the Reclaim Your Revenue Blueprint, which includes the FREE Cash Calculator and other resources directly in your inbox.
Do you know a hotelier who would like to know about this tool?
If so, please help them out by sending them this link.
Cheers to you getting the whole picture and making informed decisions to grow your revenue.
Perhaps I can help you get more bookings, drive new revenue, or eliminate expensive acquisition or agency costs.
Worth exploring?
If you're the kind of person who likes to fast-track their growth results, here are 2 ways I can help.
Revenue Roadmap: In 12 days, get a full assessment and action plan to fast-track your revenue results.
30-Min Free Growth Strategy Call: Book a time to chat with Christine about a challenge or your next level of growth.