How Much Should Your 2016 Hotel Marketing Budget Be?
November 17, 2015 6:48am
Tambourine provides the right (and wrong) answers….
One of the most vexing questions posed to executives in any industry is: “how much should our budget be? Whether you are being asked to submit next year’s budget or a funding request for your next campaign, knowing how to answer your management or ownership’s budgetary questions is vital to your success (and job security)!
Hotel sales and marketing leaders face this question at least once a year. As an external vendor, we get asked this question all the time. After 30 years in the hotel marketing profession, here’s our thoughts on the right and wrong ways to answer the property owner when you face this thorny question:
The wrong ways:
1. “Whatever you can give me, I’ll do the best I can.”
On the surface, this happy answer would appear to position you as an easygoing team player, but it’s actually the most dangerous answer of all! Essentially, you are allowing ownership/senior management to unilaterally control the resources you have to achieve revenue targets that only you know how to achieve. If you fall short and are held accountable for missed targets, you will deeply regret not having asked for the proper amount before you accepted responsibility.
2. “I didn’t spend all of last year’s budget, so I don’t need as much next year.”
This answer only works if you exceeded revenue targets while under-spending the budget… which doesn’t happen very often. Unfortunately, if you are good enough to pull off that amazing feat, be prepared to be asked to do it again every year!
3. “Our sales goals are 20% more than last year, so I need 20% more budget”
It’s not that easy. Revenue rarely correlates in an exact linear fashion with marketing budgets. Instead, think about where the expected revenue increases are expected to come from and what kind of budget you need to achieve it? Perhaps the increased target is from meetings and groups, which takes less budget to generate leadflow than transient/leisure.
Conversely, if the targeted revenue increases are expected to come from channels that cost more to penetrate, be ready to ask for more budget to attack those channels.
PART 2: The Right Ways
Now that we have covered the wrong ways to answer the question: how much should our marketing budget be…?” Now, let’s focus on better ways to answer the question that will determine your success and quite possibly your career longevity!
1. “The budget needs to be aligned to sales/revenue projections… what are the sales & revenue projections?”
It’s always a bit awkward to answer your boss’ question with a question of your own, but it’s impossible to determine the proper hotel marketing budget without knowing the overall revenue targets AND how each sub-segment is expected to contribute to the total revenue pie. Once you know the actual revenue targets, you can carefully consider the resources you need to “climb the hill” that’s been put in front of you. And then, even after you know how “high” the hill is… you need time to put your plan and ultimate budget request together.
2. “I need $____ in funding. ____ new people. _____ product changes to be made. And _____ department to report to me.”
Whoa! Does that sound bold and frightening? We understand if it does, but budgeting time means it’s time to put on your big boys and girls pants and tell ownership EVERYTHING you need to deliver the results they are mandating! Surprisingly, many senior tourism and hotel marketing folks think they are restricted to simply asking for advertising money. If you need more people on your staff to achieve the revenue target, then you need to ask and be prepared to make a simple business case for the added overhead. Same goes for changes to the product; if your physical product or service experience requires additional investment, now is the time to ask! And last but not least, if someone else’s department is inhibiting your results, ask for control of it…. Or forewarn ownership that results may be hampered by folks you have no ability to manage and improve.
3. Last year, we achieved a marketing CPS of X.
To achieve next year’s budget, I need $_______ .”
CEOs and property owners no longer want to hear about “branding initiatives” or logo colors… they expect their senior marketing leaders to contribute to revenue in a measurable way, communicate in number-speak and be accountable for tangible results. So it’s important to have complete fluency in the KPIs that affect the bottom line. As an example, if you know last year’s marketing cost-per-sale (CPS), you should be able to extrapolate that against future revenue targets to determine the budget required. But remember, you will also be expected to reduce your CPS over time as you learn and tweak your programs.
Think it through!
Remember, when ownership asks you for your budget request, take time to carefully think about your answer. This may be the first and last time you get to ask for the things you really need to achieve the goals they have set for you.
Tags: hotel marketing
Tambourine drives revenue for hotels and destinations worldwide using advanced marketing technology. The firm is celebrating its 30-year anniversary. For more information, visit Tambourine.com.
Contact: dave spector
10 Most Influential Hospitality Trends and Insights to Start 2018
TripAdvisor and Google Going Opposite Directions?
Art as A Marketing Strategy for Hotels – Infographic
The Importance of Data Transparency in Hotel Marketing
10 Secrets for Stellar Email Opens & Click-Throughs
5 Ways AI Is Transforming Hotel Marketing
5 Things Hotel Marketers Are Thankful for This Thanksgiving According to Tambourine
[Infographic] Classic Resorts Nets a New Channel of Travelers by Launching Advocacy with Flip.to
Tambourine Shares Hotel Digital Talent: Why Is It so Hard to Find?
How Much Should I Spend on Paid Search for My Hotel?
Your Wine List Is Too Long
5 Travelling Trends to Consider for Your 2018 Marketing Campaign
Tambourine Shares Why Hotel Management Companies are Obsessed with Marketing Costs
All Forces That Do Not Respect the Law Become Tyrannical
Online Hotel Marketing — A Hotelier’s Guide to Inbound Marketing
Are Hotels Coveting only Half of the Millennial Market? Part Two
Tambourine Shares Why We Need to Talk About Hotel Marketing Metrics
Are Hotels Coveting only Half of the Millennial Market? Part One
How to Turn Your Hotel Guests Into Brand Ambassadors
The Secret Weapon Page on Your Hotel Website – Tambourine Insights
Please login or register to post a comment.