The Short Answer: 4-6% of Revenue for Strong Performers
Australian hotels achieving strong occupancy and direct booking ratios typically allocate 4-6% of total revenue to marketing. This benchmark comes from Merge’s analysis of 3,000+ Australian hospitality campaigns delivered between 2008 and 2026, tracking spend against revenue across budget, mid-tier, and luxury properties. The broader industry average sits higher — the Gartner CMO Survey (2025) reports marketing budgets at 7.7-9.4% of revenue across all industries (Gartner, 2025). That doesn’t mean hotels should spend 9%. It means properties that allocate wisely — prioritising direct booking channels over broad awareness — can achieve strong results at the lower end. Hotels spending under 2% of revenue on marketing almost always over-rely on OTAs, paying 15-25% commission per booking instead.
TL;DR: Hotels should allocate 4-6% of revenue to marketing for strong performance. The cross-industry average is 7.7-9.4% (Gartner, 2025), but well-targeted hotel campaigns — particularly those focused on direct bookings — deliver results at the lower end of that range (Merge Marketing).
What Does the Average Hotel Spend on Marketing?
Most Australian hotels spend far less on marketing than they should. While the Gartner CMO Survey (2025) places the cross-industry marketing budget at 7.7-9.4% of revenue (Gartner, 2025), many independent and boutique hotels invest under 2.5% — leaving the gap for OTAs to fill with their own advertising budgets.
That under-investment has a direct cost. Hotels retain 94.87% of direct booking revenue compared to just 82.06% through OTAs (Punch Hospitality/Revinate). Every dollar not spent on direct marketing effectively funds OTA commissions of 15-25% per booking. The question isn’t whether hotels can afford to spend on marketing. It’s whether they can afford not to.
Here’s how hotel marketing budgets typically break down by property type:
| Property Type | Typical Spend (% of Revenue) | Notes |
|---|---|---|
| Budget / Economy | 2-4% | Tighter margins; focus on Google Ads brand protection and OTA rate management |
| Mid-Tier / Boutique | 4-6% | Sweet spot for balanced paid + organic strategy with direct booking focus |
| Luxury / Resort | 5-8% | Higher ADR justifies broader campaigns including video, content, and social |
| New Property (first 2 years) | 8-12% | Awareness building requires heavier investment before word-of-mouth develops |
We’ve found that hotels in their first two years of operation need to spend roughly double what established properties do. Brand recognition doesn’t exist yet, organic rankings haven’t matured, and the guest review base is thin. Cutting the marketing budget early is the most common mistake we see with new hotel openings.
Where Should Hotels Allocate Their Marketing Budget?
Google Ads in the travel sector achieves an 8.73% click-through rate and 5.75% conversion rate — the highest of any industry (WordStream, Apr 2024-Mar 2025). That makes paid search the cornerstone of most hotel marketing budgets, but it shouldn’t be the only channel.
A well-balanced hotel marketing budget spreads investment across channels that capture demand at different stages — from dreaming about a trip to comparing room rates. Here’s the allocation we recommend for established Australian hotels:
Why Paid Search Takes the Largest Share
Google Ads captures travellers at the moment of booking intent. Someone searching “boutique hotel Brisbane this weekend” is ready to commit. The travel industry’s average CPC of $2.12 and cost per lead of $73.70 (WordStream, Apr 2024-Mar 2025) represent strong value compared to OTA commissions on the same booking. Brand keyword bidding alone — protecting your hotel name from OTA ads — is the highest-return activity in hotel advertising.
We consistently see hotels spending too much on broad awareness channels before locking down their high-intent paid search campaigns. A hotel with strong Google Ads ROAS of 5x or above should scale that spend before investing in upper-funnel channels. Only when search is maxed out does it make sense to push more budget toward Meta and content.
Email: The Most Undervalued Channel
Email marketing returns $36 for every $1 spent in hospitality (SiteMinder). Despite that, most hotels allocate less than 5% of their marketing budget to email. The channel thrives on owned data — guest emails captured through direct bookings, website opt-ins, and loyalty programmes. Loyal hotel customers spend 22.4% more per stay than first-time guests (SiteMinder). Building and nurturing an email list compounds value over time in a way that paid advertising alone can’t match. Read more about email marketing for hotels.
How Do You Measure Whether Your Hotel Marketing Budget Is Working?
The clearest indicator is return on ad spend. Hotels targeting 5x+ ROAS from Google Ads are in strong territory, based on Merge’s hospitality benchmarks. Luxury properties should aim higher at 6-10x, while budget hotels can consider 3-5x acceptable given their lower average daily rates (Varos, 2025).
ROAS is the primary metric, but it doesn’t tell the whole story. You also need to track Book Now CPC as a proxy when booking engine revenue data isn’t clean. Here’s how we grade both metrics:
| Performance Level | ROAS | Book Now CPC | What It Means |
|---|---|---|---|
| ● Strong | 5x+ | Under $1.50 | Scale spend confidently — campaign is clearly profitable |
| ● Average | 2x-3x | $1.50-$2.50 | Acceptable but worth optimising — test bidding and landing pages |
| ● Underperforming | Under 2x | Over $2.50 | Needs urgent audit — review full booking funnel and attribution |
Beyond ROAS, track the direct-to-OTA booking ratio. A healthy hotel should aim for at least 60-70% direct bookings. If OTAs account for more than 40% of your reservations, your marketing budget isn’t working hard enough — or it’s being spent in the wrong places. Direct bookers are 2.1-3.4x more likely to return than OTA guests (HotelsSEO CRM data, 2025-2026), so the lifetime value difference is substantial. See our full direct vs OTA cost comparison.
What Mistakes Do Hotels Make with Marketing Budgets?
The most common mistake isn’t overspending — it’s under-spending and then paying more through OTA commissions. Hotels retain 94.87% of direct booking revenue versus 82.06% through OTAs (Punch Hospitality/Revinate). A hotel spending 2% of revenue on marketing but losing 20% on OTA commission is actually spending more than one investing 6% in direct channels.
Treating Marketing as a Cost Instead of Revenue
Hotels that view marketing purely as an expense tend to cut it during slow periods — exactly when they should be spending more to fill rooms. Marketing should be measured by what it returns, not what it costs. A campaign returning 5x ROAS is generating $5 in revenue for every $1 spent. Cutting that spend doesn’t save money; it eliminates $4 in profit per dollar.
Spreading Budget Too Thin
A $3,000/month budget split across Google Ads, Meta, TikTok, email, print advertising, and a PR agency won’t produce meaningful results in any single channel. We’ve found it’s better to dominate one or two channels before expanding. For most hotels, that means locking down Google Ads and email first, then adding Meta retargeting once the foundation is solid.
Ignoring Seasonality
Our campaign data shows that hotels maintaining flat monthly budgets waste 15-25% of their annual spend. Demand fluctuates dramatically — school holidays, long weekends, events, and conference seasons all create booking surges. Smart budget allocation follows demand curves: increase spend 4-6 weeks before peak periods when travellers are researching, and pull back during genuine low-demand windows.
How Should Hotels Adjust Their Budget by Season?
Seasonal budget pacing separates efficient hotel marketing from wasteful spending. Google Ads travel campaigns achieve a 5.75% conversion rate (WordStream, Apr 2024-Mar 2025), but that average masks huge seasonal swings — peak periods convert higher, while off-peak windows drag the number down.
The key principle: spend when people are planning, not when they’re arriving. For a hotel with a summer peak, marketing spend should ramp up in spring when travellers are researching and booking. By the time peak season arrives, the ad spend has already done its job. Here’s a practical framework:
- Peak season (highest demand): Allocate 30-40% of annual budget. Increase Google Ads bids on high-intent keywords. Run Meta retargeting campaigns to capture comparison shoppers. This is when ROAS peaks because conversion rates are highest.
- Shoulder season (moderate demand): Allocate 25-35% of annual budget. Focus on package deals and experience-based messaging. Target domestic weekend travellers and corporate events. This is often where the biggest gains hide.
- Off-peak (lowest demand): Allocate 15-25% of annual budget. Reduce broad keyword spend but maintain brand bidding. Shift budget toward email campaigns targeting past guests with off-peak incentives. Don’t cut to zero — visibility during quiet periods builds the pipeline for shoulder season.
Does it seem counterintuitive to spend more during periods when rooms would partially fill anyway? Consider this: peak-period campaigns convert at 2-3x the off-peak rate, which means your cost per booking drops even as you increase spend. Pulling budget from peak to “save” money during slow periods is leaving the highest-return marketing investment on the table.
Frequently Asked Questions
Is 4-6% of revenue enough for a new hotel?
Typically not. New properties lack brand recognition, organic search rankings, and a guest review base — three things established hotels benefit from at no incremental cost. We recommend 8-12% of projected revenue for the first 18-24 months, tapering to 4-6% once occupancy stabilises. The Gartner CMO Survey (2025) notes cross-industry averages of 7.7-9.4% (Gartner, 2025), and new hotels should sit at or above that range.
Should hotels count OTA commissions as part of their marketing budget?
Yes — in terms of analysis, if not accounting. OTA commissions of 15-25% per booking are functionally a marketing cost. Hotels retaining 94.87% of direct revenue versus 82.06% through OTAs (Punch Hospitality/Revinate) should consider whether redirecting even a fraction of OTA commission toward direct marketing would yield better returns. The comparison reframes the budget question entirely.
What ROAS should a hotel target from Google Ads?
A 5x+ ROAS represents strong performance from Google Ads based on Merge’s benchmarks. Luxury properties should target 6-10x, mid-tier 4-6x, and budget hotels 3-5x (Varos, 2025). Below 2x signals serious issues requiring a full campaign audit. See our hotel ROAS benchmarks for a detailed breakdown by property tier.
How much does a hotel booking lead cost through Google Ads?
Google Ads in the travel sector averages a $73.70 cost per lead with a $2.12 CPC and 5.75% conversion rate (WordStream, Apr 2024-Mar 2025). Actual costs vary by location, property type, and keyword competitiveness. Hotels bidding on branded terms see CPCs well under $1, while competitive generic searches like “hotels in Sydney” push above $3-4.
Ready to benchmark your hotel’s marketing spend? See the complete performance data across all hospitality categories in our Hospitality Marketing Benchmarks 2026 guide, explore our hotel marketing services, or request a free campaign review.