With the 2026 budgeting season in hospitality rapidly approaching, it’s not too late to compare marketing spend in hospitality to the retail industry and the broader economy.

As per the authoritative Gartner CMO 2025 Spend Survey, the average 2025 marketing budgets are 7.7% of total revenue, same as in 2024.

Hospitality is a retail industry - selling hotel rooms and auxiliaries to travel consumers. As a rule of thumb, retailers spend between 5% and 10% of their gross revenue on advertising and marketing. In highly competitive markets and industries this allocation is 10% or more to keep pace with competitors.

HubSpot reports that companies generally spend around 9.1% of their total revenue on marketing. The U.S. Small Business Administration suggests that small businesses should allocate between 7% and 8% of their revenue to marketing

What is the situation in hospitality? On average, U.S. hoteliers spend on marketing less than 2.5% of room revenue, including payroll for the Sales and Marketing Team (STR). The global hotel revenue in 2025 is projected to reach $443 billion. Even if all hotels were willing to spend 2.5% of that on marketing (which I doubt), then hoteliers’ global spend on marketing would be $11 billion.

Compare this to Expedia, which spent on sales and marketing 54% of its 2024 revenue to the tune of $6.9 billion, 12% increase over the previous year. The big OTAs spent the whopping amount of $17.8 billion on marketing in 2024. No wonder hoteliers are losing the distribution war with the OTAs.

So, the question is: what percentage of total revenue should hoteliers be spending on marketing?

Underinvestment in marketing is the direct online channel “killer”. The less you invest in marketing, the greater the dependence on the OTAs.

Hoteliers are risk averse, I get it. They are not willing to invest adequately in marketing because they consider it a risky spend and there are no guarantees. As if there are any guarantees in life! But they don’t mind spending 25% and more on OTA commissions and discounts, because it is risk free.

One of the main reasons for the systemic underinvestment in marketing is the lack of “ownership” of the direct online channel. In my 30 plus year career in hospitality, and tens of thousands of hotel clients, I have never seen a DOSM - director of sales and marketing or any marketing manager whose compensation or bonuses to be tied directly to the property website bookings.

Unless the hospitality industry budgets and spends on marketing at least 4%-6% of total revenue, not including payroll, and invest adequately in technologies like CRM, RMS, chatbots, ORM, guest messaging and issue resolution applications, the industry will continue to suffer from the dominance of the OTAs and other intermediaries, and continue to pay them commissions to the tune of $75 billion/year.

Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist

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