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Building your hotel’s 2008 online marketing budget

October 17, 2007 | Hospitality Industry

For a second year in a row, Hospitality eBusiness Strategies takes a closer look at some important aspects of Internet marketing in hospitality and what marketing activities and line items should comprise the 2008 Internet marketing budget.

Hoteliers are in the height of the budget planning season for 2008. Understandably, there is a great level of anxiety in the industry. Are you allocating the right budget for hotel marketing? What are your peers doing with their budgets? What are the best practices for 2008? Web 2.0, social media, consumer generated media—what should I do about these new media formats? What are the latest trends in Internet marketing and how should I account for them in the new budget? For a second year in a row, Hospitality eBusiness Strategies takes a closer look at some important aspects of Internet marketing in hospitality and what marketing activities and line items should comprise the 2008 Internet marketing budget.

There is no doubt the hotel’s overall competitiveness today is determined to a great extent by how well it manages its Internet marketing and distribution efforts. In 2008, 60% of all travel bookings and up to 40% of all hotel bookings in North America will be generated from the Internet (PhoCusWright, HeBS), which represents a 15%-16% growth over 2007. Another 25-30% of hotel bookings will be directly influenced by online research, but booked offline. By 2010 the Internet will contribute over 45% of all hotel bookings in North America.

Another positive fact is that the indirect online channel is losing market share. The negative impact of third-party online intermediaries (TPIs) is still felt throughout the industry, but to a much lesser degree. The ratio between the direct and indirect online channel continues to improve in favor of the direct channel: from 52:48 back in 2002 to 60:40 in 2007 and is projected at 62:38 in 2008.  Some major brands already enjoy very healthy 85:15 direct vs. indirect online channel ratios.

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