Before You Demand a 10% Marketing Budget, Read This
If you’re in hospitality and about to march into a meeting demanding a 10% marketing budget, pause for a second. Let’s talk about why that number might not be the solution everyone thinks it is and what properties really need to consider in order to win back direct bookings.
We’ve all heard it: “Spend 10% of your revenue on marketing.” It’s treated like gospel. Go over that number, and you’re wasting money. Fall below it, and you’re not serious about growth.
But here’s the thing when it comes to hospitality, the real issue isn’t the number. It’s how we’re thinking about that number in the first place.
This isn’t just another marketing theory, it’s something I feel deeply passionate about because I’ve seen firsthand how it can make or break a property. So, I dug deeper with hospitality technologist Max Starkov (Top 50 Social Media Influencer in Hospitality) and hotel direct-booking expert Christine Malfair. Together, they shared insights from decades of experience that might just flip the script on how you approach your marketing budget.
Trust me, what they revealed will change the way you think about growth, control, and what’s really possible for your property.
Why the 10% Rule Isn’t One-Size-Fits-All
First, let’s rewind.
When you hear someone say, “You need to spend 10% of revenue on marketing,” that advice didn’t come from the short term rental playbook, it came from retail. According to the Gartner CMO Spend Survey, the average company in 2025 is still allocating about 7.7% of its revenue to marketing, right on par with 2024 . Think about that: businesses of all stripes—whether tech startups or consumer brands—are landing around that benchmark.
But let’s unpack it further. Only the top 25% of companies crank up their marketing budgets to 10% or more, while half of all businesses stay at 6% or below, and the least-laid-back spenders in the bottom 25% invest 4% or less as Mr. Ryan from GTM Value Insights illuminates further on Gartner’s CMO Spend Survey.
Industry-wise, there’s a clear split. B2B firms tend to spend 2–5% on marketing, consumer brands and retail businesses hover around 5–10%, and hyper-growth startups famously pour in 20–30% or even more. Data from Deloitte’s CMO Survey also tells a similar story—companies averaged 10.9% in total marketing spend in early 2023, with over half of that budget funneled into digital channels.
All this means one thing: while retail and tech sectors often hover near or above 10%, hotels are wildly trailing behind.
Hospitality isn't just behind—they’re losing the war
Picture this: A Marketing Director at a glamping resort fighting tooth and nail to get approval for a modest campaign that could double direct bookings. She’s asking for a bigger slice of the pie—just enough to push past their usual spend of 2.5% of room revenue, which, believe it or not, includes payroll for the entire sales and marketing team and represents the average spend for U.S. hotels today.
Now contrast that with Expedia. In 2024, they spent a jaw-dropping 54% of their revenue—a cool $6.9 billion—on sales and marketing. And they’re not alone. Altogether, the big OTAs funneled $17.8 billion into capturing travelers’ attention worldwide.
See the problem? Independent properties are stuck rationing pennies while OTAs are splashing billions across every screen, every ad network, and every social feed. And we wonder why travelers book there first.
Christine Malfair first flips the question ‘how can Hotels compete with OTA’s‘ on it’s head in this LinkedIn discussion.
“Hotels are spending big on marketing—they just don’t realize it. Take a property generating $8M in room revenue. If 47% of that comes from OTAs at a 20% commission, they’re quietly paying over $800K in “marketing fees.” Ask any GM or owner if they’d approve an $800K marketing budget upfront, and the answer would be a hard no. Yet they do it every single day through the back door of OTA commissions—buried in invisible distribution costs.
This underinvestment in intentional marketing often comes down to fear. Without a clear strategy or defined outcomes, spending on marketing feels like a gamble, so owners default to what feels “safe”—even when it costs them more in the long run.
The solution? Hotels need to take ownership of their direct channel and reframe marketing’s role. It’s not just about campaigns—it’s about creating profitable revenue streams. That shift only happens when marketing teams are held accountable for results. Imagine if more hotels tied marketing compensation directly to website revenue. It would transform marketing from a “service function” into a strategic growth engine and finally align it with sales in driving the bottom line.”
This isn’t just an imbalance, it’s a full-scale distribution war. And right now, the OTAs are winning because they’re the only ones bold enough to truly invest in it. Meanwhile, hotels are under-spending, ceding ground, and—here’s the kicker—seemingly okay with footing the bill for their own defeat through sky-high commissions.
The Mindset Shift Hotels Desperately Need
Max Starkov explains:
“Two things must happen for hospitality owners and marketers to experience a mindset shift: First, Cost of Acquisition (CoA) for OTA and direct bookings must be accounted in the exact same way on the property’s P&L. Second, the industry should adopt Profit per Available Room (ProPAR) as the overarching bottom-line benchmark, instead of relying on ADR, Occupancy Rate, and RevPAR.”
That sounds powerful, but let’s break it down.
Here’s the problem: the true cost of OTA bookings is basically invisible in most hotel financials. When Expedia uses their “merchant model,” for example, they collect the guest’s payment, take their cut, and send the hotel what’s left. That commission? It never even shows up on the properties profit/loss statement (P&L).
Even when OTAs operate on an “agency model” like Booking.com, the commissions get tucked away in a generic line called “travel agent commissions.” It’s a catch‑all bucket with no clarity on how much went to online agencies vs. traditional travel agents. Most owners don’t dig into it, it’s just accepted as the cost of doing business.
Now compare that to direct bookings. Every single dollar spent to drive guests to your own website—SEO, paid ads, CRM tools, website upgrades—gets counted against the Sales & Marketing budget. Even if your campaign is delivering a 2,500% return on ad spend, the property can pull the plug if they don’t “feel comfortable” going over budget. (That’s not hypothetical either—it’s something Max Starkov’s team actually experienced while running campaigns at NextGuest, now part of Cendyn.)
See how backwards this is? The most cost-effective bookings are handcuffed by tight budgets, while OTA commissions—often double or triple the cost—are left to grow unchecked.
It’s no wonder growth stalls.
Stop Treating Marketing as Riskier Than OTA Commissions
Here’s the irony: many property owners treat marketing spend like it’s gambling. They hesitate to invest more because it feels unpredictable. What if the campaign doesn’t work? What if we don’t see the ROI fast enough?
Christine addresses this super clearly in her article ‘Could your marketing cost$ be higher than you think?’:
“So many properties treat OTA commissions as a cost of doing business, yet see direct marketing spend as a gamble. But if you’re spending $800K a year on OTA commissions (as a hotel doing $8M in rooms revenue at 20% commission), you’re already investing heavily in marketing… just not your own. No one is going to ask for ownership for an $800K marketing budget.
The challenge isn’t the budget, it’s the clarity of outcomes. Without a strategy and ownership of the direct channel, that money goes to growing someone else’s brand.”
Let’s unpack that. Paying an OTA 25% or more for every booking feels safe because it’s transactional: you only pay when a guest shows up. But here’s the problem—every time a guest books through an OTA, you’re giving away a huge chunk of revenue and missing the chance to build a direct relationship that allows you to remarket to loyal customers that book at a higher spend per guest than when booked with an OTA.
It’s like refusing to buy your own fishing gear because you’re afraid you won’t catch any fish. So instead, you hire someone else to fish for you and you happily give them 25% of every fish they bring back. Sure, it feels less risky in the moment. But over time, you never learn how to fish for yourself, and you’re stuck paying a premium forever.
Max addresses this from a very no-nonsense angle in his recent LinkedIn post:
“Hoteliers are risk averse. They’re unwilling to invest adequately in marketing because they see it as a risky spend with no guarantees. But they don’t mind spending 25% or more on OTA commissions, because it feels risk-free.”
Short-term rental properties that think this way are trapped in a cycle. They avoid upfront investment in their own marketing—SEO, CRM, paid campaigns, email marketing—because there are no “guarantees.” Meanwhile, OTAs are pouring billions into marketing to steal that guest’s attention first.
This mindset isn’t just costing money. It’s costing control.
Retreet’s Journey: From 100% OTA to 93% Direct Bookings
If you’re wondering what it looks like to break free from OTA dependence, let me tell you a story from my own playbook.
When I started working with ReTreet Resort, we were a small property with just six units. Like so many in the hospitality industry, we were 100% dependent on OTAs to fill our rooms. Every booking came with a hefty commission attached, and we felt stuck—we couldn’t see how to grow without feeding the very platforms that were eating away at our margins.
Instead of chasing a big marketing budget, we focused on smart, high-return moves. We invested in SEO to make ReTreet visible to travelers searching online, which later paid off by showing up in ChatGPT as one of the southeasts top glamping destinations. We built a CRM strategy to keep past guests engaged and coming back. We ran partnership influencer marketing campaigns to reach exactly the people most likely to book directly.
Little by little, it worked. Direct bookings started to climb, giving us the confidence—and revenue—to reinvest. We doubled down on storytelling, beautiful photography, and email marketing to build relationships with guests instead of relying on intermediaries.
Fast forward two years: ReTreet Resort has grown to 21 units and achieved 93% direct bookings. We didn’t just save on commissions; we built long-term brand loyalty, controlling our own destiny.
Max Starkov reinforces this strategy:
“Even with limited dollars, focus first on building trust and proving ROI through direct channels. Invest in high-return activities like SEO, CRM, and retargeting that drive direct bookings.”
This is how you take back control: start small, aim for early wins, and use that momentum to scale. It’s not about outspending OTAs—it’s about outsmarting and out storytelling them.
A Smart Budget Strategy for Hospitality (4–6% Minimum)
If there’s one thing holding properties back from winning the direct booking battle, it’s how they think about marketing. Most owners and operators still treat marketing spend as a risky expense while viewing OTA commissions as a necessary evil. That mindset is costing them control—and a lot of money.
When I first started shifting ReTreet Resort away from OTA dependence, the budget wasn’t huge. In fact, it felt painfully limited compared to the resources OTAs were throwing at their own marketing. But we didn’t let that stop us. Instead, we focused on making every dollar count.
We began with simple, high-return tactics: improving our SEO so travelers could actually find us online, building out CRM tools to nurture relationships with past guests, and running creator campaigns to build trust quickly in a saturated market.
Those early wins were critical. Not just because they drove bookings, but because they proved to ownership that direct marketing could work. With each small success, we built trust and earned a little more budget to reinvest.
This approach mirrors what Max Starkov often emphasizes:
“Even with limited dollars, focus first on building trust and proving ROI through direct channels. Invest in high-return activities like SEO, CRM, and retargeting that drive direct bookings.”
By staying disciplined and data-driven, we created momentum. Over time, ReTreet Resort grew from 6 to 21 units and shifted from 100% OTA dependency to 93% direct bookings.
That’s the lesson for any hospitality marketer: you don’t need to demand 10% of revenue right away. Instead, aim for a smarter budget allocation—4–6% of total revenue (excluding payroll)—and make sure it goes to channels you control.
Focus on metrics that actually move the needle, like Profit per Available Room (ProPAR), not just ADR or occupancy. And align your team’s incentives: when DOSMs and marketing managers are rewarded for growing direct bookings, they take ownership of the results.
Start small, prove ROI, and scale smartly.
That’s how you break free from OTA dependence and build a marketing strategy that grows with you.
Now, let’s take the conversation even further.
🎧 For the audio learners out there—and for a deeper dive into this topic—check out Adam and Conrad on The Art of Hospitality podcast. In the episode “Are You Set Up for Success With Your Marketing Efforts?” they break down why marketing matters, the common challenges operators face, and how to uncover (and maximize) your marketing budget.