December 1, 2022

Hotel Marketing Department Expenditures Reveal Changes In Tactics

According to the 2021 edition of CBREs Trends ® in the Hotel Market report, overall operating income for the average hotel in the sample decreased by 62.2 percent from 2019 to 2020.

NB: This is a post from CBRE Hotels

This is by far the biggest decline in revenue recorded throughout the 84-year history of the Trends ® survey. For recommendation purposes, operating profits declined by 18.4 percent during the Great Recession in 2009.

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This is down from a tenancy of 74.9% in 2019, along with and ADR of $184.03.

Hotel sales and marketing department expenditures can be considered as a financial investment to acquire earnings. However, facing such extreme decreases in incomes, the marketing department, like all others, was tasked in 2020 with the required to cut costs. An evaluation of the changes in marketing department expenditures from 2019 to 2020 supplies some intriguing insights into how U.S. hotels changed their unit-level marketing techniques in action to the industry economic crisis.

All Expenses Reduced

From 2019 to 2020, the average property in our study sample cut their marketing department expenses by 53.1 percent. For reference purposes, the aggregate of all hotel undistributed department expenses declined by 39.8 percent throughout the year. With revenues decreasing by 64.1 percent at these very same hotels, sales and marketing department expenditures as a percent of overall earnings increased from 9.2 percent in 2019 to 11.9 in 2020.

Labor costs are the second largest expenditure within the sales and marketing department. In 2019, the combined expense for salaries, salaries and employee benefits equated to 28.5 percent of total department expenses. From 2019 to 2020, these expenses were cut by 44.9 percent. Amongst the different labor associated expenses tracked by CBRE within these departments, the best percentage declines were observed amongst the salaries and wages paid to non-management workers, service fee payouts, and benefits.

CBREs Trends ® in the Hotel Industry study tracks 15 various expense classifications within the Sales and Marketing Department. These include seven labor related costs, three franchisee associated costs, and 5 particular marketing expense categories.

The sheer drop in franchise costs is the primary factor why marketing department expenditures decreased to a greater degree than the other undistributed departments.

Read remainder of the short article at CBRE Hotels

The precipitous drop in franchise fees is the main factor why marketing department expenses declined to a greater degree than the other undistributed departments.

An evaluation of the changes in marketing department expenses from 2019 to 2020 supplies some interesting insights into how U.S. hotels adjusted their unit-level marketing strategies in action to the market economic crisis.

With earnings decreasing by 64.1 percent at these exact same hotels, sales and marketing department costs as a percent of overall income increased from 9.2 percent in 2019 to 11.9 in 2020.

This is down from a tenancy of 74.9% in 2019, along with and ADR of $184.03.

Amongst the different labor associated costs tracked by CBRE within these departments, the greatest percentage decreases were observed among the wages and salaries paid to non-management workers, service charge payouts, and bonus offers.

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