Here’s the Three Metrics You Missed this Budget Season

If you’re like most hotel marketers, your world revolves around a few key performance indicators (KPIs). One of them is Return on Ad Spend (ROAS). This metric tells you how much revenue you earned for every dollar spent on marketing. It’s a vital metric when measuring campaign performance.

But here’s an uncomfortable truth: ROAS is a snapshot, not the entire picture of your marketing campaign’s success. It’s great for measuring the immediate effectiveness of a specific ad. However, it will leave you in the dark in the long term for the health of your brand.

True success isn’t about filling rooms every night, but about building a community of loyal advocates who return year after year. To measure that, you can look at your powerful trio of metrics: Customer Acquisition Cost (CAC), Revenue Per Occupied Room (RevPOR), and Lifetime Value (LTV).

1. Customer Acquisition Cost (CAC): The True Cost of a Guest

CAC is the total cost of sales and marketing efforts needed to acquire a new guest. It’s calculated by dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent.

While ROAS tells you the return on an ad, CAC tells you the investment required to win a guest. If your CAC is too high, you’re losing profits. A returning guest is always cheaper than converting a new one. By lowering your CAC, you’re investing in your connections with long-term guests.

2. Revenue Per Occupied Room (RevPOR): Beyond the Room Rate

RevPOR (Revenue Per Occupied Room) measures the amount guests spend beyond the room rate. This includes revenue from your spa, restaurant, bar, minibar, dry cleaning, parking, and other amenity services. This metric directly measures your success in monetizing the guest experience. A high RevPOR indicates your hotel has a captivating guest experience. If you’re looking to increase this number, create irresistible packages and promote on-property amenities before the guest arrives.

3. Lifetime Value (LTV): The Ultimate Measure of Loyalty

Lifetime Value (LTV) refers to the total revenue a business can expect from a single guest throughout their relationship with the brand. For hotels, this means calculating the projected revenue from a guest’s repeat stays, additional spending, and referred bookings over the years.

LTV is the metric that encapsulates everything. A guest with a high LTV is a loyal advocate. They return year after year, enjoy hotel amenities, and refer people through word-of-mouth. Marketing strategies that increase LTV are important investments in your hotel’s future profitability.

To keep guests coming back, implement loyalty programs, personalized email marketing campaigns, and offer exceptional service that drives repeat bookings.

When The Trio Comes Together…

That’s when the magic happens! Here’s how to use them together:

• A marketing campaign might have a good ROAS and bring in new guests at a reasonable CAC.

• Once guests arrive, an excellent on-property experience increases their RevPOR.

• If the guests’ experience was memorable, they return, becoming a loyal guest with a high LTV, which in turn justifies your initial CAC.

Hotels can utilize this trusted cycle to accurately measure their growth and the effectiveness of their marketing campaigns.

Ready to Grow?

Schedule a free call with us today! We can identify your:

• Current marketing strategy’s pain points,

• How to better reach your current guests, and

• How to win future long-term guests!

Look out for our budget season insights this September by subscribing to the S.T.A.R. Report. We’ll see you next week!