HOW TO PLAN YOUR ANNUAL SALES AND MARKETING BUDGET FOR THE YEAR AHEAD

Are you pondering how much you should be spending on your hotel sales and marketing this year? It’s the $1 million question, isn’t it? And it’s the one question that clients ALWAYS address - especially in a year such as 2023, that looms large with high business expenses and the cost-of-living crisis. I feel clients are never 100% comfortable with the answer, or indeed sure they’ve got it quite right. I hear all sorts – “As much as possible”, “Too much”, “I have no idea” (i.e. I do things on the fly!). So, today I want to attempt to streamline that process and provide some simple steps and a ‘How to’ on reaching a suitable figure, that sits comfortably with your goals, makes sense and is based on industry standards and metrics.

1) HOW TO WORK OUT YOUR SALES AND MARKETING SPEND…

The Rule of thumb is that hotels, and other businesses should typically be spending 2-5% of the businesses SALES REVENUES on marketing for the following year. This is based on industry metrics and your marketing efforts being both business to business to business & business to consumer. If you want a stronger focus of marketing direct to the end consumer then, in most cases the percentage would increase to as much as 10%. But for this example, we are going to go with the equation of a typical B2B style budget.

2) DO THE MATH!

You can work this out by taking your 2022 actual sales revenues and calculating the percentage range. So, to make it easy let’s say your 2022 sales revenues were £250,000, divide this by 100 and X by 2%, - 5%.

Sales Revenues / 100 x Percent Range = YOUR 2023 sales and marketing budget.

For the £250k sales revenues this would equate to a 2023 marketing spend of £5k-12,500k.

3) CONSIDER YOUR MARKETING PLAN & OBJECTIVES.

Now you’ve got your range, consider what it is you want to achieve this year. Is this a normal year you are planning for? Or do you have something new that you are launching? Have you had a major refurb over the winter? Do you have new accommodations options? New Restaurant? New Brand? Development of new customer base? Whatever features in your marketing plan for the year ahead, will fundamentally need money assigning to it. This is where the range comes in. If you have new developments, facilities, services, strong focus on direct consumer marketing then you would want to consider the higher end of the range – 4 or 5%. If this is a regular year, business as usual, nothing changes then you probably want to keep it to the lower end.

4) EVALUATE LAST YEARS MARKETING ACTIVITY.

Before you assign and commit your marketing budget for the year ahead. Please, please, please, assess and evaluate the success of the activations from the year before. Everything should be reviewed, I always advise my clients to get as much 'bang for their buck', by evaluating last year’s activities and spend before simply renewing or committing to the activity for another year. Stop wasting money ‘just because’ and create a new strategy for each year to keep things fresh and focussed.

5) LAST BUT NOT LEAST. DON’T FORGET…

The figure you have calculated, (Point 2), doesn’t include salaries of your sales and marketing personnel, whether that be an employee or a consultant. Often consultancy fee’s get ‘lumped in’ with the sales and marketing budget which isn’t best practice! Those expenses should be coming out of your payroll or other professional services... Working with Independent hotel marketing consultants (like me) can provide hotels, hospitality businesses and accommodation providers genuine day to day and week to week support, experience, strategies and the means to implement them for you too.

CONCLUSION

So there you have it, 5 steps on how to plan your annual sales and marketing budget for the year ahead, whatever time of year but most preferably in Q1. Including industry metrics, maths, insight into your marketing plan and objectives and remembering that working with consultants can provide greater bang for your buck to get the plan in place timely and with accuracy and attention to detail. I hope this help and I would genuinely love to hear from you if you have any feedback, questions or indeed examples of what worked for you.