Cost of Acquisition (COA) is the total cost required to generate a single confirmed room booking.
In hotel practice, it is not enough to measure revenue alone (for example, RevPAR).
The critical question is:
How much did these revenues actually cost us?
Simple COA calculation
COA (%) = (Total Marketing Costs + Commissions)
———————————————
Total Booking Revenue
× 100
COA varies significantly by sales channel. Strategic success lies in increasing booking volume from channels with lower acquisition costs.
|
Sales Channel |
Estimated COA |
What the cost includes |
|
Online Travel Agencies (OTA) |
15% – 25% |
Commissions (Booking.com, Expedia, etc.) |
|
Direct Bookings |
6% – 8% |
Website costs, remarketing, booking engine fees |
|
Google & Meta |
5% – 9% |
Cost-per-click (CPC) to compete with OTAs |
The primary objective is clear:
A balanced distribution of bookings between OTAs and direct channels
Α. Invest in Google Hotel Ads & Meta Ads
Action:
Do not allow OTAs to dominate search results or social media.
Make your direct hotel rate visible:
Next to OTAs via Google Hotel Ads
Directly to your audience via Meta Ads (Facebook & Instagram)
Indicative COA: up to 7.5%
Even with a COA close to 7.5%, the cost remains significantly lower than OTA commissions (15%–25%), while you also:
gain customer data
strengthen brand awareness
build the foundation for repeat bookings
Goal:
Win the customer and convert interest into a direct booking at a lower net cost.
Action:
When someone searches for your hotel’s name on Google, your official website must appear first:
organically (SEO)
or via paid advertising (Brand Bidding)
You pay a small amount to Google in order to avoid paying a much higher OTA commission for a guest who was already looking for you.
C. Best Rate Guarantee (BRG) with conditions
Action:
Promise the best value on your official website — not necessarily a lower price, but added benefits.
Examples:
“Book direct & enjoy complimentary breakfast”
“10% discount at the hotel restaurant”
“Early check-in / Late check-out”
Value-added benefits are often more effective than price reductions.
D. Cultivate repeat guests (CRM)
Action:
The COA of a repeat guest is almost zero.
Email collection
Email marketing
Exclusive benefits for past guests
Goal:
Convert the first-time visitor into a loyal direct-booking customer.
Modern hotel sales and marketing management is not only about RevPAR.
It is about:
Net RevPAR = RevPAR – COA
To maximize profitability and sales efficiency, hotels must maintain a controlled and balanced COA ratio between:
Direct bookings, with low acquisition cost
Digital marketing, acting as a lever to reduce average COA
OTAs, with higher COA but strong contribution to demand, visibility, and customer acquisition
Attempting to completely eliminate OTAs is a strategic mistake, not only because it reduces bookings, but also because it:
artificially increases overall COA
limits the hotel’s total visibility
cuts off access to new customers who would never reach the brand directly
OTAs should be treated as customer acquisition channels with a controlled COA.
The role of digital marketing and CRM is to gradually reduce the average COA by converting OTA guests into direct customers at a lower cost in the future.
FAQ – Frequently Asked Questions