Faculty & Research
The Relationship of Sales and Marketing Expenses to Hotel Performance in the United States
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Vol 49 No 4
By: John W. O'Neill, Bjorn Hanson and Anna S. Mattila
Executive Summary: A study of marketing expenses by 2,815 hotels located in the United States found that the beneficial effects of marketing expenditures are dependent in part on the type of hotel and in part on the type of expense. For several segments, the study found a significant, positive connection between net operating income (NOI) and “marketing other” expenses, primarily those connected with loyalty programs. This correlation held for luxury, upper-upscale, upscale, independent, and midscale hotels (both full service and limited-service properties). At the same time, certain expenses are associated with lower NOI for some hotel types. The study found a significant, negative relationship between marketing payroll expenses and NOI for economy hotels, for instance. Indeed, although marketing payroll expenditures were related to higher room revenues in several types of hotel, such expenditures did not always mean increases in NOI. For midmarket hotels, the study found that increased franchise fees are associated with improved NOI, most likely indicating the importance of brands for midscale hotels.
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- The Relationship of Sales and Marketing Expenses to Hotel Performance in the United States By: John W. O'Neill, Bjorn Hanson and Anna S. Mattila
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