The question every independent hotel eventually asks — and rarely gets a straight answer to.
How much should we be spending on digital advertising? The honest answer is: it depends on your revenue targets, your OTA dependency, your current direct booking share, and the competitive environment in your market. But there are benchmarks, frameworks, and principles that make the answer concrete rather than theoretical.
This guide walks through how to size a hotel digital advertising budget — by channel, by objective, and by the commercial logic that justifies the investment.
The most useful frame for hotel digital advertising budget is not “how much can we afford to spend” — it is “how does the cost of direct booking acquisition compare to the cost of OTA commission”.
If your hotel pays 18% commission to OTAs on £50,000 of monthly OTA bookings, you are paying £9,000 per month for those bookings. A digital advertising budget that converts a portion of that OTA demand to direct — at a cost lower than the commission it replaces — is not a cost. It is a margin improvement.
This reframe is important because it changes the question. The question is not “can we justify spending £3,000 per month on Google Ads?” The question is “can a £3,000 Google Ads budget generate enough direct bookings to save more than £3,000 in OTA commission?” For a well-structured campaign in a competitive market, the answer is typically yes — often many times over.
Google Search Ads (Branded + Non-Branded)
Google Search is where most independent hotels should concentrate the majority of their digital advertising budget. It captures guests at the highest point of booking intent — when they are actively searching for a hotel.
Minimum viable budget: £1,500 per month (all-in, including management fee if outsourced). Below this level, campaigns struggle to compete in peak booking timeslots and accumulate conversion data too slowly to optimise effectively.
Practical budget range for independent hotels: £1,500–£8,000 per month depending on property size, market competitiveness, and revenue targets.
Target return: 600–1,200% ROAS (£6–£12 in direct booking revenue per £1 of ad spend) for a well-structured account in a competitive market. Branded campaigns typically exceed 1,000% ROAS. Non-branded campaigns typically range from 400–900%.
Google Hotel Ads (Metasearch)
Google Hotel Ads place your direct rate alongside OTA rates in Google Search and Maps results. They operate on a commission-per-booking or cost-per-click model.
Budget allocation: Typically 20–30% of total paid media budget. For a hotel spending £3,000 per month on digital advertising, £600–£900 in Hotel Ads spend is a reasonable starting allocation.
Target return: 500–1,000% ROAS. Hotel Ads ROAS depends heavily on rate competitiveness — if your direct rate is consistently at or below OTA rates, ROAS will be strong. If OTA rates are lower, Hotel Ads will generate clicks that do not convert.
Display and Retargeting
Display retargeting follows website visitors who did not book with ads as they browse other sites. High ROAS on warm audiences, lower volume than search.
Budget allocation: £200–£600 per month for a hotel with meaningful website traffic (3,000+ monthly visitors). Retargeting audiences are small relative to search audiences — overfunding retargeting at the expense of search is a common budget misallocation.
Facebook and Instagram Ads
Paid social operates in the upper and mid-funnel — building awareness and reaching guests before they search. Lower direct booking attribution than search, but contributes to the consideration phase.
Budget allocation: 15–25% of total digital advertising budget for hotels where paid social has a defined role (awareness building, offer promotion, retargeting). Hotels with limited budgets should prioritise search before social.
Target return: Harder to measure directly due to multi-touch attribution. Evaluate on cost per assisted booking, branded search volume trends, and retargeting conversion rates rather than direct last-click bookings.
These are practical benchmarks for independent hotels at different revenue levels, not prescriptions. Actual optimal spend depends on your specific market, competitive environment, and OTA dependency.
Small independent hotel (under £500k annual accommodation revenue):
Total digital advertising budget: £1,500–£3,000 per month. Priority allocation: 70% Google Search (branded + non-branded), 20% Google Hotel Ads, 10% retargeting. Paid social: optional at this budget level — prioritise search first.
Mid-size independent hotel (£500k–£2M annual accommodation revenue):
Total digital advertising budget: £3,000–£8,000 per month. Priority allocation: 50% Google Search, 25% Google Hotel Ads, 15% paid social (retargeting + awareness), 10% display retargeting.
Larger independent or boutique group (£2M+ annual accommodation revenue):
Total digital advertising budget: £8,000–£25,000+ per month. Full-channel strategy: branded and non-branded search, Hotel Ads, Performance Max, display retargeting, paid social (multiple campaign objectives), and seasonal campaign budgets on top of evergreen spend.
Here is a framework for calculating what a rational digital advertising budget looks like for your specific hotel.
Step 1: Calculate your current OTA commission spend. Multiply your monthly OTA booking revenue by your average OTA commission rate (typically 15–22%). This is your baseline — the amount you are currently paying to acquire OTA bookings.
Step 2: Set a direct booking target. How much of your OTA volume do you want to convert to direct? A conservative target might be 20–30% of current OTA bookings. A more ambitious target might be 50%.
Step 3: Calculate the commission saving. If you convert £15,000 of OTA bookings per month to direct at 18% commission, that is £2,700 in saved commission per month.
Step 4: Determine acceptable advertising cost. If you are willing to spend up to the full commission saving on advertising to achieve direct bookings, your budget ceiling for those bookings is £2,700. In practice, a well-run campaign should deliver direct bookings at 30–50% of the OTA commission cost — meaning the campaign produces net savings even before you account for the additional margin from owning the guest relationship.
Step 5: Set a realistic minimum. No channel can be optimised below a minimum viable budget. Google Ads below £1,500/month (all-in) is unlikely to generate meaningful returns in most markets. Add channels incrementally as budget allows.
Fund branded campaigns fully before expanding to non-branded. The ROI on branded search protection — preventing OTAs from intercepting guests who searched for your hotel by name — is almost always the highest in your account. Never underinvest in branded to fund broader reach campaigns.
Allocate budget toward proven performers. After the first 90 days of running campaigns, you will have performance data by campaign type, keyword, and audience. Reallocate budget toward campaigns delivering the best ROAS. Do not maintain equal budget across campaigns out of caution — follow the data.
Increase budget seasonally. Digital advertising during your peak booking season — when search volume is highest, OTA competition is fiercest, and the revenue opportunity is greatest — deserves more budget than off-peak periods. Plan seasonal budget increases 4–6 weeks before your peak demand windows.
Separate campaign budgets from management fees. If you use an agency or freelancer to manage your campaigns, ensure you are clear on what proportion of your total spend reaches the advertising platforms and what proportion is the management fee. A rule of thumb: management fees should not exceed 25–30% of total paid media spend at most budget levels.
Campaigns consistently hitting budget caps before the end of the day — meaning you are winning auctions but running out of budget before peak booking hours. Low impression share on branded terms — OTAs are appearing above your ads for searches of your own hotel name. Insufficient conversion volume to enable automated bidding — campaigns stuck on Maximise Clicks because Target CPA/ROAS cannot optimise without data. Slow data accumulation — if it takes more than 3 months to collect 100 conversions, your budget is too low to optimise effectively.
ROAS declining as budget increases without a corresponding increase in search volume — you are beginning to buy lower-quality impressions and clicks. Impression share at or near 100% for your target keywords — you have captured all available relevant search volume and cannot grow further through the same campaigns. Diminishing returns on marginal spend — the last £500 added to budget generates significantly fewer bookings than the first £500.
The Lobby helps independent hotels build digital advertising strategies sized to their revenue targets — from initial budget planning through to full campaign management and monthly performance reporting.
The Lobby is a hospitality digital marketing agency working with independent hotels and restaurants across Europe. We combine paid media, SEO, and website strategy to grow direct revenue.
Talk to The Lobby about a paid media strategy built around your hotel’s direct booking goals.
