Consumer acquisition costs too high and growing, says Kalibri Labs CEO

By Elliott Mest

NEW YORK — Customer acquisition costs in hospitality can vary depending on the property, but when guests book through third parties, hotel revenue takes a serious hit. Cindy Estis Green, CEO & co-founder of Kalibri Labs, held a workshop on the second day of the Direct Booking Summit in New York City titled “The New Dynamics of the Digital Landscape,” which delved into the numbers behind customer acquisition costs and how small shifts in direct bookings can add up over time.

According to Green, the cost of customer acquisition in hospitality is an average of 15 percent to 25 percent of guest-paid revenue, but she said there are many hotels that are spending as much as 35 percent of guest-paid revenue to put new heads in beds. Green said revenue that contributes to operating profit and expenses (such as sales and marketing) consists of whatever is left after operators pay out for loyalty investments, retail commissions and wholesale commissions, leaving a tiny slice of the pie for overall net revenue. 

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