Marketing & guests
Guest acquisition cost
Also written: CAC, cost of acquisition
Guest acquisition cost represents the total expense required to secure a guest booking, encompassing marketing expenditures, direct sales costs, third-party commission fees, and booking engine technology overhead. Distinct from general retail customer acquisition metrics, it directly reduces top-line room revenue to yield net revenue.
Formula
Guest Acquisition Cost = Total Channel Marketing Expenses + Direct Sales Costs + Distribution Commissions + Booking Engine Fees
How it is used
Revenue managers and asset managers evaluate guest acquisition cost across individual distribution channels to optimize channel mix and maximize net RevPAR. High commission channels like online travel agencies often carry acquisition costs of 15% to 25%, whereas direct booking channels typically range from 5% to 10%. By auditing these expenses monthly, operators adjust digital ad spend, renegotiate OTA contracts, and shift inventory to lower-cost direct channels, directly protecting operating margins.
Worked example
A hotel spends $10,000 on digital ads, $2,000 on booking engine fees, and pays $18,000 in OTA commissions to generate 1,500 total bookings in a month. The total acquisition expenditure is $30,000. Dividing $30,000 by 1,500 bookings yields a guest acquisition cost of $20 per booking.
Common mistake
Hoteliers frequently miscalculate this metric by accounting only for paid ad spend while ignoring merchant model commission deductions and technology platform fees.