Return on Ad Spend in Tourism and Hospitality [What to Expect]

In the tourism and hospitality industry, setting a target Return on Ad Spend (ROAS) can vary based on various factors such as the type of business, target audience, seasonality, and geographical location. However, there are some general considerations to keep in mind when determining what to expect in terms of target ROAS:

  1. Historical Data: Look at past performance data to understand the typical ROAS for your specific business. This can serve as a baseline for setting future targets.
  2. Industry Benchmarks: Research industry benchmarks to see how your ROAS compares to competitors or similar businesses. Benchmarks can vary depending on the sector within tourism and hospitality (e.g., hotels, airlines, tour operators), so it’s important to find relevant data.
  3. Advertising Channels: Different advertising channels may yield different ROAS. For example, ROAS from search engine marketing (SEM) campaigns might differ from social media advertising or display ads. Understanding the typical ROAS for each channel can help set realistic targets.
  4. Seasonality: Tourism and hospitality businesses often experience fluctuations in demand based on seasons, holidays, and events. ROAS targets may need to be adjusted accordingly to account for these fluctuations.
  5. Target Audience: The ROAS can vary depending on the target audience’s behavior and preferences. For instance, targeting high-income travelers might result in a higher ROAS compared to budget travelers.
  6. Campaign Objectives: The objectives of your advertising campaigns can influence the target ROAS. For example, if the goal is to increase brand awareness rather than immediate bookings, the expected ROAS might be lower.
  7. Cost Structure: Consider the cost structure of your business, including overhead costs, to determine the desired ROAS that will ensure profitability.
  8. Experimentation and Optimization: Continuously test and optimize your advertising campaigns to improve ROAS over time. This might involve tweaking ad creatives, targeting parameters, or bidding strategies.

Benchmark Target ROAS to Consider

Overall, while there isn’t a one-size-fits-all answer, aiming for a ROAS between 200% to 500% is often considered a good target range for many businesses in the tourism and hospitality industry. However, it’s essential to assess your specific circumstances and adjust your targets accordingly. Additionally, regularly monitoring performance and making data-driven decisions will help you refine your ROAS targets over time.

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