Journal
The 2.5% Problem
Why the property that spends the least on marketing keeps paying the most for it, and why the next chapter of that story is already being written.
U.S. hoteliers spend less than 2.5% of room revenue on marketing, including sales and marketing payroll. That figure comes from STR, and it sits far below what almost any other consumer category considers sane: general retail spends 5 to 10% of gross revenue on advertising and marketing, the Small Business Administration recommends 7 to 8% for an established business, and a hotel opening new tells its own investors to plan for something closer to 10%. Even luxury operators, the properties with the most to protect in how they're perceived, are advised to spend up to 8%.
Independent and boutique properties, the ones with the thinnest teams and the least time, are the ones spending the least of all.
That gap did not close on its own. Something moved in to fill it. In 2024 the four largest online travel platforms, Booking Holdings, Expedia Group, Airbnb, and Trip.com Group, spent a combined $17.8 billion on marketing, a new record, up a full billion from the year before. Booking Holdings alone put $7.3 billion behind it, 31% of its own revenue. That spend buys exactly one thing: being the answer when a traveler starts looking. And once an OTA is the answer, it keeps a share of every booking it delivers, commonly somewhere between 18 and 25%, for a conversation the property itself was never part of.
This is not a story about hotels failing to compete. It's a story about hotels never entering the room where the decision gets made. The OTA didn't out-market the property. It occupied ground the property left open.
The room is changing again, and the vacancy is opening in the same place.
For twenty years that room was a search engine results page. A guest typed a query, a list of options appeared, and whichever name was loudest, best-optimized, or most heavily bid-on tended to win the click. That's the room the OTAs spent $17.8 billion to own.
That room is being replaced by a conversation. The next guest increasingly does not search. They ask: for a beachfront resort for two, first weekend next month, ocean view, adults only, and they expect a direct answer, not a list to sift through. A conversational assistant either has an accurate, current, well-structured answer about a specific property ready to give, or it doesn't, and if it doesn't, it answers with whatever it can find: a listing page, a stale review, a summary built from someone else's description of the property rather than the property's own account of itself.
That is the 2.5% problem's second act. The properties that under-invested in owning their presence in the first room are, by default, under-prepared to own their presence in the new one. And the cost of losing that room isn't a marketing budget line. It's the same 18 to 25% margin, paid again, to whichever party ends up standing between the property and the guest.
The fix was never "spend more." It's "be present where the decision now happens."
Raising a marketing budget to industry-standard levels would help, and most independent properties genuinely are under-spending. But the more urgent problem is structural, not budgetary: most properties don't have a single, accurate, centralized account of themselves that any assistant, search engine, or booking agent could read and trust. Rates live in one system, room and amenity details in another, policies in a PDF nobody has opened since it was written, and F&B hours on a page that was last true two seasons ago. When there's no authoritative source, whatever fills the gap wins the conversation, an OTA listing, a scraped fragment, guesswork.
Owning that room starts with the same work regardless of budget: get the property's own facts, rates, policies, and voice into one place that's actually current, so that whoever or whatever is answering on the property's behalf, a person, a search result, or an assistant fielding a guest's question, is answering with the truth, and answering as the property, not as a third party's version of it.
The guest is going to ask. The only real question is who answers, and whether the answer is right.
Tribeca is a creative studio built for hospitality. This piece is the first in a short series on where the guest's decision is actually being made, and what it takes for a property to be standing there when it happens. If it's useful, we're glad to talk about your own property's version of this problem.