Guest Acquisition Cost (CAC)
Guest Acquisition Cost (CAC) calculates the total financial expenditure—ad spend, commissions, agency fees, and software subscriptions—incurred to acquire one confirmed paying guest reservation.
Why It Matters for Independent Operators
Comparing CAC across channels (e.g. Meta Ads vs Google Ads vs MakeMyTrip commissions) reveals which marketing investments generate profitable net revenue versus margin depletion.
Practical Scenario & Calculation
[Illustrative Scenario] Spending ₹30,000 on Meta Ads yielding 15 direct bookings produces a CAC of ₹2,000 per booking. If average booking value is ₹18,000, customer acquisition cost represents 11.1%, significantly cheaper than a 20% OTA commission (₹3,600).
How Operators Can Apply This Concept
Compute net CAC per channel monthly. Reallocate advertising budget to channels delivering the lowest CAC relative to total booking revenue.
Common Misunderstanding to Avoid
Many hoteliers consider direct bookings "free", ignoring ad spend, website hosting, and payment gateway fees. Accurate CAC accounts for all direct channel costs.
Hotel Marketing Budget Planner
Allocate an entered budget across editable marketing channels and compare assumed acquisition cost with available room nights.