Report Overview
The use of digital marketing and advertising technology can help hotels increase direct bookings, draw in new customers, speed up social media reaction times, and improve their overall content strategy. When used effectively, it can improve team productivity and aid marketers in avoiding feeling overwhelmed by distribution across numerous channels and reaching the right audience.
Efficient utilization of these tools, however, remains an emerging skill, and travel leaders are working on closing the gap in terms of the skills required to achieve the same. While smaller companies are likely to take longer to create robust systems and larger organizations may achieve maturity in the near term, audience segmentation, personalization, and targeting capabilities remain key focus points for the industry. This makes marketing and advertising technology valuable additions to a hotel’s tech stack.
The data in this report is accurate as of June 2023. For the latest updated information, Skift Research subscribers can access our Hotel Tech Benchmark dashboard, which is updated periodically as we collect more data from hotel tech vendors.
What You'll Learn From This Report
- Current and future growth potential of digital marketing and advertising tech
- Total market penetration
- Top Vendors market penetration
- Revenue distribution for vendors
- Total market penetration for vendors based on total number of hotels and rooms they service
Effective Hotel Marketing in the Digital Age
If a brand is marketed well, potential customers will be drawn to it regardless of how they decide to book their trip. A study by NetAffinity suggests that 53% of respondents stated that their most recent purchase was triggered online. Skift Research’s U.S. Travel Tracker Survey shows that online sources are used more than offline sources when planning a trip, rendering digital marketing and advertising crucial for the industry.
Marketing is a complex practice that requires a creative mindset as well as a strategic approach. With leaner teams and budgets under constant scrutiny, Chief Marketing Officers (CMOs) are expected to strike a balance between growth and efficiency.
Utilizing marketing and advertising technology can aid marketers in increasing direct bookings and drawing in new customers, thus maximizing the impact of every dollar spent. As a result, it has emerged as a crucial component of a hotel's tech and marketing stack.
A pre-pandemic survey by Skift Research shows that a significant 25.4% of a CMO’s budget was allocated to marketing and advertising technology.
A study on marketing spend across multiple industries by Gartner suggests that marketing budgets in 2023 will be down to 9.1% of revenue from 9.5% in 2022. Having said that, while marketing spend for other industries decreased last year, the travel industry stood out, recording budget increases to 8.4% of total revenue.
Adapting new digital tools gained more importance as the industry made its way out of the pandemic; however, even Skift’s 2019 travel marketing survey showed that 72% of respondents reported martech as critical to their competitive edge. Therefore, there is little doubt that this technology is embedded in the industry’s future.
Adoption of martech, however, comes with challenges. According to a recent study by McKinsey, 67% of CMOs surveyed reported that they are overwhelmed by the quantity of marketing data available to them. Data and value-driven marketing require appropriate tools and skills, which makes the deployment of martech difficult for organizations.
Of the totality of capabilities made available by martech, Gartner’s Marketing Technology Survey 2022 asked companies to share the percentage of capabilities being actively utilized in the business. The survey measured a significant decline in marketing technology utilization between 2020 and 2022. It remains an emerging skill and requires proper education and patience with the learning curves of the technology.
A Quick Note on Definitions
Marketing technology (Martech) includes processes and software or technology with which marketers use data and analytics to conduct and personalize email marketing, social media marketing, A/B website (and other messaging) testing, customer relationship management (CRM), consumer surveys, and the like.
Advertising technology (Adtech) includes processes and software or technology with which advertisers and ad agencies create, run, measure, and manage online advertising campaigns across external websites or applications. Data and analytics play a significant role in audience identification, targeting, and personalization. Most ad tech tools help with the management of metasearch channels as well. Some of the most widely used metasearch channels are Google, TripAdvisor, Trivago, Kayak, and Bing, which account for 85% of metasearch traffic. The rest are the more regional channels like Yandex, Wego, Line, and so on.
Metasearch channels, which are “one-stop shops” for travelers who seek to quickly compare different travel options, consolidate online listings from multiple booking channels, including hotel websites and online travel websites, making them an important part of a hotel’s online marketing mix. Large hotel companies, such as Marriott International, partner with digital marketing and advertising technology providers such as DerbySoft to better manage online bookings from metasearch sites. Marriott’s proprietary central reservation system (CRS) is buffered from data requests from multiple travel metasearch engines, which helps capture direct bookings. They align with a hotel’s direct booking strategy.
Martech and Adtech Can be a $3 Billion Industry
Leveraging the expertise of martech and ad tech can help hotels drive direct bookings, reduce the cost of acquiring new customers, improve response times to social media requests, and reduce the time it takes for content to go from idea to publication. Our analysis shows that 38% of hotels worldwide use digital marketing or advertising technology. This translates into approximately 17.9 million hotel rooms.
At Skift Research, we estimate that digital marketing and advertising technology vendors in the hospitality industry generated a total revenue of $1.2 billion in 2019. Combining this with the unused market potential, this tech category has the potential to generate a total of $3 billion in annual revenues.
These revenues are estimated on the basis of pricing information available through vendor surveys and websites. The average price paid by hotels is multiplied by the estimated total number of hotels and rooms worldwide. Further details on the methodology used can be found at the end of this report.
Commission-Based Pricing Model
Most vendors offer both marketing as well as advertising technology solutions. These are largely cloud-based service offerings, offered for a flat fee plus commission fees per social media post or ad. Flat fees range approximately from $300 to $1000 per month.
Other fees, essentially commission fees, make up ~92% of revenues. These generally constitute a specific percentage of the total spend on advertising. This also includes training and installation fees. Some companies also use performance pricing, which is a percentage of the total incremental revenue generated.
Subscription fees are mainly the flat fee paid for the service and contribute 7% to revenues. These may be built based on specific numbers of campaigns run or the number of ads within the campaigns.
Integration fees make a 1% contribution to revenues. This includes integrating martech and adtech with the CRS.
Vendor List
| Vendors | Sub-Category | Base | Hotels | Hotel Share | Rooms | Room Share | |
|---|---|---|---|---|---|---|---|
| 1 | DerbySoft | Digital Marketing, Metasearch Management, and Ad Tech | U.S. | 50,000 | 8.3% | 4,000,000 | 13.3% |
| 2 | RateGain | Digital Marketing, Metasearch Management, and Ad Tech | India | 45,000 | 7.5% | 3,600,000 | 12.0% |
| 3 | D-Edge | Digital Marketing, Metasearch Management, and Ad Tech | France | 17,000 | 2.8% | 1,360,000 | 4.5% |
| 4 | Triptease | Metasearch Management and Ad Tech | UK | 12,000 | 2.0% | 1,200,000 | 4.0% |
| 5 | Tambourine | Digital Marketing | U.S. | 10,000 | 1.7% | 1,200,000 | 4.0% |
| 6 | WIHP Hotels | Digital Marketing, Metasearch Management, and Ad Tech | France | 14,000 | 2.3% | 1,120,000 | 3.7% |
| 7 | Sojern | Digital Marketing | U.S. | 10,000 | 1.7% | 1,000,000 | 3.3% |
| 8 | THN Demand Platform | Digital Marketing and Metasearch Management | Spain | 16,000 | 2.7% | 800,000 | 2.7% |
| 9 | Demand Plus | Metasearch Management and Ad Tech | Australia | 15,000 | 2.5% | 750,000 | 2.5% |
| 10 | FornovaEC | Ad Tech | UK | 8,000 | 1.3% | 640,000 | 2.1% |
| 11 | Synxis Digital Marketing | Digital Marketing, Metasearch Management, and Ad Tech | U.S. | 10,000 | 1.7% | 600,000 | 2.0% |
| 12 | Amadeus | Digital Marketing | U.S. | 5,000 | 0.8% | 500,000 | 1.7% |
| 13 | Cendyn | Digital Marketing and Metasearch Management | U.S. | 2,000 | 0.3% | 400,000 | 1.3% |
| 14 | BookLogic | Digital Marketing and Metasearch Management | Turkey | 6,300 | 1.1% | 252,000 | 0.8% |
| 15 | Profitroom | Digital Marketing and Ad Tech | Poland | 3,500 | 0.6% | 164,500 | 0.5% |
| 16 | Milestone Inc | Digital Marketing | U.S. | 1,500 | 0.3% | 120,000 | 0.4% |
| 17 | DBX | Digital Marketing | U.S. | 500 | 0.1% | 37,500 | 0.1% |
| 18 | Avvio | Digital Marketing and Metasearch Management | U.S. | 500 | 0.1% | 25,000 | 0.1% |
| 19 | Bookassist | Digital Marketing and Metasearch Management | Ireland | 400 | 0.1% | 20,000 | 0.1% |
| 20 | Net Affinity | Digital Marketing and Metasearch Management | Ireland | 500 | 0.1% | 20,000 | 0.1% |
| 21 | Umi Digital | Digital Marketing and Metasearch Management | UK | 150 | 0.0% | 18,000 | 0.1% |
| 22 | HMA Intelligent Marketing | Digital Marketing | U.S. | 70 | 0.0% | 8,400 | 0.0% |
| 23 | three&six | Digital Marketing and Metasearch Management | UK | 225 | 0.0% | 7,875 | 0.0% |
| 24 | Orange Hotel Marketing | Digital Marketing | Netherlands | 23 | 0.0% | 5,175 | 0.0% |
| 25 | Hotel Marketing Coach | Digital Marketing | Netherlands | 50 | 0.0% | 5,000 | 0.0% |
| 26 | TravelNet Solutions | Digital Marketing | U.S. | 16 | 0.0% | 2,400 | 0.0% |
| 27 | Incite Response | Digital Marketing | U.S. | 15 | 0.0% | 1,800 | 0.0% |
| 28 | Cloudbeds Amplify | Digital Marketing and Metasearch Management | U.S. | 50 | 0.0% | 1,750 | 0.0% |
| 29 | Mirai | Digital Marketing | Spain | 23 | 0.0% | 1,380 | 0.0% |
| 30 | Gcommerce | Digital Marketing and Metasearch Management | U.S. | 9 | 0.0% | 1,080 | 0.0% |
| 31 | Koddi | Ad Tech | U.S. | 20 | 0.0% | 800 | 0.0% |
| 32 | Travel Media Group | Digital Marketing | U.S. | 9 | 0.0% | 720 | 0.0% |
| 33 | Positioner | Digital Marketing | Switzerland | 20 | 0.0% | 600 | 0.0% |
| Total | 227,880 | 38.0% | 17,863,980 | 59.5% |
Hotel Tech Benchmark Methodology
The Hotel Tech Benchmark by Skift Research is based on a mix of information provided by hotel tech vendors and proprietary data calculations. Participating companies have provided extensive information about their operations,
including:
- Historical and current revenues
- Revenue Streams
- Historical and current employee count
- Geographic Coverage
- Product breakdown, including software functionality, launch date, pricing models, and integrations
- Number of hotels and rooms per product
Market sizes and market potential are calculated bottom-up, using information from vendor input as well as publicly available information on company websites and franchise disclosure agreements.
The total size of the hotel industry, which informs our ability to calculate market sizes, is a point of contention in the industry. We have used industry sources and our own estimates to determine the size of the hotel industry in terms of hotels and rooms.
There are many estimates of the number of hotels worldwide, ranging between half a million and a million. We collected information from different sources to estimate the TOTAL NUMBER OF HOTELS WORLDWIDE AT 600,000.
This is much higher than the often-quoted STR figure, which is below 200,000. The STR estimate excludes properties with less than 10 rooms, and while known for its strong coverage of highly branded markets like the U.S., struggles to capture more independent markets in Europe and Asia.
Therefore, other sources were taken into consideration. Euromonitor International, a market research company that includes coverage on independent and chained hotels for 100 countries, estimates the market is just short of 600,000. Expedia asserts it has more than 600,000 properties on its platform, although this is likely to include more than just hotels.
Data on the number of rooms also show extreme differences between sources. STR asserts that the average hotel has 92 rooms, while Euromonitor International puts this figure at 55. As both disregard small properties to different degrees, with STR particularly having limited coverage of independent and smaller hotels, we estimate that the average hotel has 50 rooms, to TOTAL 30 MILLION ROOMS WORLDWIDE.
Revenue streams are calculated using input from participating vendors, taking into account the size of each vendor and their revenue breakdown. As participation increases, this data is expected to change.