# Calculating true customer acquisition costcustomer acquisition costCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète →
A boutique resort in Tulum posts a screenshot to its investors: Instagram bookings cost $18 in ad spend per reservation. Booking.com bookings cost $340 in commission per reservation. The team celebrates Instagram as the cheap channel and quietly shifts budget away from OTAs (Online Travel Agencies, third-party platforms like Booking.com or Expedia that list and sell hotel inventory for a commission). Eighteen months later, the resort's marketing team can't explain why revenue per booked guest has fallen and repeat bookings have dried up. The $18 number was real. It was also almost meaningless.
This lesson works through why, and how to compute CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow. () properly across the messy, multi-channel reality of travel marketing.
In most industries, CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → is simple: marketing spend divided by new customers acquired. In travel and hospitality, three structural features complicate this.
1. Commission is a hidden acquisition cost. When a guest books through an OTA, the hotel doesn't pay upfront ad spend, it pays a commission on the booking value after the stay, typically 15 to 25% for OTAs like Booking.com or Expedia (industry estimate, varies by market and contract). That commission is CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète →, even though no "campaign" was run.
2. Metasearch adds a bidding layer on top. Metasearch engines (Google Hotel Ads, Trivago, Tripadvisor) let hotels bid for placement, then charge either cost-per-click or a commission on resulting bookings. A property might pay Google Hotel Ads directly AND still lose that click to an OTA retargetingretargetingShowing ads to users who have previously visited your site or interacted with your brand, to bring them back and drive conversion.Voir la définition complète → the same user later.
3. Attribution windows distort channel comparisons. A paid social ad might get "last-click" credit for a booking that a guest actually discovered via organic search three weeks earlier. Instagram often looks artificially cheap because it captures demand created elsewhere.
The result: comparing a $18 Instagram CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → to a $340 OTA CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → is comparing two different things measured two different ways.
The fix is a blended CAC: total acquisition-related cost across all channels, divided by total new guests acquired, computed on a like-for-like basis (same time window, same definition of "cost").
Blended CAC = Total acquisition cost (all channels) / Total new guests acquired (all channels)
But the real work is standardizing what counts as "cost" per channel:
| Channel | What counts as acquisition costacquisition costCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → |
|---|---|
| OTA (Booking.com, Expedia) | Commission paid on completed stay (15 to 25% of booking value, estimate) |
| Metasearch (Google Hotel Ads, Trivago) | CPCCPCCost Per Click (CPC) is the average amount you pay each time someone clicks your ad. It is a core pricing metric for paid search and social advertising.Voir la définition complète → spend or commission, plus platform fees |
| Paid social (Instagram, Meta Ads) | Ad spend + agency/creative production cost, amortized |
| Direct/organic (brand site, SEOSEOSearch Engine Optimization: the practice of improving your pages' natural (unpaid) rankings in search engine results pages to attract more organic traffic.Voir la définition complète →) | CRMCRMCustomer Relationship Management: software and strategy to manage and analyse customer interactions throughout their lifecycle.Voir la définition complète → and website tooling cost, allocated proportionally |
Let's rebuild the Tulum resort's channel comparison properly over one quarter.
Instagram (paid social):
But: creative production (photographer, video editor, retouching) for that quarter cost $6,000, and an agency retainer of $4,000 supported the campaign. Fully loaded:
That's already more than double the naive figure.
OTA channel (Booking.com):
Metasearch (Google Hotel Ads):
Now compare fairly: Instagram at $38, metasearch at $40, OTA at $108. Instagram is no longer wildly cheaper, it's roughly on par with metasearch. The original "$18 vs $340" comparison collapsed once production costs were loaded in and once commission was calculated correctly (the $340 figure in the opening scene likely came from dividing total OTA commission by a small subset of high-value bookings, another common distortion).
Here's the deeper problem. Even a correctly calculated CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → tells you nothing about whether a channel is "cheap" unless you pair it with LTVLTVLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.Voir la définition complète → (Lifetime ValueLifetime ValueLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.Voir la définition complète →, the total revenue or margin a guest generates over the full relationship, including repeat stays).
OTA guests are typically one-and-done: the OTA owns the customer relationship, retargets them for their *next* trip (possibly to a competitor), and the hotel rarely gets repeat direct bookings from that guest. Direct and social-acquired guests, by contrast, enter the hotel's own CRMCRMCustomer Relationship Management: software and strategy to manage and analyse customer interactions throughout their lifecycle.Voir la définition complète → (Customer Relationship ManagementCustomer Relationship ManagementCustomer Relationship Management: software and strategy to manage and analyse customer interactions throughout their lifecycle.Voir la définition complète → system) and can be remarketed to for future stays at near-zero incremental cost.
A simplified LTVLTVLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.Voir la définition complète →:CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → comparison for our resort:
Suddenly Instagram isn't just "not more expensive," it's the far better investment once repeat behavior is included. But this only becomes visible once CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → is calculated honestly and matched to LTVLTVLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.Voir la définition complète → over a multi-year window, not a single-stay lens.
A commonly cited healthy benchmark across subscription and consumer businesses is an LTVLTVLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.Voir la définition complète →:CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → ratio of roughly 3:1 as a minimum, with 5:1 or higher considered strong (estimate, general marketing benchmark, not travel-specific). Travel brands with strong direct-booking loyalty programs, like Marriott Bonvoy or Hilton Honors, are built explicitly to push this ratio higher by maximizing repeat stays from acquired guests. See HBS Online's primer on CAC and LTV for the general framework.
Vérification des acquis
1. Why is comparing raw ad spend per booking across channels misleading in travel marketing?
2. A hotel's Instagram channel shows a very low cost per booking. What is the most likely explanation the lesson highlights for why this number could be misleading?
3. A resort shifts budget away from OTAs toward paid social because paid social shows a lower CAC. Based on the lesson's reasoning, what is the key risk of this decision?
4. Select ALL correct answers describing structural features that make CAC calculation unusually difficult in travel and hospitality.
Sélectionnez toutes les réponses correctes.
5. Select ALL correct answers about why OTA commissions should be treated as part of customer acquisition cost.
Sélectionnez toutes les réponses correctes.
Channel | Spend/Commission | Loaded Costs | Bookings | True CAC | Avg LTV | LTV:CAC
Instagram | 9000 | 10000 | 500 | =SUM(B,C)/D | 960 | =F/E
Metasearch | 12000 | 0 | 300 | =B/D | 720 | =F/E
OTA (Booking) | 86400 | 0 | 800 | =B/D | 660 | =F/E
Direct/organic | 4000 (tooling) | 15000 (SEO) | 400 | =SUM(B,C)/D | 1100 | =F/ERun this quarterly, per property, per channel. The columns matter more than the tool: always separate raw spend from loaded costs, and always attach an LTVLTVLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.Voir la définition complète → window (12 to 24 months minimum for hospitality, given trip cycles).