Navigating Profitability: The Crucial Role of Customer Acquisition Cost
In today's ever-evolving and competitive hotel industry, more than the traditional focus on generating top-line revenue is required. Instead, the need to maximize profitability has become increasingly critical. This transition has ushered in a new approach - Profit-Oriented Revenue Management (PORM). At the heart of PORM lies a crucial factor that can dramatically influence a hotel's profitability: the Customer Acquisition Cost (CAC). According to research from Kalibri Labs, CAC is now 15-25 % of room revenue, up from 5-6 % twenty years ago. The bad news is that there is a high risk of an increasing CAC over time without effective and efficient management.