Acquisition
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Customer Acquisition Cost
Customer Acquisition Cost, abbreviated as CAC, is the cost of winning a customer to book a hotel room. With CAC, any company can gauge how much they’re spending on acquiring a (new) customer. Elements like loyalty and life-time-value play an important role. If the CAC is profitable to the hotel at all, has to do with the RevPOR.
If the CAC is efficient, has to do with the ROI (return on investment).
CAC can be compared to, for instance:
- When operating on your own, direct sales;
- When using other ways of distribution.
There are many different ways to calculate your CAC.
Often CAC is directly related to the fee /commission paid to the intermediary, the channel used. An indication of the costs would be anywhere between 2% and 15% of the sales, depending on many different things like:
- Contracts
- Being a preferred supplier or not
- Eas of the sale
- Options the partner offers
- The handling the partner takes care of
- The cancellations arrangements
- (Advance) payment services
- Just sales or promotions as well
- etc.
Due to Covid, hospitality (sales) is even more 'concentrated' than before and there are fewer 'players' in the field. Until now, the tendency has been, that CAC was going up; it is hard to predict what the future will bring.
Acquisition costs
These are strongly linked to distribution and promotion. Again, in the past no money was spent on this. So, if you kick this up in any way, it will be a decision in the group marketing costs.
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