Hospitality Industry is amongst the first Industries to adopt major technological advances. The same was the reason with Internet Technology and Industry adopted it seamlessly and helped millions of people to plan there trip with getting them the best rates and reviews.

But with major advancements in technology, Hotels are now facing higher CAC (Customer Acquisition Cost) then ever before. The reason for the same is the high competition in this Industry between Individual Hotels, Hotel chains & Online Travel Agents.

Amongst Advertising and most searched item on the Internet, Travel has always been a predominated player with Hospitality been the predetermined leader as the margins in Hotels is higher then Airlines. But with the market becoming bigger with growing young population and more people wanting to travel - The Industry has become even bigger. However the challenges and risks attributed with these growing demands has also become substantially bigger. 

Some of the common CAC used by Hospitality providers are as follows:-

1. Google Adwords - Google the king of advertising has always been instrumental and the biggest beneficary of the hospitality sector. With main keywords around city going around Rs. 150-/- to Rs. 500-/-. The major spenders on these are Online Travel Agents specially Booking.comm MakeMyTrip & Agoda. Also Hotel chains & Hotels are spending extensively.

2. Advertising on Online Platforms - Online Platform like Booking.com, Agoda and MakeMyTrip has started having there own ads on the platforms for hotels to have higher listings. There cost are also the same. Logic is that what they spend on CAC on Google they retrieve from Hotels throught there Website. Same is a growing tend.

With such high CAC burden finally is paid by Hotels who retrieve the same from there customers. The result of the same is that Hospitality prices across geographical locations is becoming higher and the demand is slowing with increase in prices.

As per the study conducted by PK Group of Hotels in Noida, PreCovid to the year 2022, there was an increase in 50% Average Room Rent and a 15% Increase is Occupancy rates in the city of Noida located next to Delhi. However the rmains reasons were the opening of the economu post Covid hence the surge in demand. Post Covid, prices of everything from labour to goods also increased however profitability increased because increase in revenues surged more the the increase in Expenses. 

However the story has changed in 2024. The hospitality Industry is witnessing stagnant growth in Corporate & Tourism Industry. However the religious Industry is still seeing a phenomenal growth. But 90% Hospitality in India is that off tourism and corporates located in urban centres and tourism areas so we can easily say the growth is very minimal or even negative in certain areas. And this is one of the reason why such high CAC cannot be mantained going forward.

Another reason is that the number of Hotels have increased by 50%. To give an example, Noida a small city next to Delhi has 1000 listed Hotels on MakeMyTrip & GoIbibo. There is increase competition and aggressive selling by Hoteliers on the online segment thus leading to reduced margins and will eventually lead to low quality.

OyoHotels has substantially grown pre covid. They tried to find there way post covid also and increased demand helped the downturn growth. However year 2024, they have reduced there adverting costs considerable, reason is that they were everywhere offline and online, but now you can hardly find them online & offline in any city.

This Year 2024 is going to be a very hard year for Hospitality with lower demand & increased costs. This is a very high Investment category and only a few Hotel chains are Individual Hotels are doing good and actually growing. The reason is that they are focussing more on quality and paying lower amount on CAC. Some of the predominant Hotels doing well in Noida are BloomRooms, PK Group of Hotels & Golden Tree.

PK Group of Hotels is a three generation old Hotel chain. We have seen everything from good to bad. Even wars and Covid so the Industry goes to its ups & down. But one thing is certain about Hospitality is that it always comes back irrespective of the dark days. We are focussing on our quality mantaining good rates and customer service. Our debt is increasing but same is attributed to further growth.