Return on Investment and the Lifetime Value of a Guest

We recently read with great interest the blog entries by Eric Goldreyer, the CEO of Intelligent and well-spoken, Eric speaks in one article of the Lifetime Value of a Guest. In short, this is the value a B&B earns over a lifetime by bringing in one guest. Lifetime Value of a Guest is usually multiples of the earnings on just the first reservation. The article is worth reading and has several good points to be driven home to innkeepers.

Where we stopped short in our tracks is when Eric illustrates the concept with a typical example. He uses 25% as the typical cost of a reservation. He then goes through the calcuation and reinforces that ROI (Return on Investment) is a primary consideration for bed and breakfast owners.

Please allow me to emphasize, well no … proclaim loudly, that 25% is not anywhere near a good value for B&B innkeepers to be paying for a reservation. Even when the lietime cost of acquiring a client is maybe half of this (12.6% as Eric Goldreyer goes on to explain in his article), it’s still not a bargain for the hotel.

When CEOs of online booking services announce publicly that typical costs of acquiring guests are in the 25% range, it makes us wonder where all the value is going with the high technology available today. In this particular case is a proponent of all the right concepts, as stated in their other blog entries, including “online reservations, leveraging ratings and reviews, frequent stay programs, etc.” These are all the concepts we at (Instant World Booking) have been talking about for year. Nevertheless, consider that the cost structure we are able to offer to you, the innkeeper, are roughly one-third the amount you’ll be paying as suggested by Goldreyer above.

This is why we are imploring all bed and breakfasts and small hotels to consider alternatives to their online marketing strategies. Another well-written article by Eric Goldreyer speaks of how to think about return on investment (ROI) for your online marketing spend. Read the article, then consider that (Instant World Booking) charges no fees to join the service, offers more online, search-engine-optimized content for your property, more photos, and more translated online pages than the competition. Instant World Booking also offers a fully integrated online calendar, with credit card collections, for no sign-up fee or monthly fee. In short, you have zero cost unless you have bookings. And when you do have bookings, our cost is roughly one-third the cost offered by competing services. We encourage you to sign up for a free listing at (Instant World Booking) today:

The blog articles mentioned in this article can be found at the links include in the comment below.

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