For independent hotels, boutique stays, or multi-property groups, pricing strategy is a top priority. But beyond setting rates, there’s a silent profit killer that often goes unnoticed—Guest Acquisition Cost (GAC). This metric tells you exactly how much you spend to bring in each guest—and whether you're actually running a profitable business.
Let’s explore how GAC works, how to calculate it, and most importantly, how hoteliers can optimize it for sustainable success.
What Is Guest Acquisition Cost (GAC)?
In hospitality, GAC refers to all expenses related to attracting a guest—from online marketing to OTA commissions and technology costs like your channel manager or GDS connect. It gives a realistic picture of how much profit you retain from every booking.
GAC = Total Marketing & Distribution Spend ÷ Number of Guests Booked
Guest Journey & Acquisition Funnel
A potential guest doesn’t book your hotel at first glance. They follow a decision journey:
Each of these phases involves cost—monetary or operational—and adds up to your GAC.
Real-World Guest Acquisition Channels
1. Online Travel Agencies (OTAs)
For most independent hotels, OTAs are a double-edged sword—great for visibility, but costly in the long run. With 15%–25% commission rates, relying too heavily on OTAs will increase your GAC significantly. However, tools like real-time OTA management can help control cost spikes by avoiding overbookings and enabling dynamic rate updates.
2. GDS Connect
If your property caters to business travelers or works with travel agents, you're likely connected to GDS platforms like Sabre or Amadeus. These systems boost corporate bookings but come with average commissions around 20%. For upscale or city hotels, the GAC via GDS may be higher but the ADR often justifies it.
3. Channel Manager
Essential for syncing inventory across OTAs, GDS, and your own website, a channel manager ensures rate parity and booking accuracy. For hotel groups and resorts with seasonal traffic, this tool can reduce manual effort and avoid double bookings—while adding a fixed monthly cost.
4. Booking Engine
Direct bookings are your most profitable channel. A web booking engine like AxisRooms or SynXis adds minimal cost compared to third-party platforms. When paired with smart marketing and reputation management, it helps build brand trust and keeps your GAC in check.
Sample GAC Breakdown for a Mid-Sized Hotel
Properties targeting more direct and repeat business will operate at the lower end of this range.
What Influences Your Guest’s Booking Decision?
- Trust & Reviews: Word-of-mouth and reviews still remain one of the biggest influences. Effective reputation management allows you to respond, recover, and build loyalty.
- Competitive Pricing: Guests compare rates within seconds. Using a revenue management system, you can apply pricing rules based on season, occupancy, demand spikes, or competitor moves.
- Mobile Optimization: More than 50% of bookings now happen on mobile. Ensure your booking engine and website are mobile-responsive.
- Perceived Value: Package inclusions like breakfast, late checkout, or a guest services app can swing decisions in your favor—without heavy discounts.
How to Optimize Your GAC – Hospitality-Specific Tips
- ✅ Benchmark Regularly: Compare your GAC against your ADR and competitor benchmarks in your comp set.
- ✅ Invest in Content Marketing: Great photos, Google visibility, and local SEO reduce long-term dependency on paid channels.
- ✅ Negotiate OTA Terms: Use your high-performing OTA listing as leverage to negotiate better commissions or participate in seasonal campaigns.
- ✅ Use CRM & Email: Capture emails post-booking and remarket to past guests with special rates. The ROI here is typically 5–10x.
Product Spotlight: How Hotelogix Helps Optimize GAC
With built-in modules like:
- Channel Manager for OTA/GDS sync
- Direct Booking Engine for commission-free reservations
- Smart Reporting Dashboards to track CAC and ROI by channel
- Real-time OTA Management to prevent errors and rate leaks
…it gives hoteliers full visibility into what each guest really costs—and how to drive more direct, repeat, and cost-efficient bookings.
Final Thoughts: Why GAC Should Be a Weekly Metric
If you’re serious about growing profitably, GAC should be a core KPI on your hotel dashboard. It tells you:
- If your marketing spend is worth it
- Where guests are really coming from
- Whether you need to fix your OTA dependency
- And if your direct channels are strong enough to sustain you
Whether you run a 30-room boutique hotel in Goa or a 5-property chain in Southeast Asia, lowering GAC is the fastest way to increase profit per guest—without increasing room rates.
