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Hotel Ads ROAS: What is a Healthy Ratio and How to Measure It
Hotel Ads ROAS: What is a Healthy Ratio and How to Measure It
"What is our ideal ROAS?" This question is the most frequently asked by hotel and villa owners when they first seriously monitor Google Ads. The answer is not as simple as a single magic number — because a healthy ROAS depends on your cost structure, property margins, and business stage.
This article discusses ROAS in the hospitality context, how to measure it correctly, and the pitfalls to avoid.
What is ROAS and Why is it Important for Hotels
ROAS (Return on Ad Spend) is the ratio between the revenue generated from ads and the ad cost itself. The formula is simple:
ROAS = Ad Revenue / Ad Cost
For example, you spend Rp10 million on Google Ads and generate bookings worth Rp50 million. Your ROAS is 5x — or 5:1.
But ROAS is not just a cool number on a report. In the context of hotels and villas, ROAS is an indicator of whether your ad budget is working efficiently or just burning through your margins. Without a measurable ROAS, you won't know if your Google Ads campaigns are generating a profit or a loss.
What is a Healthy ROAS for a Property?
There is no single benchmark number that applies to all properties. A healthy ROAS depends on:
1. Your Room Margin
A property's cost structure is the primary determinant. Room margin is the selling price minus room operational costs (housekeeping, utilities, amenities, laundry).
Simple example: a room is sold for Rp1 million, operational cost is Rp400 thousand. Margin = Rp600 thousand or 60%.
With a 60% margin, an ROAS of around 1.67x is needed just to cover the ad costs from the margin. An ROAS below that means the ads are funded from outside the margin — which means it's unsustainable.
| Room Margin | Minimum ROAS (Break-Even) | Healthy ROAS |
|---|---|---|
| 70% | 1.43x | 3x+ |
| 60% | 1.67x | 3.5x+ |
| 50% | 2x | 4x+ |
| 40% | 2.5x | 5x+ |
| 30% | 3.33x | 6x+ |
2. The Benchmark: OTA Distribution Costs
The most relevant benchmark is not a general industry benchmark — but your own distribution costs. OTA commissions (Booking.com, Agoda, Traveloka) average 15-22% per booking. In ROAS terms:
- 15% OTA Commission = needs ~6.7x ROAS for equivalent distribution cost efficiency
- 20% OTA Commission = needs ~5x ROAS
- 25% OTA Commission = needs ~4x ROAS
If your Google Ads ROAS is above that number, direct ads are already relatively more efficient compared to OTAs in terms of distribution costs. Read more: Direct Booking vs OTA: Cost Calculation.
3. Business Stage
New properties or those just starting Google Ads usually have a lower ROAS initially (2-3x) because the campaign is still in the learning phase, conversion data is sparse, and the audience hasn't built up yet. This is normal — not a sign of failure.
Mature properties with 6-12 months of conversion data should be able to achieve 4-8x ROAS for non-brand campaigns, and 10-20x+ for brand campaigns.
Pitfalls in Measuring ROAS
After years of managing Google Ads accounts for properties in Bali, there are a few pitfalls that are seen most frequently:
Chasing High ROAS by Restricting Budget
This is the most common irony: property owners see a 10x ROAS and feel happy — unaware that a 10x ROAS from a budget of Rp5 million per month (total revenue Rp50 million) could be less profitable compared to a 5x ROAS from a budget of Rp30 million (total revenue Rp150 million).
Focus on total booking value, not just the ratio. High ROAS with low volume = lost revenue potential.
Measuring the Wrong Thing
Google Ads can record "1 booking" without knowing its value. Without sending the conversion value from the booking engine to Google Ads, the ROAS column in the dashboard is empty or only shows "1" — there is no information on how many Rupiah were generated.
Solution: make sure your booking engine sends the booking value (total transaction) as a conversion value to Google Ads, not just a "purchase" event without a value.
Not Separating Brand vs Non-Brand
The ROAS of brand campaigns (people searching for your property name) is almost always high — it can be 20x or more. But this is not a reflection of acquisition efficiency because the guest already knows your property.
What truly measures acquisition performance is non-brand ROAS — campaigns that capture new guests searching for "villas in Ubud" or "cheap hotels in Seminyak" without knowing your property.
Separate brand and non-brand in the campaign structure, and monitor their ROAS separately.
Not Accounting for Assisted Conversions
The hotel booking funnel is long. A guest might first come from Google Ads (first click), then return a week later from an organic search (last click) and book. In a last-click model, Google Ads gets no credit. But in a data-driven or view-through model, its contribution is visible.
Don't just look at last-click ROAS. Use an attribution model that fits the hospitality funnel — usually data-driven or linear attribution.
How to Measure ROAS Correctly
Step 1: Set Up Conversion Tracking with Value
This is absolute. The booking engine must send a purchase event to GA4 with the value parameter (total booking in Rupiah) and currency (IDR). From GA4, this conversion is imported into Google Ads.
Read: How to Track Villa Booking Conversions.
Step 2: Structure Campaigns Neatly
Separate campaigns based on goals:
- Brand: Property name, spelling variations
- Non-Brand Generic: "villas in Ubud", "Seminyak hotel"
- Non-Brand Long-Tail: "cheap private pool villa Ubud", "hotel near Sanur beach"
- Remarketing: Guests who have visited the website
- Google Hotel Ads: If the property qualifies
Step 3: Monitor Alongside Other Metrics
ROAS is an efficiency metric, not a profitability metric. Monitor it alongside:
- Cost per Booking — the ad cost to generate one booking
- Total Booking Value — the amount of revenue from ads
- Booking Count — how many bookings are generated
- CPA (Cost per Acquisition) — the acquisition cost per new guest
Step 4: Segment Reports
Create report segments based on:
- Device — Mobile vs desktop ROAS (hotel guests often book from their phones)
- Time — High season vs low season ROAS
- Geography — Domestic vs international market ROAS
- Room Type — Suites vs standard rooms
ROAS is Not Everything
A low ROAS early on does not mean Google Ads isn't working. The problem might be with the landing page, website speed, or a booking flow that isn't smooth. Or perhaps your product requires a brand-building approach first before performance marketing can be effective.
Conversely, a high ROAS but low total bookings = unmaximized potential. The balance between efficiency (ROAS) and volume (total booking value) is the true target.
Conclusion
ROAS for hotels and villas cannot be simplified into a single number. Property margins, campaign structure, attribution models, and business stages all affect what a "healthy" number is.
Start from the foundation: accurate conversion tracking with values. Without it, ROAS is just a guess. With the right data, you can determine for yourself what a realistic ROAS is for your property — and continue to improve it over time.