Definition
Return on Investment (ROI) measures the profitability of an action or investment relative to its cost.
It is used to assess whether a decision (technology, campaign, channel, etc.) delivers value compared to what was invested.
Formula
ROI=Profit−InvestmentInvestmentROI = \frac{Profit – Investment}{Investment}ROI=InvestmentProfit−Investment
Why it matters
ROI helps hotels to:
- Evaluate the efficiency of marketing, distribution or tech investments.
- Compare different actions or channels.
- Prioritise decisions based on actual profitability.
- Justify investments internally.
Not everything that generates revenue is profitable.
Practical example
A hotel invests €1,000 in a campaign and generates €3,000 in additional revenue.
The ROI is positive, but a proper analysis should also consider associated costs (commissions, operations, etc.) to assess net profitability.
