ABSTRACT
The chapter aims to present essential financial information that hospitality marketers must consider before executing marketing strategies. The author discusses the relationship between projecting revenues, estimating costs, and evaluating potential profitability with the application of return on marketing investment and several capital budgeting methods. The author also offers a discussion of the five functional financial components that guarantee the feasibility of a marketing line of action. The extensive review of the literature includes a review of academic research studies and numerous books written in the marketing and finance literature. Leaning on the fundamentals of finance and marketing, the author provides an interesting review of what critical information hospitality marketers must consider when projecting sales revenue, estimating break-even analyses, examining costs, and applying capital budgeting methods including net present value, internal rate of return, and payback period. The author also discusses common sources of financing in the hospitality industry. This chapter was written to offer useful information for hospitality marketers in order to have a solid understanding of the financial impact of marketing decision-making before allocating resources, selecting among different marketing strategies, and assessing the after-effect of a marketing plan.
