A Bishnupur Homestay Weighs ₹40,000 of Instagram Ads
Chandrai Bhawan is a six-room heritage homestay in Bishnupur, run by the owning family in a 200-year-old house with a courtyard and terracotta panels. Average daily rate is ₹2,800 and annual occupancy is about 34%. Roughly 70% of bookings come through one online travel agency charging 18% commission; the rest come direct by phone and WhatsApp. The property's review score has fallen from 4.6 to 4.1 after three recent reviews mentioning "no hot water in the morning" and "breakfast came at 10:40 when we had a temple tour at 9". The owner has saved ₹40,000 and wants to spend all of it on a one-month Instagram advertising campaign, believing "we just need more people to see the property". The family has no one assigned to answer messages, and the geyser fault is not yet repaired.
1. Using the figures given, evaluate whether the ₹40,000 should go to Instagram advertising now. Show the arithmetic.
Read the worked answer
Size of the business: 6 rooms × 365 = 2,190 room nights. At 34% occupancy, about 745 room nights sold, worth 745 × ₹2,800 = ₹20.86 lakh.
Commission exposure: 70% of 745 ≈ 521 room nights through the OTA, grossing ₹14.59 lakh, commission 18% ≈ ₹2.63 lakh. Direct: 224 room nights, ₹6.27 lakh. Net after commission ≈ ₹18.23 lakh.
What advertising must earn back: each room night shifted from OTA to direct saves ₹2,800 × 18% = ₹504. To recover ₹40,000 the campaign must shift about 80 room nights - roughly 11% of annual room nights - from a standing start, in one month, on a property scoring 4.1.
The judgement: advertising amplifies whatever the product delivers. Sending traffic to a listing that promises hot water and a 9 a.m. breakfast, and delivering neither, buys more 3-star reviews and permanently lowers the ranking that generates free bookings. Spend the first ₹8,000–10,000 on the geyser and a breakfast pre-order sheet, and answer messages within an hour. Then advertise - with the ₹30,000 balance, targeted at weekend travellers from Kolkata and Durgapur, linking to a direct booking page, not to the OTA.
2. Design a 90-day plan to raise occupancy and cut commission dependence, with measurable targets.
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Days 1–30 - fix the product. Repair the geyser; set a 7:30–9:30 breakfast window with an order slip filled at check-in; reply publicly and politely to all three negative reviews and to every future review within 24 hours; brief the family on who answers WhatsApp and within what time. Target: no new review below 4.0; score back to 4.4.
Days 31–60 - build free and cheap channels. Complete the Google Business Profile with photographs of the courtyard and terracotta panels, correct map pin and a direct phone number; message the last two years' guests on WhatsApp with a returning-guest rate; list on the state tourism website; tie up with two Bishnupur tour operators and the temple circuit guides for commission of 10% (below OTA). Target: OTA share down from 70% to 60%.
Days 61–90 - spend on advertising, with a track. Run the ₹30,000 Instagram campaign on the fixed product, using a direct-booking link and a code so bookings can be attributed; offer a ₹200 direct-booking incentive - cheaper than ₹504 of commission. Target: occupancy 34% → 40% (about 90 extra room nights) and 40 direct room nights from the campaign.
Measure monthly: occupancy, ADR, OTA share, review score, enquiries answered within an hour. Report to the family in one page, not a feeling.
3. The OTA offers to feature the homestay on its homepage for a higher commission of 22%. Advise the owner, with numbers.
Read the worked answer
Compare the commission paid against the business it buys.
- Now: 521 room nights at ₹2,800 = ₹14.59 lakh gross; 18% = ₹2.63 lakh commission, net ₹11.96 lakh.
- At 22% with a volume lift of 15% (a realistic homepage effect, not a promise): 599 room nights = ₹16.77 lakh gross; 22% = ₹3.69 lakh commission, net ₹13.08 lakh. That is about ₹1.12 lakh more net - worth doing if the lift actually arrives.
- If the lift is only 5% (545 room nights, ₹15.27 lakh gross, ₹3.36 lakh commission), net is ₹11.91 lakh - slightly worse than today. The higher commission only pays above roughly a 10% volume gain.
Advice: negotiate - accept 22% for a fixed three-month window with a written minimum placement and a review of actual room nights produced, refusing any change to the rate outside the window. Keep the direct channels growing in parallel: every direct booking saves the full ₹616 at 22%, so the 90-day plan to cut OTA dependence matters more, not less, once commission rises. Do not sign an annual exclusive clause; the owner's real asset is the guest relationship, not the placement.