US Accommodation and Food Services Sector

The 784,882 establishments in the US accommodation and food services sector prepare meals, snacks, and beverages to customer order for immediate consumption or provide short-term lodging for travelers and vacationers.

Labor Intensive, High Turnover

Food service and accommodation operations are labor-intensive, and the sector struggles with turnover.

Economic Sensitivity

The accommodation and food service sector is driven by discretionary spending and is vulnerable to economic downturns.

Oct 8, 2026 - Services Providers Facing Higher Costs

• Accommodation and food services providers face renewed cost pressure even as the broader services economy continues to grow. The Institute for Supply Management’s purchasing managers index (PMI) for services providers fell to 54.9 in September from 55.4 in August, indicating a slower pace of expansion. Meanwhile, the prices index climbed to 74, its highest level since July 2022, signaling rapidly rising costs for service businesses. Fuel was the most frequently cited issue, while supply chain constraints were increasing both costs and delivery times. For hotels, restaurants, caters, and other hospitality providers, higher fuel and supplier costs could raise expenses for food, beverages, linens, equipment, and other supplies. Moreover, employment also returned to slight growth, potentially adding to payroll expenses. Hospitality businesses may need to hike prices, adjust purchasing, or absorb higher costs, putting additional pressure on already tight operating margins.
• US hotel investment is rebounding as buyers acquire aging properties at discounted prices and invest heavily in renovations, The Wall Street Journal reports. Hotel sales rose 28% year over year in the first half of 2026, helped by lower short-term interest rates, strong luxury demand, and travel associated with major events and data center construction. Many hotel owners have struggled to finance required renovations amid high debt costs, and hotel brands are becoming more aggressive about enforcing property improvement requirements, according to WSJ, thus pushing some owners to sell rather than fund costly upgrades. For accommodation providers, increased investment could improve property quality and competitiveness but also raise pressure to renovate aging rooms, lobbies, and amenities. Limited new hotel construction may benefit current operators by restraining room supply, while making older properties more attractive acquisition targets because buying and renovating can be cheaper than developing new hotels.
• Artificial intelligence is changing how travelers find and book hotels, and could reduce the importance of traditional competitive advantages such as distribution networks by putting greater emphasis on the guest experience, Hospitality Technology reports. Hospitality executives at HITEC 2026 said AI will make sophisticated tools for revenue management, personalization, and customer service available to more hotels, increasing the need to stand out through superior service and operations. AI is also expected to help accommodation providers improve labor productivity, forecasting, and guest experiences by tailoring stays to individual preferences. While some executives think AI will reinforce loyalty programs by recommending brands that match travelers' preferences and memberships, others believe it will make it easier for guests to switch brands. Either way, hotels that use AI to improve efficiency while delivering a more personalized and memorable stay are likely to have the strongest competitive advantage.
• Producer prices for accommodations rose 2.7% in August compared to a year ago, after dipping 0.7% in the previous August-to-August annual comparison, according to the latest US Bureau of Labor Statistics data. Producer prices are near record highs due to a combination of strong demand from travelers and rising costs for accommodation providers. Employment by accommodation and food services inched up 0.7% year over year in August, while the average sector wage rose 4.9% YoY in July to $20.49 per hour, down a bit from its peak in May, BLS data show. Higher wages, persistent staffing shortages, increased hiring, and richer benefits needed to attract and retain workers are driving up the hospitality sector's payroll costs.

Industry size & Structure

The accommodation and food services sector comprises 784,880 establishments that employ 14.2 million workers and generate $1.3 trillion in annual revenue, according to government sources.

• The accommodation and food services sector represents 3.2% of the nation's Gross Domestic Product (GDP) and employs about 9% of the country's workers.
• The sector is fragmented with the 20 largest firms representing 13.3% of revenue.
• In addition to employer establishments, the accommodation and food services sector has 491,800 owner-operated establishments with no employees. The subsectors with the highest number of nonemployer establishments are special food services (56%), restaurants and other eating places (23%), and traveler accommodation (11%). The owners of nonemployer firms typically perform the work and may outsource support functions like marketing and accounting.
• The US Accommodation and Food Services sector shed nearly 20% of its employees in 2020 due to the pandemic but recovered to surpass 2019 levels in 2024, according to the Bureau of Labor Statistics.