US Accommodation and Food Services Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 770,895 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.
Economic Sensitivity
The accommodation and food service sector is driven by discretionary spending and is vulnerable to economic downturns.
Labor Intensive, High Turnover
Food service and accommodation operations are labor-intensive, and the sector struggles with turnover.
Industry size & Structure
The accommodation and food services sector comprises 770,895 establishments that employ 14.1 million workers and generate $1.2 trillion in annual revenue, according to government sources.
- The accommodation and food services sector represents 3.3% of the nation's Gross Domestic Product (GDP) and employs about 10% of the country's workers.
- The sector is fragmented with the 20 largest firms representing 13.6% 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 leisure and hospitality sectors shed about 65,000 establishments in 2021, which equals about 6.9% of existing establishments, according to the Bureau of Labor Statistics. However, the sectors added about 93,000 new establishments, equivalent to 9.9% of existing establishments. As a result, the sectors had a growth rate of 3%.
Industry Forecast
US Accommodation and Food Services Sector Industry Growth
Recent Developments
Dec 13, 2024 - Rising Chargebacks
- The hospitality industry is seeing a noticeable uptick in credit card chargebacks, Hotel Management reports. Factors leading to the recent rise in chargebacks – a major pain point for accommodation providers because they disrupt cash flow and increase in the workload for staff assigned to handle disputed charges – include the growing complexity of hotel charges, third-party booking errors, and fraudulent transactions, such as using stolen credit cards to book rooms. Effective strategies hotels and motels can use to prevent chargebacks and mitigate financial losses include using chargeback analytics software to identify patterns in chargebacks and understand why they are occurring. Using an address verification service (AVS) to authenticate ownership of a credit or debit card used by a customer and 3D Secure to add an extra layer of security to online transactions, can also help minimize chargebacks, according to HM. 3D Secure shifts fraud liability to the card issuer.
- The accommodation and food services sector was the fastest growing of 14 services sectors tracked by the Institute for Supply Management's Purchasing Managers' Index in November. Leisure and hospitality added 53,000 jobs in November, second only to healthcare and social assistance, according to the latest Bureau of Labor Statistics data. November’s gain was buoyed by employment in food services and drinking places, which trended up by 29,000. Sustained consumer spending – up 0.4% in October after rising 0.6% in September – is supporting demand for food service and lodging providers. A new survey commissioned by the American Hotel & Lodging Association finds that more than half (52%) of Americans plan to travel overnight for leisure in the next four months, with hotels remaining the top lodging choice for both leisure (45%) and business travelers (59%).
- Portion creep, which took off in the 1980s and led to the super-sized portions of today, may finally be reined in, thanks to a combination of economics, demographics, and climate science, The New York Times reports. Faced with rising food costs and diners turned off by sky-high menu prices, restaurants are trying to figure out how to offer smaller servings without upsetting customers. A new study by the Portion Balance Coalition at Georgetown University is underway to do just that, NYT reported in September. Meanwhile, some eateries are already shrinking offerings or launching snack-focused menus. According to the National Restaurant Association, 75% of US adults would opt for smaller-sized portions for a lower price, a trend which could help reduce food waste and improve restaurants' profits. Restrictions by some states on how much food can end up in landfills, is also driving the move toward smaller portions.
- Employment by the US accommodation and food services sector grew 1.2% in October compared to a year ago, following a 3.9% year-over-year rise in sector wages in September to a new high of $19.06 per hour, according to the latest data from the Bureau of Labor Statistics. The accommodation and food services sector was the third fastest growing of 14 services sectors tracked by the Institute for Supply Management's Purchasing Managers' Index (PMI) in October. Sales by accommodation services providers and at food services and drinking places are rising, according to the US Census Bureau.
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