Hotels & Motels
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 44,700 hotel and motel companies in the US provide lodging for business and leisure travelers. The industry includes chains, franchises, and independent hotels. Franchise hotels are branded properties with independent owners. The franchise brand (Marriott, Hampton Inn, etc.) is known as the "flag." Large chains may offer franchises in addition to operating corporate-owned properties. About 72% of hotels are affiliated with a chain.
Large Capital Commitments
Building a new hotel requires significant investment in land, buildings, furnishings, and marketing expenses.
Integrating Technology
Hotels are rapidly integrating technology to improve their operational efficiency, mitigate labor shortages, and enhance the guest experience.
Industry size & Structure
A typical hotel employs fewer than 20 workers and generates about $5 million in annual revenue.
- The hotel industry consists of about 44,700 companies that employ 1.5 million workers and generate $221 billion annually.
- The industry includes chains, franchises, and independent hotels. Franchise hotels are branded properties ("flags") with independent owners. Large chains may offer franchises in addition to operating corporate-owned properties. About 72% of hotels are affiliated with a chain.
- Hotel categories are defined by price and the level of services and amenities offered. General classifications include luxury, upscale, midscale, and economy.
- Specialized hotels include resorts (which cater to vacationers) and extended stay properties (which include kitchens and additional space). Some corporate chains offer timeshare units, which give guests the option to stay at a particular property during a scheduled period.
- Large companies include Marriott International (Marriott, Renaissance, Courtyard, Fairfield Inn, Ritz-Carlton), Hilton Worldwide (Hilton, Doubletree, Embassy Suites, Hampton Inn, Homewood Suites), InterContinental Hotels (Holiday Inn, Crowne Plaza, Staybridge Suites, Candlewood Suites), and Best Western.
- Varying strength among flag hotels leads to varying levels of risk for new properties.
Industry Forecast
Hotels & Motels Industry Growth
Recent Developments
Mar 11, 2025 - Canadian Travel to the US Plummets
- Sinking Canadian public opinion of the US and a lengthy trade war could cost the American travel industry an estimated $4 billion, according to a Forbes analysis of US Travel Association (USTA) data. Statistics Canada reported that Canadians visiting the US by car - the majority method - dropped a hefty 23% in February 2025 compared to the same period in 2024. Air travel from Canada to the US was also down 2.4%. Canadian travel agency giant Flight Centre reports a 40% drop in bookings to the US over the last three months (year over year), and a 20% cancellation rate on pre-booked trips. The USTA in February already warned that a 10% dip in travel from Canada could cost the US $2.1 billion in consumer spending and 140,000 hospitality jobs. With that rate already more than double the USTA estimate, losses could balloon to a potential $4 billion.
- Employment in the hotel industry grew 1.7% year over year in December, per the US Bureau of Labor Statistics, but that still remains below pre-pandemic levels amidst an ongoing industry-wide staff shortage. The hotel industry lost about 680,000 jobs during the pandemic, and in the four years since has added back 467,000 employees (68%), according to data analysis from The American Hotel and Lodging Association (AHLA). Retention of the industry’s 2.1 million workers will be a key focus for hoteliers in 2025, according to AHLA, with employers stressing an increase in total wages, compensation, and advancement opportunities. A survey of hotel owners by AHLA in December 2024 found that 64% currently have staffing shortages. The top employer methods cited to reverse the trend included pay raises (47%), flexible work schedules (19%), and offering employees steep hotel discounts (13%).
- Tipping fatigue has grown significantly since the pandemic, leading politicians from both parties to propose legislation exempting tips from taxes, an idea supported by out two-thirds of Americans, according to a poll from Ipsos. The proposal is popular among hospitality industry trade groups and tipped workers, but the economic implications of such a move are not so simple. It would only affect a small number of workers - the Yale University Budget Lab finds there are 4 million tipped US workers, or 2.5% of the workforce - only a third of which make enough to pay taxes at all. In addition, only federal income tax on tips would be affected. State income and payroll taxes would still be deducted. Yale estimates that such a proposal would cost the government about $100 billion in revenue over the next ten years.
- The extended stay segment of the hotel industry is targeting a more upscale market than the typical low-level brands that usually dominate the niche. After COVID shuffled consumer and business travel habits and service expectations in the long stay segment, companies including Marriott and Wyndham have looked to offer a more upscale offering with apartment-style accommodations. Industry leaders are targeting the business traveler who wants the perks of extended stay (in-room kitchens, laundry facilities, business centers) combined with high-end hotel fringe benefits. The new Apartments by Marriott brand includes all those same amenities but with private bedrooms and separate living areas. Expansion in the segment will be largely focused on densely-populated urban areas, and in partnerships with other hotel and online travel partners. Smith Travel Researchers and Tourism Economics both forecast that luxury hotels will have the most growth in revenue per available room in the industry in 2025.
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