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
Nov 6, 2024 - Group Travel Making a Comeback
- Conferences and group events, which were slow to recover from the pandemic, are staging a comeback, providing a welcome boost to the hotel industry as leisure travel slows, The Wall Street Journal reported in October. Revenue per available room for group travel – generally defined as bookings of 10 rooms or more at pre negotiated rates – rose 6.8% for the first eight months of 2024 compared with the same period in 2023, according to data firm CoStar Group. Average daily room rates for nongroup travel have fallen slightly this year, while group booking rates increased 4%, per CoStar. “Group and convention hotels are having a moment right now,” C. Patrick Scholes, a lodging and leisure analyst for Truist Securities, told WSJ, adding “That is the greatest strength this year and likely next year in terms of revenue growth for the domestic hotel industry.”
- The strikes that have plagued the lodging industry over the past few months show no sign of letting up, with the hotels workers’ union still locked in a dispute with operators over wages, staffing levels, and other issues, Hotel Management reported in October. Contracts with the union Unite Here began expiring on October 23rd and it’s taking the opportunity to demand a “livable wage” and better working conditions for its members. While most of the 10,000-plus workers at Hilton, Hyatt, and Marriott hotels across nine cities who walked off the job over the Labor Day holiday have returned to work, others are still walking picket lines. As of late October, more than 4,400 workers remained on strike in San Francisco, Honolulu, and Boston. The union is urging hotels to notify guests of strike activity, which has disrupted hotel operations and led guests to complain and demand refunds.
- Producer prices for hotels and motels rose 1.2% in July compared to a year ago after rising 2.3% in the previous July-versus-July annual comparison, according to the latest US Bureau of Labor Statistics data. Industry producer prices hit a new high in July, buoyed by summer travel and sustained consumer spending, up 2.6% year over year in June, according to the Bureau of Economic Analysis. To meet increasing demand, employment by hotels and motels grew 1.9% YoY in July, while average industry wages were flat over the same period at $20.46 per hour, BLS data show.
- Hotel room rates are hitting new highs in many major US markets, according to a September article in The Wall Street Journal. According to August year-to-date data from CoStar Group, cited by WSJ, 20% of the reporting hotels in the top 25 US markets charged an average daily rate of at least $200, up from 13% in 2019. Hotels in Boston and Miami charged average nightly rates of $227 thus far this year, with rates in San Diego averaging $217, according to CoStar data. Hoteliers in New York City are asking $276. Price-sensitive consumers who aren’t staying home say they’re trading down to cheaper accommodations. Consumers started to trade down from pricier hotels and go with cheaper options in June, according to a Morning Consult Economic Intelligence index that tracked consumer spending on hotels. High hotel room rates, further inflated by taxes and fees, also affect the length of stay.
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