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 43,300 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 73% of hotels are affiliated with a chain.

Large Capital Commitments

Building a new hotel requires significant investment in land, buildings, furnishings, and marketing expenses.

Online Booking Channels Grow Powerful

The growing number of travelers who turn to the Internet to book lodging has forced hotels to alter how they do business.

Industry size & Structure

A typical hotel employs about 28 workers and generates $4-5 million in annual revenue.

    • The hotel industry consists of about 43,300 companies that employ 1.2 million workers and generates $202 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 73% 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 time share units, which give guests the option to stay at a particular property during a scheduled period of time.
    • 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 30, 2022 - Higher Interest Rates Pressure Lodging Demand
                                  • Higher interest rates are creating uncertainty in US markets which is expected to slightly reduce US lodging demand, according to a November report by PwC. Annual occupancy for US hotels in 2022 is expected to increase to 62.8%, which is slightly lower than PwC’s forecast in May 2022. Average daily room rates (ADR) are projected to rise by 19.3% in 2022. ADR growth will push revenue per room (RevPAR) up 30.3%, which would be about 108% of pre-pandemic levels. For 2023, PwC expects growth in both individual and group business travel to offset softer demand for leisure travel. Outbound international travel will be more robust than inbound due to the strength of the US dollar. Improvements in ADR and occupancy in 2023 will help drive year-over-year RevPAR growth of 5.8%, a slowdown from 2021 but about 115% of pre-pandemic levels.
                                  • While hotel occupancies still have not recovered to 2019 levels, hotels near airports are recovering more quickly than urban hotels, according to real estate consulting firm CBRE. In September 2022, occupancy at hotels near airports was about 4.5% below 2019 levels, but urban hotel occupancy was down 8%. Part of what is driving the trend is the return to in-person business meetings among geographically dispersed teams. Some firms find it convenient to hold in-person meetings at major hub airports such as Houston, Dallas, Chicago, or Denver with hotel and meeting facilities connected to the terminal. Hyatt has said its airport hotels are nearly back to pre-pandemic occupancy levels and plans to make more airport facility investments under its Hyatt House and Hyatt Place brands.
                                  • Dallas leads the nation in the number of hotels in the construction pipeline, according to the newly-released third quarter United States Construction Pipeline Trend Report from Lodging Econometrics. With a record-high count of 174 projects, accounting for 20,676 rooms, Dallas outpaced Atlanta with 139 hotels and 17,843 rooms, Los Angeles with 118 hotels and 19,062 rooms, Phoenix with 113 hotels and 15,508 rooms, and New York with 102 hotels and 17,805 rooms. The US markets with the most hotels currently under construction were New York with 69 hotels, and Atlanta with 25 hotels, followed by Phoenix, Dallas, and Austin, Texas. Within the first three quarters of 2022, the markets with the greatest number of new hotel openings are New York City, Austin, Nashville, Atlanta, and Detroit.
                                  • The top concerns for hotel managers are labor availability (86.76%), labor costs (85.29%) and demand (42.64 %), according to the Hospitality Asset Managers Association’s (HAMA) Fall 2022 Industry Outlook Survey. The survey of 68 hotel managers found most are optimistic about the industry’s future but cautious about shifting norms, Hotel Management reported. “The biggest surprise from the respondents is how labor – both wages and availability – continues to be a challenge for hotels, despite the large increases seen in labor cost over the last two to three years,” said HAMA President Matthew Arrants. He noted that the hospitality industry is locked in competition with the retail and distribution sectors for talent. Another notable finding was that just under 50% believe industry revenue per available room levels will return to 2019 by 2023, while approximately 40% predict it will occur in 2024.
                                  Get A Demo

                                  Vertical IQ’s Industry Intelligence Platform

                                  See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.

                                  Build valuable, lasting relationships by having smarter conversations -
                                  check out Vertical IQ today.

                                  Request A Demo