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 43,500 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.

Online Booking Channels Grow Powerful

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

Industry size & Structure

A typical hotel employs fewer than 20 workers and generates about $4 million in annual revenue.

    • The hotel industry consists of about 43,500 companies that employ 1.6 million workers and generate $184 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 5, 2023 - Producer Prices Rising
                                  • Hotel and motel stays are becoming more expensive. September’s Producer Price Index for hotels and motels was up compared to a year ago. However, industry producer prices have eased from July's year-to-date and decade-long high. Employment rose in August year over year as the lodging industry continued to rebuild its workforce from the depths of the pandemic. Overall industry employment is up 91% versus May of 2020. Average industry wages also rose in August compared to a year ago, topping $20 per hour for nonsupervisory employees.
                                  • Hotels and motels in US cities considering housing homeless individuals and migrants will want to think twice, a new national poll commissioned by the American Hotel & Lodging Association and conducted by Morning Consult suggests. The poll found that more than seven in ten Americans (72%) would be deterred from booking a hotel room in Los Angeles if hotels there are forced to house homeless people next to paying guests. The survey was conducted ahead of a vote in Los Angeles set for March 2024 on whether to require local hotels to house homeless people next to paying guests as part of a ballot initiative proposed by Unite Here, a labor union that represents LA-area hotel workers. If the union’s ballot initiative passes, Los Angeles would become the first city to force hotels to house homeless people next to paying guests. Respondents cited safety risks to hotel staff and guests.
                                  • Tech-enabled wristbands are catching on at all-inclusive resorts, Travel Weekly reports. Upon check-in at destinations including Margaritaville Beach Resorts and Karisma Hotels and Resorts, guests are issued bracelet-like waterproof wristbands that function as their room key and can be used to make on-premises purchases. Hotel-giant Hilton has rolled out Easy Go Bands at several of its all-inclusive resorts in Mexico and plans to offer them at others. The wearable bands allow guests to enjoy the beach or pool without having to worry about losing their room keys or key cards. "We've seen 92% satisfaction from our guests on the understanding, ease of use, and the value that they get out of these Easy Go Bands," said Nicole Tilzer, Hilton’s senior director for all-inclusive and resort strategy. Resort operators say the wearable bands are so attractive that some guests opt to keep them as souvenirs when they checkout.
                                  • More hotels are charging guests who wish to check in early or check out later, The Wall Street Journal reports. Along with other vanishing conveniences like free daily housekeeping at some hotels, properties across the country – from budget hotels to luxury resorts – are levying fees for extra hours in the room. The late checkout fee cited by WSJ at one Boston hotel with a noon checkout time is $50 for the first hour, $75 for two hours, and $100 for extending the stay until 3 p.m. Hoteliers say charging a fee brings order to one of the top guest requests and helps to offset extra housekeeping hours required when travelers arrive early or stay late. Rising occupancy rates mean hotels have fewer empty rooms available for early check-in, while persistent labor shortages mean fewer housekeepers to prepare rooms.
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