US Accommodation and Food Services Sector NAICS 72

        US Accommodation and Food Services Sector

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Industry Summary

The 771,900 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.


Recent Developments

May 13, 2025 - Declining Consumer Confidence Threatens Restaurants
  • The dramatic drop in consumer confidence is expected to cause diners to pull back on spending, presenting restaurants with ongoing challenges amid a deteriorating economic landscape, Nation’s Restaurant News reports. In April, consumer confidence fell off a cliff according to the University of Michigan, whose consumer confidence index fell 11% for the month and is down 30% over the past five months as US consumers have grown increasingly pessimistic about the prospects for unemployment and worried about more inflation. Restaurants rely on discretionary spending. When consumers feel stressed they skip dining out and eat at home instead. In May, restaurant industry bellwether McDonald's reported a 3.6% year-over-year decline in first quarter same-store sales. The Michigan survey shows that Trump’s tariff pronouncements, along with the severe reaction of the stock and bond markets, are taking their toll on US consumers.
  • International travel to the US is trending downward, according to preliminary data from the Department of Commerce, US Customs and Border Protection, and other organizations that track inbound US travel. Total international visits to the US fell approximately 14% in March compared to the same period last year. Moreover, traffic from the highest-value inbound travel markets declined significantly. March saw a 26% year-over-year decline in overnight land trips by Canadians and air travel to the US from Canada fell 14% YoY. Travel from Western Europe declined for the first time since 2021, with a 17% drop in March visits to America. Travel from Asia fell for the second consecutive month in March and remains 25% below 2019 levels, while visits from South America fell 10% following a flat February. Florida was the top destination for international visitors in March, per the US Travel Association.
  • A new analysis from Goldman Sachs forecasts inhospitable conditions for US hotel operators as multiple factors converge to dampen the industry's prospects. According to Goldman’s report released in mid-April, a key hotel industry metric – revenue per available room (aka RevPAR) – is predicted to grow at just 0.4% year-over-year in 2025. That would be below the trend of the past four weeks, when US RevPAR tracked about 1.6% higher, according to analytics firm CoStar. At the start of this year, hotel giants Marriott, Hilton, and Hyatt called for RevPAR growth of between about 2% and 2.5%. Goldman's dimmer outlook reflects emerging signs of consumer weakness, geopolitical uncertainty, and negative signals from US airlines. While stopping short of a full recessionary scenario in its forecast, the report’s authors noted that their economist colleagues at Goldman Sachs now forecast a 45% probability of a US recession.
  • With the exception of the pandemic-year 2020, 2024 set a record for restaurant bankruptcies, which increased by more than 50% versus 2023, Nation’s Restaurant News reported in December. Challenges facing food service providers last year included rising inflation and the cost of living, which caused consumers to pull back on dining out. Also, higher labor costs – up 33% since 2020 – and persistent food price inflation squeezed restaurant profits. To avoid a repeat in 2025, Ragini Bhalla of credit report provider Creditsafe, advises restaurant operators “know their finances in and out,” adding restaurants should regularly forecast and monitor their cash flow and plan for the unexpected, including not getting paid on time, which impacts cash flow. According to a survey of small businesses by Barlow Research Associates, 51% of restaurants do not seek cash flow advice from an accountant or bookkeeper.

Industry Revenue

US Accommodation and Food Services Sector


Industry Structure

Industry size & Structure

The accommodation and food services sector comprises 771,900 establishments that employ 14.2 million workers and generate $1.3 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

                                    Industry Forecast
                                    US Accommodation and Food Services Sector Industry Growth
                                    Source: Vertical IQ and Inforum

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