US Accommodation and Food Services Sector
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 770,895 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.
Industry size & Structure
The accommodation and food services sector comprises 770,895 establishments that employ 14.1 million workers and generate $1.2 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
US Accommodation and Food Services Sector Industry Growth
Recent Developments
Aug 13, 2024 - Strong Growth in July
- The US Accommodation and Food Services sector ranked second (behind Arts, Entertainment, and Recreation) on the list of 10 services sectors reporting growth in July, as measured by the Institute for Supply Management's Services PMI, a nationwide monthly survey of purchasing and supply executives. In July, the Services PMI registered 51.4%, 2.6 percentage points higher than June’s figure of 48.8%. Sales at food services and drinking places and by accommodation services providers continue to rise to new highs from their low points during the pandemic, buoyed by rising personal consumption expenditures and sector job growth.
- Providers of food services challenged by high food price inflation in recent years are finally getting some relief from rising food costs. The Consumer Price Index (CPI) declined 0.1% in June, the US Bureau of Labor Statistics reports. This comes after the CPI was unchanged in May and was the first time since the start of the pandemic that there was a month-on-month decline, according to CNN. Over the last 12 months, the all-items index increased 3%. Food prices rose 0.2% in June versus May, while food-away-fron-home prices (restaurants) increased 0.4% for the month compared to a 0.1% increase for food-at-home (groceries) prices. For the 12 months ending in June, food-away-from-home prices increased by 4.1%, three points more than food-at-home prices.
- The US’s widening wealth gap is expected to be especially evident during this summer travel season, The New York Times reported in July. Wealthier households are more optimistic about their ability to take trips, and the services they are more likely to use — like full-service hotels — are flourishing, while budget hotel chains, by comparison, are expected to report a pullback, NYT reports. “If you go to upscale, you’re actually seeing growth there,” Adam Sacks, president of tourism economics at Oxford Economics, told NYT, adding, “A lot of that has to do with the different financial situations of different income groups.” Full-service hotels are expected to hike room rates by 2.1% this year, while midscale room rates remain flat and rates at economy hotels decline as low-income earners retrench, according to a forecast by hospitality analytics firm CoStar Group.
- Nearly two-thirds (61%) of Americans plan to travel overnight for leisure this summer, and 34% expect to increase their overnight leisure travel this summer compared to last year, according to a survey commissioned by the American Hotel & Lodging Association conducted by Morning Consult in April. Moreover, the poll finds that 31% of Americans say they plan to increase the number of hotel stays this summer compared to last summer. With regard to business travel, 35% of those surveyed say they expect to take an overnight business trip in the next four months, and 16% say they plan to do more business-related travel this summer compared to last summer. However, inflation appears to be a significant obstacle to growth for hoteliers, with 55% of respondents saying inflation will likely reduce their chance of staying in a hotel, down slightly from 56% in January.
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