That $5.3 trillion makes up roughly 7% of the entire global economy with 1 in 10 of all workers, globally, working in the industry, of which the hotels are a key part. So, this is a, shall we say, large space and definitely worth knowing more about if your product or service could be a fit. The size of just the global hotel industry is $550 billion. And the size of the U.S. hotel industry is $218 billion. That’s almost double from just 15 years ago.
Since the 2008 recession, as the economy recovered, the hotel industry has grown tremendously. As business activity resumed, business travel increased and consumer travel rebounded quickly as well.
So, this is a very large and attractive market for many supporting and supplier industries. This ranges from everything from real estate and finance, to room design and furnishings, to payroll software, to food and beverages and many other related industries.
How the Hotel Industry is Structured
There are 3 main aspects of hotels; brands, owners, operators. Read more about the hotel industry structure here.
Hotel brands are the names we all know; Marriott, Hilton, Wyndham, Comfort Inn, Holiday Inn and the like. These brand companies usually don’t operate their own hotels, but franchise their brand to hotel owners. Brands set the standards of the hotel chain and control the consistency and quality of the guest experience. They also offer booking platforms, and loyalty programs and the like, to encourage brand loyalty.
The top global hotel brands by economic size are Marriott, Hilton, Best Western, Hyatt, Accor, Intercontinental, Wyndham and Choice hotels.
Owners are often a different entity from the brand or operator of a hotel. Real estate investment groups or real estate investment trusts (REITS) pool investor money to buy hotel real estate assets; namely the land and buildings. These owners usually then franchise a hotel brand, sometimes known as flags, to operate the hotel under. And while they may operate the hotel themselves, many owners hire a third-party management company to operate the hotel.
Operators, although sometimes the same organization as the owners, are more often hotel management companies. Owners of hotel real estate, hire these hotel management companies, that operate a number of hotels, often under different hotel brand names. These operators, or management companies exist to optimize profits, through operational expertise. And because they run many hotels, they offer better buying power for various operating systems.
Selling to the Hotel Industry
There are many types of business products and services that support the 3 aspects of the hotel industry structure; brands, owners and operators. Just one example, is the fact that on average, hotels re-decorate their hotel interiors and rooms every seven years. So just the interior design and furnishings supplier industry for hotels is huge. But for a variety of business goods and services, the hotel industry is a large and growing market.
Two key hotel industry associations are the American Hotel & Lodging Association (AHLA) and the
Asian American Hotel Owners Association (AAHOA). As of 2018, AAHOA has approximately 18,000 members who own about half the hotels in the United States.
Tradeshows & Conferences
Here are some of the key hotel tradeshows and conferences, most of them in the U.S. As the hotel industry is global, there are many additional hotel-related conferences and trade-shows around the world, focusing on different regions, like Asia. But these are the main U.S. events, most of which happen annually.
- Hotel Experience (HX)
- Boutique Design (BD) This event has a New York show and a separate West Coast show, every year.
- AAHOA Annual Conference
- AHLA Conference
- IMEX America
- The Lodging Conference
- The Hospitality Industry Technology Exposition and Conference (HITEC)
- Hunter Hotel Investment Conference
- The Americas Lodging and Investment Summit (ALIS)
See a more complete list of hotel industry events here.
Hotel Industry Media
These are the main hotel industry publications:
- Hotelier Magazine – this is produced by the AAHOA
- Lodging magazine – produced by the American Hotel & Lodging Association
- Hotel Business magazine
- Hotels magazine
- Hotel Management
Food and Beverage
The food and beverage (F & B) aspect of the hotel industry is enormous. Hotels are increasingly competing by offering improved food and beverage products and experiences. Just about all hotels offer either a paid or complimentary breakfast. More upscale hotels offer room service. And most medium to upper tier hotels have a restaurant and bar on premise.
The more upscale the hotel, the more important providing a quality food and beverage experience to guests is, as guests are staying there for the experience. More upscale hotels, with the possible exception of those located in areas where there is a large concentration of restaurants, will offer high quality food and beverage options. As well as room service.
If you have a food and beverage product or other hospitality product or service, most hotel management companies will have a director of food and beverages, so these are the key people to reach. And hotel brands will also have food and beverage decision-makers who are responsible to maintain the food standards of their franchisees. Other players involved are
Group Procurement Organizations (GPO’s), such as Avendra, were created to aggregate purchasing power for multiple hotel groups and negotiate with suppliers on behalf of hotel groups. Avendra was actually founded by the Marriott hotel group in 2001 and was co-owned by other hotel brands like Hyatt and Intercontinental before being sold to Aramark in 2017.
If you are selling a F & B product to hotels, you will most likely need to also work through a foodservice distributor. Large, national foodservice distributors like U.S. Foods and Sysco and also smaller, regional ones, are the businesses that hotels buy from. Your product will likely need to be ‘in-distribution’ for hotels to purchase them. This means that in most cases, you will also need to sell to these foodservice distributors that hotels use, in order for you to sell to hotels.
To learn more about foodservice distribution, read our e-book ‘Let’s Do Lunch’.
Retail is an important aspect of many hotels, especially resort hotels and mid to upper tier hotels. These range from a simple food pantry with snacks and beverages, to a larger gift shop with a wider range of products. As in food and beverages, selling to these shops will also require understanding and selling to the distributors of your product category.
Design and Furnishings
Hotels are in the experience business, not merely the lodging business. The more upscale the hotel, the more this is true. And a large component of delivering a pleasurable and memorable experience to their guests is the interior design, furnishings and lighting of the hotel. Hotels on average, re-furbish and redecorate their interiors roughly every 7 years. Hotels have to stay current and have the latest styling, décor, lighting and finishes, to maintain their brand and their ability to charge optimal room rates. Therefore, there is a very large supplier industry to hotels, covering all aspects of interior design and furnishings.
The main U.S. tradeshows covering this aspect are the Boutique Design New York show and the Boutique Design West shows.
A key international show for this aspect is the Shanghai International Hospitality Design & Supplies Expo.
There you have it; I hope this blog was an interesting and useful primer on the hotel industry. This is a large and growing market and is an attractive candidate for many products and services. And by the way, we help companies like yours reach this market by providing consulting and marketing services, so, if you’d like to have a free introductory phone to explore how we could help, call us.
Thanks for reading.
‘Global Hospitality Insights’ white paper by Ernst & Young