A Look Inside the Accommodation Industry

Nate Lundy

BCOM 214

May 4, 2020
Due to the need for more content on multiple industries for our website, I have researched and
created a report based off of the accommodations industry. This report will give enough
information for investors and clients to get the information they need to make good decisions
that benefit both clients and our company. This document will cover the industry as a whole,
relevant trends, the target market, competitors, and public interest within this industry.

Industry

The accommodations industry took a very heavy hit at the end of the 2010’s but is predicted to
rebound in the years 2020 through 2025 because of the increased tourism after the lowering of
restrictions from COVID-19. The hotel and motel sector of this industry’s revenue is expected to
rise in annualized 3.0% to $212.8 billion over the span of five years up until 2025 (Hyland,
2020). For the other sector of this industry, campgrounds and RV parks, avenues are expected to
grow at a rate of 1.5% to $8.1 billion over the span of five years up until 2025 (Hiner, 2020).
This rate of growth is expected to start after the year 2020, because of the impacts of COVID-19,
campgrounds and RV parks experienced a -0.14% change in revenues with this being the first
negative change since 2013 (Hiner, 2020). With all this said, the accommodations industry could
be very promising for investment opportunities after the decline in 2020, because of the
predicted rise for the following five years after 2020.

Relevant Trends

While there are many factors within this industry that can encourage domestic travelers to go
abroad within the United States, this industry is still expected to increase in revenue in the future.
For the hotels and motels industry, in 2019 it had a revenue of 204,103 (in millions), and due to
the big hit this industry took because of COVID-19, it is predicted it will take until 2023 with a
revenue prediction of 204,731, to return to the figures in 2019 (Hyland, 2020). According to
IBISworld and J. Hiner, “A strong US dollar encourages domestic travelers to take trips
abroad while dissuading international travelers from visiting the United States.” (Hiner,
2020). Over the next five years until 2025, time spent on sports and leisure activities is
anticipated to rise at a rate of .4% per year, while per capita disposable income is
predicted to continue to rise at an annualized rate of 1.8%, this indicates that the average
person will have more flexibility to take vacations in camping trips (Hiner, 2020). Due to
this increase in per capita per person in the United States, increased free time, and
increased economic fallout due to COVID-19, US residents will be encouraged to travel
within the United States and increase business within this industry.

Target Market

While the accommodation industry mainly targets people of any age, this industry is mainly
driven by small domestic travel, but sometimes includes international travel. For the
campgrounds in RV sector, demand derives primarily from domestic travelers, and to a much
lesser extent, some international travel visiting the United States (Hiner, 2020). Also, for this
sector, people age 34 and under make up for 41% of this sector of the accommodation industry
(Hiner, 2020). “Almost 1/3 of the companies (Kampgrounds of America Inc.) guests, stay at least
30 nights per season.” (Hiner, 2020). Younger Americans make up a majority of the target
market for this industry, but Americans of any age are the majority of revenue for the entire
sector.

Products and Services Segmentation

Other unit accommodations and service

fees

RV and tent sites for travelers and other s

Campground membership, tuition and long-

ter m fees

0% 10% 20% 30% 40% 50%

Competitors

While many believe that companies such as Hilton and Marriott control this industry, they make
for a very small portion of it. This allows smaller companies within motels in RV parks all
around America to make up for a majority of the revenue made in the sector. But even though
this industry is in the mature stage of its life cycle, new competitors are still rising to the top.
Establishments that are branded by one of the top operators, such as Marriott International Inc.
and Hilton Worldwide Holdings Inc., account for just under 5% of the industry (Hyland, 2020).
Over the past five years leading up to 2020, many of the major players found within the hotels
and motels industry have adjusted their structure and move to franchise-based business models to
be able to compete with the smaller companies found within the industry (Hyland, 2020).
However, a new major player has entered into this industry recently, having over 3 million
listings in over 190 countries, Airbnb has become a powerful major player in the hospitality,
travel, and tourism industries (Mody, 2019). While this industry is mainly held up by smaller
businesses in the motel and RV park/camping sectors within this industry, new competitors such
as Airbnb have a rose to the top and hurt many of its competitors within the hotel sectors of this
industry.

Public Interest in this Industry

Public interest within this industry for the most part is on a downturn, as many people are
reluctant to invest in this industry during the next five years. This is especially true with the
events of COVID-19 and its effect on the economy. This industry also relies on millennials and
groups of younger people to get involved within camping and spend money in this industry. For
the next five years, investment in the new hotel and motel room is expected to gradually return to
a growth due to increased boost in demand for tourism, especially after restrictions from
COVID-19 are lowered (Hyland, 2020). With luxury camping on a popularity rise, it is expected
that millennials will spend more time at these industry sites, especially millennials with young
children. Adults aged 20 to 64 which includes millennials that are visiting these industry sites, is
expected to increase at a yearly rate of 0.2% over the next five years. Due to this industry having
a 1/3 retainment per season, it does not garner increased interest from the public, which leads to
a decline in investment within this industry.

Overall, the accommodations industry has a lot of potential for investment within the next few
years. After this year and the economic downfall of COVID-19, the accommodations industry
has taken a big hit and could be a great investment opportunity as it is predicted to rise within the
next five years and surpass its previous highs.
References

Hiner, J. (2020, April) Industry Performance, Retrieved April 21, 2020, From https://my-
ibisworld-com.ezproxy1.library.arizona.edu/us/en/industry/72121/industry-performance

Hiner, J. (2020, April) Industry Outlook, Retrieved April 21, 2020, From https://my-ibisworld-
com.ezproxy1.library.arizona.edu/us/en/industry/72121/industry-outlook

Hiner, J. (2020, April) Products and Markets, Retrieved April 21, 2020, From https://my-
ibisworld-com.ezproxy1.library.arizona.edu/us/en/industry/72121/products-and-markets

Hyland, R. (2020, April) Industry Outlook, Retrieved April 21, 2020, From https://my-ibisworld-
com.ezproxy1.library.arizona.edu/us/en/industry/72111/industry-outlook

Hyland, R. (2020, April) Industry at a Glance, Retrieved April 21, 2020,

https://my.ibisworld.com/us/en/industry/72111/industry-at-a-glance
 
Hyland, R. (2020, April) Major Companies, Retrieved April 21, 2020, From https://my-
ibisworld-com.ezproxy1.library.arizona.edu/us/en/industry/72111/major-companies

Hyland, R. (2020, April) Key Statistics, Retrieved April 21, 2020, From https://my-ibisworld-
com.ezproxy1.library.arizona.edu/us/en/industry/72111/key-statistics

Mody, M., Hanks, L. (2019, February 5) Consumption Authenticity in the Accommodations

Industry: Brand Love and Brand Loyalty for Hotels and AirBNB, Retrieved April 21,
2020, From https://doi-org.ezproxy3.library.arizona.edu/10.1177/0047287519826233