HOTEL INDUSTRY

Hank Sherman
DECEMBER 9, 2020
Contents
Hotel Industry Report.................................................................................................................................2
Background.............................................................................................................................................2
Past......................................................................................................................................................2
Present.................................................................................................................................................2
Current Industry Trends..........................................................................................................................2
Overall.................................................................................................................................................2
COVID-19.............................................................................................................................................3
Disruption in the Industry.......................................................................................................................3
Conclusion...............................................................................................................................................4
References...............................................................................................................................................5

Figure 1 - Combined Revenue of the Top 10 Hotel Companies...................................................................2

Figure 2 – Hotel Industry Revenue Trends...................................................................................................3
Figure 3 - Hotel Construction Industry Revenue Trends..............................................................................3
Figure 4 - Total Hotel Industry Sales............................................................................................................3
Hotel Industry Report
In an effort to educate clients and maximize time spent investigating needs on specific and personal
matters, this document provides the specifics of the hotel industry as a whole including its background,
current trends, and disruption in the industry.

Background
Past
The hotel industry has been an established industry for hundreds of years. The industry began to take
off when technology allowed travel to be increasingly accessible throughout the 1800s, leading to
foreigners looking for places to stay [ CITATION Sam16 \l 1033 ]. Since that time, hotels have been able
to remain strong and growing for so long because different hotels decide to “specialize in catering to
large business meetings or conventions, while others maintain recreational facilities” [CITATION Tun18 \l
1033 ] to satisfy all types of travelers. Thus, the hotel industry has a solid foundation upon which the
opportunity for a lot of growth rests.
Present
Today, the industry must constantly evolve with the changing times. Emerging technologies, including
artificial intelligence, stronger computers, and biometrics, pose a new and potentially lucrative challenge
to hotels as customers will be seeking the newest and most updated experiences [ CITATION Sam16 \l
1033 ]. As figure 1 shows, top hotel companies are rising to the occasion and innovating to keep their
revenues growing [ CITATION Orb20 \l 1033 ]. Although the industry is an established one, innovation
and evolution in the industry are still fundamental to success.

Figure 1 - Combined Revenue of the Top 10 Hotel Companies

Current Industry Trends

Overall
In general, the hotel industry has been steadily growing. According to the industry report by Jared
Ristoff [ CITATION Ris20 \l 1033 ], “the industry benefited from increases in travel spending, corporate
profit and general consumer spending” which is evidenced in the sustained positive percentage change
until 2020 in figure 2. Additionally, since the hotel industry has been very strong, so too have its
associated industries. For example, in figure 3 it is shown that the hotel construction industry’s revenues
have also been consistently increasing [ CITATION Rya20 \l 1033 ]. Overall, the hotel industry is a
consistent and powerful performer.
COVID-19
Although the hotel industry is usually a good performer, the unforeseen circumstance that is COVID-19
has hurt the industry. In figure 2, there is a huge dip in the percentage change of revenue in 2020, as
many hotels did shut down or are still shut down during the pandemic [ CITATION Ris20 \l 1033 ].
Although Jared Ristoff is confident that the industry can return to normal in 2 years [ CITATION Ris20 \l
1033 ], other sources aren’t so sure. Figure 4 demonstrates Barnes Reports’ prediction that the industry
will only make up about 18 percent of what it lost in the next two years [CITATION barnes \l 1033 ].
Though there are some differing opinions on how the industry will recover, it is indisputable that COVID-
19 has been a great challenge to what otherwise is a titan of an industry.
 Figure 3 – Hotel Industry Revenue Trends Figure 2 - Hotel Construction Industry Revenue Trends

Figure 4 - Total Hotel Industry Sales

Disruption in the Industry
With the advancement of technology, the hotel industry has recently experienced some disruption. That
disruption revealed itself to be Airbnb. According to a study published in the Wall Street Journal
[ CITATION Bos19 \l 1033 ], it was found that revenues in hotels across any city dropped by .02%
whenever the supply of Airbnbs increased by 1 percent. The study went further to say that this could
have costed New York hotels nearly $365 million in 2016 [ CITATION Bos19 \l 1033 ]. Furthermore, in
2019, the Indian hotel company OYO received a multi-million-dollar investment from Airbnb, cementing
the home rental service in the hotel industry as well [CITATION Air19 \l 1033 ]. Additionally, Airbnb has
begun to offer select hotels on their site [CITATION Adr18 \l 1033 ] which puts them even deeper into
the hotel industry. Airbnb and its unique platform have introduced a challenging new problem to the
hotel industry that has begun to take away revenues.

Conclusion
This report has provided a summary of the background, trends, and disruption in the hotel industry. The
industry has historically been strong and ever-growing with minimal disruption, but it has recently been
facing disruption on two different fronts concerning Airbnb and COVID-19. Please send any questions to
Hank Sherman at hbsherman@priceright.org.
References
Airoldi, D. M. (2019, April 15). Airbnb Invests Big in Indian Hotel Company. Retrieved from EBSCOHost:
http://ezproxy.library.arizona.edu/login?url=https://search.ebscohost.com/login.aspx?
direct=true&db=bsu&AN=135888636&site=ehost-live

Barnes Reports. (2020). 2021 U.S. Industry and Market Report; (NAICS 72111): Hotels and Motels
Industry. Retrieved from EBSCOHost: https://web-a-ebscohost-
com.ezproxy1.library.arizona.edu/ehost/pdfviewer/pdfviewer?vid=1&sid=3cb60438-becf-4643-
8b23-5b61bc860a4d%40sessionmgr4007

Boston University. (2019, May 21). Making Room for Airbnb. Wall Street Journal, p. 1.

Bureau van Dijk. (2020). Hotel Company List Generated Data. Retrieved from Orbis: https://orbis-
bvdinfo-com.ezproxy3.library.arizona.edu/version-20201126/orbis/1/Companies/List
Goon, T. N. (2018, November). CFRA Industry Surveys: Hotels, Restaurants and Leisure. Retrieved from
EBSCOHost: https://web-b-ebscohost-com.ezproxy4.library.arizona.edu/ehost/detail/detail?
vid=0&sid=c25cd1ab-f768-423b-9d46-e51dfcd52c15%40pdc-v-
sessmgr02&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=135993458&db=bsu

Pasquarelli, A. (2018, March 19). Overbooked. Retrieved from EBSCOHost: https://web-a-ebscohost-

com.ezproxy4.library.arizona.edu/ehost/detail/detail?vid=0&sid=c02b6ac1-6d85-4b7e-9a0c-
ead6d598f6e1%40sdc-v-sessmgr02&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d
%3d#AN=128637276&db=bsu

Ristoff, J. (2020, August). Hotels and Motels. Retrieved from IBISWorld: https://my-ibisworld-
com.ezproxy3.library.arizona.edu/us/en/industry/72111/industry-at-a-glance

Roth, R. (2020, March). Hotel Construction. Retrieved from IBISWorld: https://my-ibisworld-

com.ezproxy3.library.arizona.edu/us/en/industry-specialized/od4670/industry-at-a-glance

Wich, S. (2016). The Origins of the Hospitality Industry and What Lies Ahead. Retrieved from
EHLInsights.edu: https://hospitalityinsights.ehl.edu/origins-hospitality-industry