Industry Report: Hotels

& Motels in the US

May 4, 2020
Mark Norwoods
The Hotel & Motel Industry showed rapid increases in revenue in the 2010s. Due to COVID-19,
the industry has seen a swift decline. The Hotel & Motel Industry is projected to rebound and is
projected to grow over the next five years. The topics that will be discussed are, industry
performance, industry factors, and markets and products.

Industry Performance
The Hotel & Motel Industry in the United States has experienced short-term losses during the
current pandemic. Over the past five years leading into 2020, the industry revenue has increased
0.1% to $183.4 billion. While decreasing 10.2% in 2020 alone (Hotels (except Casino Hotels)
and Motels).
Sharp declines
in revenue can
be directly
pinpointed to
COVID-19.
Consumers have
seen an abrupt
halt in travel for
both leisure and
business travel.
Also, a lack of
destination-
based travel with
foreign tourism
which makes up
the bottom line
of the industry. The industry will likely rebound due to an expanding global economy and
increased tourism and business travel. Revenue is expected to rise 3.0% to $212.8 billion moving
into 2025 (“Hotels (except Casino Hotels) and Motels, 2020).

Industry Factors
Domestic Trips
Domestic travel trends, including business travel, and total time spent away from home have a
direct effect the demand for accommodation. The opposite is also true. Due to COVID-19, the
amount of domestic travel is projected to decrease over the course of 2020. As travel restrictions
are lifted, business travel is projected to continue (U.S. hotels zapped into profit shock FROM
COVID-19, 2020).

Consumer Spending
The demand on travel is directly affected by the levels of consumer spending. When consumers
have more disposable income, they are more likely so spend surplus income on travel and
accommodations. Therefore, an increase in consumer spending helps with the demand for hotels
and motels. However, as consumers reduce spending, they tend to decrease spending on travel,
which reduces the demand for hotels and motels (U.S. hotels zapped into profit shock FROM
COVID-19, 2020).
Industry Outlook
Economic Rebound
It is projected that The Hotel and Motel Industry will benefit
from both domestic and global economies as people recover
from the effects that have been a result of COVID-19.
Consumers will be able to spend more freely on
accommodations. Customer spending will likely increase
2.3% annually into 2025. Corporate profit will also likely
rise 0.2% annually into 2025. This will likely increase
business travel leading to a demand for hotels and motels.
As business is getting back to normal, the large market may
see a slower recovery as businesses find their new normal (2020 Hotels & Motels Industry
Statistics & Market Research Report, 2020).

Consumer earnings are projected to be higher and businesses are expected to replenish their
travel budgets over the next five years. Inbound travel by non-US residents will likely rise 27.6%
in 2021, while spending on domestic travel is expected to increase 15.6%. It is expected for these
rates to return to normal and remain stable over the next five years (MarketLine Industry Profile,
2020).

Investment
Due to a boost in demand for tourist accommodation, investment in new hotel and motel rooms
is expected to gradually grow over the next five years. Opposed to other top global regions, the
US has consistently outpaced in hotel development. According to IBISWorld (2020), the United
states was listed as the top country in terms of project developments in 2021. Also, it is projected
that the number of establishments will likely increase annually 2.9% to 111,639 locations over
the next five years. The new supply of rooms will likely lead to increased revenue growth.

Markets & Products

Services
Hotel and motel sales made are expected to make up 75.2% of the industries revenue in 2020.
More specifically, establishments with 75 rooms or more make up 56.2% of revenue. Many of
these properties are in larger cities and are closer to airports. The reason being to accommodate
business travelers. Larger properties have conference rooms and can specifically cater to their
targeted demographic (Jaaskelainen, 2020).

Hotels with 300 to 500 rooms make up 6.5% of revenue, while hotels with over 500 rooms make
up 7.9% of revenue. Hotels of this size are considered full-service hotels. “These properties
typically service mid to upscale leisurely travelers seeking an all-inclusive experience. As a
result, many hotels within this product segment offer both leisurely and business-related
amenities, such as swimming pools, children's activities, conference rooms and event spaces”
(Hyland, 2020, Hotels & Motels in the US). Properties of this size are typically sought out by

consumers looking to host special events including weddings and parties.

Major Markets
Domestic Leisure
Nearly four out of five domestic travel trips are taken for leisure purposes. The definition of
leisure travel is subjective and is reliant on economic trends such as unemployment rate, oil and
gas prices, and disposable income. This is the reason that spending on leisure travel has
increased. Consumers have felt more comfortable spending disposable income on vacations and
leisure activities (Hyland, 2020).

Business and Incentive Travelers

According to IBISWROLD
(2020), business travelers make
ups 17.3% of revenue, while
event and incentive travelers
make up 12.4% of revenue in
2020. Due to a growing
economy, businesses have
benefited and have been more
likely to send employees on
business related travel (Hyland,
2020).

International Leisure
In 2020, international arrivals account for 17.4% of revenue. It is estimated that 80.6 million
travelers were international arrivals. Major visitors include Canada and Mexico and major
oversea travelers include the United Kingdom, Japan, and Germany. International travelers spend
an estimate on $4,200 when spending more than 18 nights in the United States. The United
States is dependent on destination travel to major cities which include Los Angeles, New York,
and Chicago (Hyland, 2020).

Locations
In the Hotel and Motel Industry, establishments are located in cities with higher population
densities and economic activity. The level of hotels and motels is dependent on what attraction
the region has to offer. High volume locations include, Las Vegas, Disneyland, and Hollywood.
All these locations have a high market value in terms of both domestic and international travel
(Hyland, 2020).

Conclusion
The presented research on industry performance, industry factors, and markets and products
provide insight on the Hotel and Motel Industry in the United States. The industry performance
is a correlation on how the economy is preforming. Please direct any questions to Mark
Norwoods at marknorwoods@email.arizona.edu.
 References

Hotels (except Casino Hotels) and Motels. (2020). Retrieved from https://bi-gale-
com.ezproxy1.library.arizona.edu/global/industry/721110?u=uarizona_main

“2020 Hotels & Motels Industry Statistics & Market Research Report.” AnythingResearch, 2020,
www.anythingresearch.com/industry/Hotels-Motels.htm.

Hotels (except Casino Hotels) and Motels. (2020). In Encyclopedia of American Industries.
Farmington Hills, MI: Gale. Retrieved from https://bi-gale-
com.ezproxy1.library.arizona.edu/global/article/GALE
%7CFRQDTI363861097/64184eddcb402dc1bde8f5eebbff3b47?u=uarizona_main

Hyland, R. (2020, April). IBISWorld Industry Report 72111. Hotels & Motels in the US.
Retrieved from IBISWorld database.

Jaaskelainen, L. (2020, April). Topic: Hotel industry. Retrieved from

https://www.statista.com/topics/1102/hotels/

MarketLine Industry Profile: Hotels & Motels in United States. (2020). Hotels & Motels
Industry Profile: United States, 1–61.

U.S. hotels zapped into profit shock FROM COVID-19. (2020). Retrieved May 02, 2020, from
https://www.hotelnewsresource.com/article110465.html