Professional Documents
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Boutique Hotels
Room service: Industry revenue will likely increase as travel restrictions become more
flexible
Contents
COVID-19 (Coronavirus) Impact Update.............................3 COMPETITIVE LANDSCAPE.......................... 22
ABOUT THIS INDUSTRY.................................. 5 Market Share Concentration............................................. 22
Key Success Factors........................................................22
Industry Definition................................................................5 Cost Structure Benchmarks............................................. 23
Major Players...................................................................... 5 Basis of Competition......................................................... 25
Main Activities..................................................................... 5 Barriers to Entry............................................................... 26
Supply Chain....................................................................... 6 Industry Globalization........................................................ 27
ADDITIONAL RESOURCES............................42
Additional Resources........................................................ 42
Industry Jargon..................................................................42
Glossary............................................................................ 42
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COVID-19 IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of
(Coronavirus) how this industry is likely to be impacted as a result of the global COVID-19 (coronavirus) pandemic:
Impact Update • The Boutique Hotels industry is anticipated to experience growth in 2021 after a steep decline in 2020, with
industry revenue increasing 18.8% as the economy recovers and consumers begin travelling more frequently.
• Large drops in domestic and international travel, temporary closures of industry establishments and economic
slowdowns limited demand for industry services in 2020. Demand from these segments is expected to rebound in
2021, however, as the coronavirus pandemic is contained.
• Industry operators have been adding labor to meet rising demand, causing the number of industry employees to
increase 14.9% in 2021 alone.
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About IBISWorld
IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help
businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching
and preparing for meetings, and more time focused on making strategic business decisions that benefit you, your company and your clients. We
offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that
are truly global in nature.
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Operating restaurants
Lifestyle accommodations
Other
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Supply Chain
SIMILAR INDUSTRIES
Non-Hotel Casinos in the US Hotels & Motels in the US Casino Hotels in the US Bed & Breakfast & Hostel
Accommodations in the US
Global Hotels & Resorts Hotels and Resorts in Australia Hotels in China Hotels in the UK
Hotels & Motels in Canada Hotels and Resorts in New Hotels in Ireland
Zealand
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Industry at a Glance
Key Statistics Key External Drivers % = 2016–21 Annual Growth
$1.9bn
Profit
Industry Structure
Annual Growth Annual Growth
MIXED IMPACT
Capital Intensity Regulation & Policy
15.1% Medium Medium / Steady
Profit Margin
Technology Change Barriers to Entry
Annual Growth Annual Growth Medium Medium / Steady
2016–2021 2016–2021 Industry Globalization
-3.3pp Medium / Increasing
NEGATIVE IMPACT
Revenue Volatility Industry Assistance
Very High Low / Increasing
4,642
Businesses Competition
High / Increasing
Annual Growth Annual Growth Annual Growth
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STRENGTHS
WEAKNESSES
High Competition
Very high Volatility
High Customer Class Concentration
High Product/Service Concentration
High Capital Requirements
OPPORTUNITIES
THREATS
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Executive Summary Room service: Industry revenue will likely increase as travel restrictions
become more flexible
The Boutique Hotels industry focuses on providing luxury accommodations with an emphasis on design,
individualization and quality of service and had been performing strongly until the outbreak of the COVID-19
(coronavirus) pandemic. As a result of a significant drop in demand for travel accommodations in 2020, industry
revenue is expected to decline at an annualized rate of 6.5% over the five years to 2021. Despite declines in 2020,
the industry is set to recover partially in 2021 as consumer spending and demand for travel increase. As a result,
industry revenue is expected to grow 18.8% to reach $12.4 billion in 2021. This steep increase in revenue expected
in 2021 follows a decline of 49.4% in 2020.
Over the past two decades, travelers have grown increasingly weary of cookie-cutter hotels geared toward a mass
audience. Instead, they have begun shifting toward new and more intimate types of hotels, especially in urban
locations. These hotels typically have between 10 and 250 rooms and offer unique architecture and design themes
targeted toward a market of wealthier 20- to 55-year-olds. Industry operators often center establishments around a
brand-name chef's restaurant or a trendy lounge, providing their boutique hotels with both a sizeable revenue
stream and instant brand recognition. Prior to the outbreak of the coronavirus pandemic, rising consumer spending
and per capita disposable income increased demand for industry services. However, due to rising competition within
the industry and the effects of the pandemic, average profit has decreased slightly during the period. Industry
operators have been cutting down on labor and wage costs to stay afloat while the tourism sector is paused and
establishments reopen.
Over the five years to 2026, IBISWorld forecasts that the industry will rebound from the adverse effects of the
coronavirus pandemic and continue to expand as demand for the boutique concept grows substantially. Both
domestic and international trips are anticipated to increase during the outlook period as travel restrictions become
more flexible, driving demand and industry revenue. Over the five years to 2026, revenue is projected to increase an
annualized 11.1% to reach $21.0 billion. Merger and acquisition activity is set to continue as large chains continue to
increase their market share by purchasing small boutique chains or developing their own boutique brands.
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Industry Performance
Trends in the number of international visitors to the United States and the length of their stays influence demand for
accommodation. When inbound trips rise, demand for boutique hotels increases, especially because international
visitors are more likely than domestic travelers to use hotel accommodations. Inbound trips by international visitors
are expected to increase in 2021.
Changes in consumer sentiment influence the decisions that individuals make concerning expenditure on
entertainment and travel, particularly during an economic recession. The Consumer Confidence Index is expected to
decrease in 2021, posing a potential threat to the industry.
Consumer spending
Consumer spending levels have a direct effect on travel demand. When consumers are spending more overall, they
are more likely to spend some of their money on travel and accommodations. Therefore, a rise in consumer
spending benefits demand for hotels and motels. Consumer spending is expected to increase in 2021.
Households earning more than $100,000 are better able to afford the rates that boutique hotels charge and are
more likely than low-income households to spend on luxury accommodations when traveling. Therefore, an increase
in the number of high-income households benefits the industry. The number of households earning more than
$100,000 is expected to increase in 2021, representing a potential opportunity for industry operators.
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Current The Boutique Hotels industry has declined over the five years to 2021 due
Performance to the adverse effects of the COVID-19 (coronavirus) pandemic.
Prior to the ongoing pandemic, however, increased travel demand and consumer preference for unique
accommodations with a focus on style and individualization fueled strong growth within the industry. The industry is
expected to make a partial recovery as consumers begin feeling comfortable travelling again. The level of domestic
travel among Americans is expected increase dramatically in 2021, but industry revenue is expected to remain
below pre-pandemic levels. Over the five years to 2021, industry revenue is projected to decrease an annualized
6.5% to $12.4 billion. Industry revenue is expected to grow 18.8% in 2021 alone.
IMPACT OF CORONAVIRUS
Despite many challenges arising in 2020, the industry is expected to stage a partial recovery in 2021 as consumers
begin travelling more frequently and social-distancing guidelines become increasingly relaxed. As a result, of
loosened social-distancing guidelines, operators will to be able to offer more services that had been limited during
the pandemic, such as dining accommodations, making their establishments more attractive to consumers.
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typically a franchised chain of boutique-style hotels that are included under the umbrella of a larger hotel brand. An
example of a lifestyle hotel chain is Marriott International Inc. (Marriott)'s Moxy Hotels.
Boutique hotels may include a chef-driven restaurant or a destination bar on the premises to attract patrons who are
not staying at the hotel. Added services can also include spa activities such as massages, steam rooms, fitness
facilities and other health and wellness services. Over the past several decades, more and more travelers have
developed a preference for boutique hotels over chain hotels with a generic appearance. Boutique hotels are geared
toward a trendy, affluent market and are generally found within higher-end urban neighborhoods. While the majority
of boutique hotels are independently owned and operated, chains have a growing prevalence in the industry.
Since the mid-1990s, technological advancements have increased labor productivity, lowered labor costs and
enhanced customer service across a sweeping range of industries. This industry has especially benefited from the
proliferation of the internet over the past five years. Operators can lower overall costs by using the internet to gather
information, make bookings and buy supplies. The information that operators receive through new technology also
enables them to send more targeted promotions via e-mail, social media and other digital formats. Websites such as
Trivago.com and Priceline.com, which offer bookings and discounted rates at the last minute, have flourished over
the past decade. Most industry operators now allocate a portion of their expected unsold rooms to such websites,
since travelers have become more reliant on booking online. Technological shifts have also accelerated market
acceptance for boutique hotels. Among these shifts is the growth in customer access to global distribution systems
(GDS) and computerized reservation systems (CRS) via travel websites. This development has helped level the
playing field among hotels by enabling customers to book boutique hotels on major travel websites alongside larger
branded chains.
INDUSTRY STRUCTURE
The number of new entrants in this industry has grown quickly over the
last few years, with many large players expanding their portfolio of
lifestyle and soft brand hotels.
For instance, Marriott has expanded its Edition boutique hotel brand, while Hilton Worldwide Holdings Inc. (Hilton)
has expanded the number of locations for their Curio Collection lifestyle hotels. Furthermore, Hilton has launched
several new lifestyle brands in the past five years including Canopy by Hilton, Tru by Hilton and the Tapestry
Collection. There has also been some consolidation during the period, demonstrated through deals such as Marriot's
acquisition of Starwood Hotels and Resorts Worldwide (Starwood). With this acquisition, Marriott expanded its
portfolio of lifestyle hotels by gaining ownership of W Hotels. Partially due to high interest in boutique hotels among
larger chains, the number of establishments in this industry has grown at an annualized rate of 3.9% to 5,610
locations over the five years to 2021.
During the same period, the number of employees is estimated to decline at an annualized rate of 0.8% to 133,341
workers. The industry remains highly labor-intensive due to the high level of customer service required to meet
customer expectations. Declines in employment, however, has been caused by the negative impacts of the
coronavirus pandemic. Average industry profit (measured as earnings before interest and taxes) has decreased
over the past five years, falling from 18.4% of revenue in 2016 to 15.1% in 2021 due to adverse effects of the
ongoing coronavirus pandemic.
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Industry Outlook
Outlook The Boutique Hotels industry is anticipated to experience growing
revenue over the five years to 2026.
Revenue is expected to increase at an annualized rate of 11.1% to reach $21.0 billion in 2026. Growth will be driven
by increasing travel rates that are expected as the tourism sector rebounds from the effects of the COVID-19
(coronavirus) pandemic. Once consumers begin to feel comfortable travelling again, interest in the independent
hotel experience is expected to recover quickly. The industry is also expected to benefit from rising consumer
spending, particularly on recreational activities such as vacations and traveling. As a result of these developments,
demand for industry establishments is expected to increase. Consumer spending is expected to rise at an
annualized rate of 2.5% over the five years to 2026, as consumer confidence rises once economic uncertainty
related to the coronavirus pandemic subsides. Business spending is also forecast to increase as corporate profit
grows, supporting an increase in the number of business guests at boutique hotels.
Travel spending is projected to increase over the next five years due to higher demand for both domestic and
international travel as the travel sector reemerges after the pandemic. This influx of tourist dollars will bolster
revenue for boutique hotels. IBISWorld estimates that international arrivals will increase at an annualized rate of
10.2% over the five years to 2026, while domestic travel will increase an annualized 4.5% during the same period.
Since international visitors spend more per visit than domestic travelers, they are more likely to stay at more costly
boutique hotels, thus stimulating industry revenue. Visitors from emerging economies in Asia, the Middle East and
South America will be especially important for this industry over the next five years as the emerging middle class in
these regions increasingly spends its disposable income on international travel.
Over the next five years, investment in new boutique hotel rooms will
gradually accelerate due to a sustained rise in demand for tourist
accommodation.
Steady economic growth during the period will likely cause the industry to experience stronger trading conditions
and financial performance. Strong performance will in turn stimulate more rapid investment to compensate for the
rise in demand. However, room oversupply and competing forms of accommodation in certain geographic areas still
remain threats to growth. Moreover, hotel investment by major operators such as Marriott International Inc.'s W and
Aloft brands will likely continue a shift in focus on opportunities in international regions, including Russia, Eastern
Europe, the Middle East, South America and Asia. As a result, any domestic accommodation investment proposals
will compete with growing international travel markets and regions for funding. Boutique hotels will also segment into
specialized areas such as extended-stay hotels, or spa and health retreats, as guests search for these types of
luxury experiences in more trendy and personalized accommodation environments.
Boutique hotel operators have been able to capitalize on the willingness of their target market to pay for unique
accommodation experiences. This gives them a competitive advantage over luxury and upscale hotel operators.
However, this advantage may not be sustainable over the long term, as targeted hotels catering to new and diverse
experiences continue to proliferate. As the market saturates and the novelty of boutique hotels diminishes, operators
may be forced to rethink the services and experiences they offer. This shift may result in a dramatic increase in
capital costs associated with running these hotels.
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IBISWorld projects that the industry will expand over the five years to
2026 as demand rises for both travel and boutique hotel experiences.
The number of establishments is forecast to increase at an annualized rate of 9.2% to 8,724 locations. A large
percentage of new hotels opening over the next five years will be boutique hotels, especially in destination cities
such as New York and San Francisco. Falling just behind establishment growth, employment is projected to grow an
annualized 9.8% to 212,930 workers. However, expansion in the number of boutique hotels is anticipated to put
pressure on industry profit. Despite increasing demand, strong growth in the number of establishments increases
the level of price-based competition within the industry, forcing many operators to lower their rates and cut profit.
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Industry Life Cycle The life cycle stage of this industry is Growth
LIFE CYCLE REASONS
Continuing growth in domestic tourism and business travel will boost demand
Long-term growth in international visitor arrivals bodes well for the industry
Demand for the boutique experience will continue to drive growth
The Boutique Hotels industry is in the growth phase of its life cycle; however, the recent outbreak of the COVID-19
(coronavirus) pandemic halted this trend temporarily. The extent of the impact that the pandemic will have on the
Boutique Hotels industry remains uncertain. Like much of the entire tourist accommodation sector, the Boutique
Hotels industry had been growing strongly initially over the five years to 2021 as interest in unique products and
experiences surged. This trend had been especially dominant among younger consumers. Due to the coronavirus
pandemic, industry revenue has dropped significantly, resulting in a decline in revenue during the five-year period.
Industry value added (IVA), which measures an industry's contribution to US GDP, is expected to grow at an
annualized rate of 2.7% over the 10 years to 2026. This US GDP is expected to increase at an annualized rate of
1.9% during the same period. Mounting consumer interest in boutique hotels combined with rising tourism and
business travel, particularly international travel to the United States, will support this growth.
The Boutique Hotels industry has been outperforming the broader Hotels and Motels industry, which is in the mature
phase of its life cycle. During the five-year period, the industry's revenue per available room (RevPAR) growth has
consistently outpaced that of traditional hotels. Operators have benefited from a steady increase in the number of
households earning more than $100,000, which has grown faster than the incomes of low-paid workers over the
past five years. High-income households are more likely to indulge in luxury accommodations during travel and can
typically afford the higher rates that boutique hotels charge. Additionally, as domestic and international tourism
grows, the number of overnight stays for leisure and business has increased, contributing to increased demand for
accommodation services.
The industry's growth phase is highlighted by the number of big chains entering the industry to meet growing
demand. Starwood Hotels and Resorts Worldwide launched its W Hotels brand in 1998 and increased its footprint to
nearly 30 properties in the United States before being acquired by Marriott International Inc. in September 2016. The
Kimpton Hotel and Restaurant Group, the largest chain of boutique hotels in the country, has also undergone
significant growth over the past five years. Furthermore, the acquisition of Kimpton Hotel and Restaurant Group by
InterContinental Hotels Group PLC (IHG) brought it together with Hotel Indigo and Even Hotels in an expansion of
IHG's boutique hotel market share. Wyndham Hotels and Resorts Inc. (Wyndham), one of the world's largest hotel
groups, has made a deal to franchise New York-based boutique Chatwal Hotels and Resorts.
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ROOM ACCOMMODATIONS
Boutique hotels are typically smaller hotels with fewer than 250 rooms
and themed decor.
Lodging and accommodation styles can be divided into three different categories within the industry. Boutique hotels
that fit the traditional definition are completely independent of large corporate brands and limited to small brand
association. Although they offer unique styles, independent boutique hotels have declined in popularity during the
period when compared with boutique hotels connected to major hotel brands. These accommodation services are
estimated to represent 13.1% of industry revenue in 2021. Other boutique hotels often fit into a category of lifestyle
hotels or fall under lifestyle brands. These are prescribed franchise products offered by major chains, such as the W
Hotels by Marriott International Inc. They follow current social trends and have grown in popularity during the period.
Lifestyle brand accommodation services are estimated to represent 16.0% of industry revenue in 2021. The third
category of boutique hotels is soft brand hotels. These are individualized hotels that are affiliated with a major hotel
chain but retain an independent and unique design and name. Soft brand accommodations have advanced in
popularity over the five years to 2021 and are anticipated to represent 46.7% of industry revenue in 2021. However,
revenue for the lodging segment overall has declined slightly as a percentage of total revenue over the past five
years, as operators have diversified their revenue streams to include more add-on services.
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wide average. This is because some boutique hotels are adding value to their food and beverage operations,
curating more luxury-style food and beverage selections and hiring higher-end kitchen staff. This segment is likely to
have suffered during the ongoing COVID-19 (coronavirus) pandemic as many local governments have had strict
limitations for the number of patrons permitted within bars or restaurants at a given time. Some local governments
have gone as far as not permitting restaurant service in any capacity beyond take-out or delivery of food.
Spa and other guest services including in-room treatments are estimated
to generate 6.3% of revenue; this segment has been growing over the past
five years as boutique hotels partner with well-known and established spa
boutiques.
These value-added services increase the attraction of boutique hotel accommodations. This segment is also likely to
have suffered as a result of the coronavirus pandemic as many spa treatments and massages are difficult to
execute while remaining socially distant.
Demand for industry services also depends on the state of the general economy. Low unemployment and high
disposable income typically result in higher demand for boutique hotels as consumers will be more inclined to travel
for leisure. Also, since 70.3% of industry customers are leisure travelers, the industry is highly dependent on the
confidence and spending of households. As a result of 29.7% of customers being corporate travelers, economic
conditions directly affect the number of business trips taken, the length of stay and budgeted travel spending.
Demand for industry services has been affected severely by the outbreak of the COVID-19 (coronavirus) pandemic
in the US. When the virus first began to take hold in March 2020, many local governments issued stay-at-home
orders and required nonessential businesses to temporarily shut down. Additionally, many states imposed
restrictions on travelers entering from other states, and the federal government has limited international travel into
the country. As a result, consumers have limited travel and have been spending an increased portion of time at
home. In addition to strict guidelines making travel difficult, the pandemic has brought about higher levels of
economic uncertainty, leading consumer confidence to fall. As consumers have felt less secure in the state of the
economy, they are less inclined to spend on discretionary services such as hotel accommodations.
Major Markets
Several factors, including age, income, purpose of travel and travel origin,
can determine the Boutique Hotels industry's major markets.
DOMESTIC LEISURE TRAVEL
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BUSINESS TRAVEL
International visitors to the United States account for 14.1% of total visitor
expenditure in the United States.
This includes spending on both leisure trips and business travel. Major visitor origin countries include Canada and
Mexico, and major overseas visitor origin countries include the United Kingdom, Japan and Germany. According to
the US Travel Association, each overseas traveler on average spends an estimated $4,360 when they spend more
than 18 nights in the United States. The most common purposes for leisure travel to the United States are shopping,
dining, city sightseeing, visiting historical places and visiting amusement or theme parks. This segment is expected
to be hit the hardest as international travel has been reduced significantly since the initial outbreak of the
coronavirus pandemic.
As a services industry, the Boutique Hotels industry does not technically log international trade. The industry
overwhelmingly services the domestic travel market, but also services international visitors traveling within the
United States. However, due to the recent outbreak of the COVID-19 (coronavirus) pandemic, the number of
international visitors to the United States has decreased significantly. The United States is still second behind
France in the list of most popular destinations among international visitors, even though it remains the top country in
terms of tourism receipts in the world. In fact, the United States generates nearly twice as much from tourism as its
nearest competitor. The main origins of visitors to the United States are Canada, Mexico and the United Kingdom.
The most popular US cities visited by international tourists include New York City, Los Angeles, Miami, Orlando, San
Francisco, Las Vegas and Honolulu.
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Business
Locations
The Boutique Hotels industry is generally spread according to the share of population and industry in particular regions, but also
correlates to a region's share of domestic and international travel on business or pleasure. Thus, most boutique hotels are located
in metropolitan areas. The proportion of boutique hotel establishments in a state or region is also driven by the attractions it offers,
particularly those of international significance or recognition, such as the Grand Canyon, Disneyland and Hollywood. Some states
such as New York attract business visitors because they are major industrial, financial and commercial centers. Past migration
patterns to the United States are also an important driver for travel related to visiting friends and relatives.
Southeast region
The Southeast has the highest concentration of business locations, representing 28.3% of all industry establishments. This region
is home to the largest share of the US population at 25.8%, a primary driver behind its heavy industry concentration. Additionally,
the Southeast contains a large number of popular tourist destinations. For example, Florida represents 6.2% of establishments
and contains major destinations for both international and domestic travel including Miami, the Florida Keys, Orlando, Palm Beach
and Daytona Beach. Although these locations are popular for the accommodation sector in general, boutique and lifestyle hotels
have increasingly thrived there. For all these reasons, the Southeast is anticipated to retain the highest concentration of industry
establishments.
West region
The West region is home to 16.4% of industry establishments due to its high population concentration (17.2%) and world-
renowned cities. The region is dominated by the presence of California, which represents 10.5% of industry establishments.
California contains many miles of coastline and many unique cities that offer international and domestic appeal. Los Angles, San
Diego and San Francisco are all known for their unique cultures, often providing the perfect market for boutique hotel
accommodations.
Mid-Atlantic region
Home to New York City, Philadelphia and Washington, DC, the Mid-Atlantic has a high concentration of industry establishments at
10.7%. These three large cities are all internationally known and attract high levels of tourism from domestic and foreign visitors.
Since boutique establishments tend to locate around major metropolitan areas, the Mid-Atlantic is a popular region for new
entrants to join the industry. New York alone represents 4.3% of industry establishments. This region also has a high
concentration of wealth. As industry establishments typically charge higher nightly rates than some chain hotel operators,
individuals must often have a higher disposable income to stay at industry accommodations, further drawing concentration to the
Mid-Atlantic region.
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Competitive Landscape
Market Share
Concentration
The Boutique Hotels industry is fragmented and has a low level of concentration. In 2021, the four largest industry
operators will account for an estimated 20.3% of the available market share. While industry concentration is low, it is
increasing, with large chain hotels such as Marriott International Inc. merging with independent boutique hotel
operators and building out their portfolio of boutique and lifestyle brands. InterContinental Hotels Group PLC's
purchase of Kimpton Hotel and Restaurant Group in 2014 helped to substantially increase industry concentration
over the five years to 2021. Additionally, Hilton Worldwide Holdings Inc. has added several boutique and lifestyle
brands during the period that are expected to expand moving forward. However, many major companies in the hotel
sector are increasingly seeking to operate on a global basis and have a presence in major countries outside the
United States. For example, major player Starwood Hotels and Resorts Worldwide (now owned by Marriott
International Inc.) has W Hotels in countries such as Mexico, Hong Kong and China. Increasingly, W Hotels is
shifting its focus toward growing economies in Asia. This expansion outside of the United States will slow down
concentration growth domestically. The shift is partly due to the saturation of establishments within the overall
accommodation sector in the United States. Although boutique and lifestyle hotels offer unique services, the
saturation of hotels and motels in popular tourist destinations has deterred some domestic expansion. Nevertheless,
concentration is continuing to increase among the major global operators within the United States.
Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Factors
Having an experienced work force:
It is important to employ highly capable staff to better assist and retain customers.
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Cost Structure
Benchmarks
Profit
Wages
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Purchases
Marketing
Depreciation
Rent
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Utilities
Other Costs
INTERNAL COMPETITION
Additionally, boutique hotels compete on location; many travelers who choose boutique over chain hotels desire
trendy neighborhoods in urban destinations. For this reason, most boutique hotels are located in metropolitan areas
such as New York City and Los Angeles. Boutique hotels such as the W Hotels also benefit from a local clientele
who visits their lounges, restaurants and spas. Industry establishments typically feature restaurants with well-known
chefs or state of the art fitness facilities, catering to the changing lifestyles of younger guests. Competition for these
locations in metropolitan areas has increased as the number of industry establishments grown over the past five
years, limiting the supply of available development.
EXTERNAL COMPETITION
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name recognition, economies of scale and high levels of market share. These advantages enable external
competitors to remain ultra-competitive, providing low daily rates and locating in some of the most popular
destinations. However, although boutique hotels have a higher average rate than chain hotels, many travelers are
willing to spend more for the uniqueness and exclusivity provided by boutique hotels. While chain hotels benefit from
their established brands and reputations, boutique hotels compete on their different appearances and lack of
uniformity. They also compete on amenities offered.
The Boutique Hotels industry, like much of the broader accommodation sector, is contending with increasing
competition from online rental services provided by companies such as Airbnb Inc. These are not included in the
accommodation services sector since they are classified as data processing and hosting services (IBISWorld report
51821). Such services enable individuals to rent out their apartments or spare bedrooms to consumers seeking
accommodation in any given location. Often these services are relatively inexpensive as compared with the daily
rates of industry establishments, further increasing price-based competition for the industry. These services have
received a boost relative to the Boutique Hotels industry throughout the COVID-19 (coronavirus) pandemic as many
consumers have opted to use services as they permit for less interaction with individuals outside their group.
Barriers to Barriers to Entry in this industry are Medium and the trend is Steady
Entry
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Branding
COVID-19 (coronavirus)
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major player Marriott International Inc. (Marriott), has expanded its W Hotels boutique hotel brand all over the world
and now has locations in Asia, the Middle East, Canada and Mexico. The company also expects to open boutique
hotels in several international locations over the five years to 2026. Marriott also teamed with real estate developer
Ian Schrager to create boutique hotels under the Edition brand. Schrager, who is credited with originating the
boutique hotel concept, designs the hotels that are then operated by Marriott across the globe.
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Major Companies
Market Share Overview
Related Companies
Competitors Company Type Employee Segment Revenue ($m) Market Share (%) Profit ($m)
Intercontinental Hotels Group Plc Golden Goose 500+ Employees 665.3 5.37 -19.8
Hilton Worldwide Holdings Inc. Laggard 500+ Employees 396.6 3.2 19.4
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Companies with 5.0% industry market share are displayed in the PDF version of this report. You can view insights for all companies associated
with this industry on my.ibisworld.com
Description Marriott International Inc. is a public company headquartered in Maryland with an estimated 12,000 employees. In
the US, the company has a notable market share in at least six industries: Boutique Hotels, Extended Stay Hotels,
Intellectual Property Licensing, Accommodation and Food Services, Hotels & Motels and Tourism. Their largest
market share is in the Boutique Hotels industry, where they account for an estimated 8.5% of total industry revenue
and are considered an Incumbent because they display strong market share, but lower profit and revenue growth
than some of their peers.
Analyst Insights Marriot International’s Courtyard by Marriott to have North American brand updated
By 2024, Courtyard by Marriott hotels in North America are to undergo external renovations as well as modernizing
renovations in public spaces in their hotels. The company has also revamped their Bistro Bar which will
complement their new urban inspired interior design to suit clients that are either visiting their locations for leisure
or for business. The gym and exercise facilities are also expected to be updated with more modern equipment to
accommodate clients who are more health conscious.
New Activity
COVID
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Industry Revenue
Profit Margin
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Description Intercontinental Hotels Group Plc is a private company headquartered in United Kingdom with an estimated
120,000 employees. In the US, the company has a notable market share in at least three industries: Boutique
Hotels, Budget Hotel Franchises and Hotels & Motels. Their largest market share is in the Boutique Hotels industry,
where they account for an estimated 5.4% of total industry revenue and are considered a Golden Goose because
they display medium to strong market share and strong profit, but slower revenue growth than some of their peers.
Analyst Insights IHG Hotels & Resorts enters preferred partnership with Expedia Group.
InterContinental Hotels Group plc, (IHG Hotels) has partnered with Expedia Group in February of 2022. This
partnership establishes Expedia Group as a preferred redistributor of IHG Hotel’s properties’ wholesale rates.
Access to Expedia Group’s network allows for better connections to business-to-business demand partners. In
addition, it allows IHG Hotels to consolidate their wholesale distribution, reducing costs for the company. In
addition, having better control over the communication with customers will provide the opportunity for revenue
growth.
New Activity
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$665.3m Moderate
Current Year
(2021)
-2.98% Weak
Current Year
(2021)
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Description Hilton Worldwide Holdings Inc. is a public company headquartered in Virginia with an estimated 142,000
employees. In the US, the company has a notable market share in at least six industries: Boutique Hotels, Extended
Stay Hotels, Budget Hotel Franchises, Accommodation and Food Services, Hotels & Motels and Tourism. Their
largest market share is in the Boutique Hotels industry, where they account for an estimated 3.2% of total industry
revenue and are considered a Laggard because they display lower market share alongside slower profit and
revenue growth than their peers.
Balance Sheet
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Industry Revenue
Profit Margin
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Operating Conditions
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The Boutique Hotels industry has been disrupted by the mounting pressure
from Airbnb and other home-sharing companies' business models.
Industry operators have kept up with the rising popularity of booking online, but the rise of Airbnb has changed the way
consumers approach hospitality. Boutique hotels are known for being smaller and providing a more personal, cozy
experience, where many homes and apartments listed on Airbnb aim to offer a similar experience, competing directly with
industry operators.
Internet bookings
Many accommodation-booking service websites are linked with Google Maps and other online maps to provide services
where travelers can identify accommodation establishments by street location, star rating or proximity to their business,
convention or holiday destination. There are also many user-generated online accommodation review and rating service
websites to provide comments on travelers' actual experiences with individual hotel facilities and services.
In-room technology
The modern hotel includes high-speed internet access via wired or Wi-Fi both
in-room and throughout the building.
Internet access is a must for any business traveler and is increasingly important for leisure travelers. The main challenge
for hoteliers is offering guests the same level of internet services in a hotel room that they receive at home. For this reason,
some hotels offer tiered bandwidth service, with pricing depending on the level of service. A Smart TV with cable services is
often the focal point of a hotel room. Other in-room technology includes radio frequency identification for keyless entry,
personalized lighting and climate control and convenient power sources. New hotel refurbishment projects often include
integrated in-room technology that can be controlled by a single touchscreen. Other technology incorporated into the
modern hotel includes executive lounges, high-tech boardrooms and meeting rooms with ergonomic leather chairs, discreet
projection facilities and wide-screen TV sets and other advanced technological features and equipment.
Some hotels are pioneering technology that gives guests the option of booking in and out of rooms without staff
involvement through the use of mobile technology and smartphone applications. While the adoption of this technology can
be expensive, as room doors need to be fitted with new locks compatible with the systems, it shows how far the industry is
willing to go to make a guest's stay seamless.
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The range of properties across a range of star ratings (including nonindustry hotels and motels) provides choices to guests
and meets all budget requirements. Additionally, these hotels typically offer a non-traditional hotel experience, which has
surged in popularity during the period. As a result, demand for boutique hotels is expected to continue increasing once the
virus has been contained. As vaccines become more widely available and cases begin to fall, demand for the Boutique
Hotels industry is expected to experience a strong rebound.
Regulation & The level of regulation is Medium and the trend is Steady
Policy
The Boutique Hotels industry is subject to a medium and steady level of
regulation at the federal and state level.
Some states regulate the activities of hospitality properties and restaurants, including safety and health standards, as well
as the sale of liquor, by requiring licensing, registration, disclosure statements and compliance with specific standards of
conduct. There are also extensive state and federal laws and regulations relating to selling and marketing timeshare
intervals for those hotels that offer such arrangements.
LABOR RELATIONS
Operators of hotels and motels are also subject to laws governing their
relationship with employees, including minimum wage requirements, overtime,
working conditions and work permit requirements.
The industry employs a high number of young and low-skilled workers at hourly rates and, therefore, is subject to minimum
wage and employee benefits regulations. Workers in the United States are entitled to be paid no less than the statutory
minimum wage. Each state also formulates and regulates its own minimum wage, with some states implementing rates
higher than the federal rate.
As many hotels and motels prepare and sell food on premises, the industry is
subject to laws and regulations relating to the preparation and sale of food,
including regulations regarding product safety, nutritional content and menu
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labeling.
The main agency responsible for providing guidance and regulation is the US Food and Drug Administration's (FDA). The
FDA's Model Food Code, which is a best-practice guide to food handling and presentation, applies to this industry and is
updated each year. The FDA Nutritional Value applies as well. Since 1996, the FDA regulations have set standards for
nutritional values of individual foods and meals. If claims such as “low fat” or “heart healthy” are on a menu, an owner must
be able to demonstrate to officials that there is a reasonable basis for the claim. For instance, the meal may be based on a
recipe from a health association or a recognized dietary group. Complete nutritional information, however, is not required to
be on menus.
The Affordable Care Act requires restaurant companies to disclose calorie information on their menus. The Food and Drug
Administration has proposed rules to implement this provision that would require restaurants to post the number of calories
for most items on menus or menu boards and to make available more detailed nutrition information upon request.
LIQUOR LICENSING
SMOKING BANS
Smoking laws are generally enforced at the state level as the US Congress has
not attempted to enact any nationwide federal smoking ban.
Smoking is banned in restaurants, bars and non-hospitality workplaces in many states and some local jurisdictions ban
smoking in outdoor areas. Each jurisdiction has developed legislation separately; however, most laws are relatively
consistent. There are some differences pertaining to the circumstances in which ventilated smoking rooms are permitted
and the distance smoking is banned outside a building. A growing number of cities and states now require hotels to be
100% smoke-free indoors, including guest rooms. Currently, all hotels and motels (including guest rooms) must be smoke-
free in Wisconsin, Michigan, Nebraska. Over the past decade, smoke-free hotels have gone from being almost non-existent
to the national norm. The Westin (a Starwood brand) announced the first national 100% smoke-free hotel policy for all its
properties in the US in 2006 following a report from the Surgeon General that exposure to secondhand smoke is damaging
to health. This marked a turning point for the industry and a domino effect led Marriott International Inc. to adopt a similar
policy across its portfolio of brands, followed by Starwood, Comfort Suites and several other brands.
FRANCHISING LAWS
Under the FTC Franchise Rule there are three elements of a franchise: the franchise has a trademark under which the
franchisee is given the right to distribute goods and services; the franchisor has significant control of or provides
significance to the franchisee's method of operation; and the franchisee is required to pay the franchisor at least $500
during the first six months of opening for business.
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As a result, consumers have not been travelling as frequently as they have in the past. This has had a significant impact on
industry revenue as the hotel industry has contended with lower bookings. Furthermore, the federal government has limited
travel from those coming from abroad. This has resulted in significantly less demand from foreign travelers. These
restrictions are temporary and are expected to become increasingly relaxed as the pandemic is contained.
In addition to travel restrictions, many states have imposed strict social-distancing guidelines that limit the number of
patrons within hotels and restaurants at a given time. This will negatively affect revenue as hotels will not be able to operate
at full capacity in many places.
Industry The level of industry assistance is Low and the trend is Increasing
Assistance
Operators in the Boutique Hotels industry often do not receive direct
assistance from federal, state or local governments.
However, many states use some of the funds collected by lodging taxes are spent on promoting local tourism, which can
indirectly benefit this industry. As tourism in a given area increases, industry establishments in that area will benefit as more
consumers may require overnight accommodation or choose to dine at restaurants located within industry establishments.
Although this assistance is primarily indirect, it greatly benefits industry establishments in regions that heavily promote
tourism.
Additionally, operators in the industry receive support from several industry associations and trade groups. Trade groups
such as the American Hotel and Lodging Association also lobby on the broader accommodation industry's behalf in addition
to providing research and planning networking events. This is the sole national association that represents all components
of the lodging industry. This includes individual hotel property members, hotel companies, training organizations, students
and suppliers. Its activities incorporate national advocacy, public relations and image management, education and research
and information. It also operates through 43 partner state associations to provide local representation to members.
The industry is specifically supported by the Boutique and Lifestyle Lodging Association, an international trade group for
boutique properties and suppliers. It provides members with education and advocacy services to effectively compete
against major hotel properties. It also provides consumers with an international directory of boutique property locations.
The 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act, which brought into effect the Paycheck Protection
Program, worked to provide small businesses with loans to aimed at assisting them maintain their payroll, and cover
applicable overhead costs to make up for interruptions to business that came as a result of the COVID-19 (coronavirus)
pandemic. Although some industry establishments were permitted to remain open for the entirety of the coronavirus
pandemic, many were forced to close temporarily or limit the number of patrons they have on premises, resulting in steep
losses for industry operators. Since the industry has many smaller operators, a significant portion of enterprises were
eligible to apply for aid through the CARES Act.
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Key Statistics
Industry Data
Domestic
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Domestic
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Trips (Million)
2012 8,055 4,271 2,582 2,009 75,330 N/A N/A 2,144 N/A 645
2013 9,665 5,036 2,957 2,319 87,330 N/A N/A 2,504 N/A 648
2014 11,630 6,108 3,422 2,704 101,376 N/A N/A 2,933 N/A 665
2015 14,171 7,275 3,917 3,100 116,684 N/A N/A 3,478 N/A 698
2016 17,311 8,722 4,629 3,677 138,533 N/A N/A 4,135 N/A 722
2017 18,367 9,008 4,721 3,788 141,091 N/A N/A 4,269 N/A 744
2018 19,388 9,743 5,168 4,158 152,192 N/A N/A 4,585 N/A 780
2019 20,589 10,325 5,699 4,598 165,103 N/A N/A 4,953 N/A 813
2020 10,427 5,570 4,987 4,140 116,050 N/A N/A 3,287 N/A 330
2021 12,392 6,734 5,610 4,642 133,341 N/A N/A 3,803 N/A 560
2022 16,869 9,163 6,682 5,479 168,760 N/A N/A 4,886 N/A 764
2023 19,132 10,374 7,378 6,042 188,208 N/A N/A 5,467 N/A 828
2024 19,811 10,771 7,807 6,405 196,635 N/A N/A 5,702 N/A 845
2025 20,389 11,109 8,267 6,796 204,865 N/A N/A 5,926 N/A 862
2026 20,958 11,434 8,724 7,186 212,930 N/A N/A 6,146 N/A 878
Annual Change
Domestic
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Domestic
Year (%) (%) (%) (%) (%) (%) (%) (%) (%) Trips (%)
2012 19.3 21.4 16.6 16.1 19.3 N/A N/A 19.4 N/A 0.58
2013 20.0 17.9 14.5 15.4 15.9 N/A N/A 16.8 N/A 0.49
2014 20.3 21.3 15.7 16.6 16.1 N/A N/A 17.1 N/A 2.65
2015 21.8 19.1 14.5 14.6 15.1 N/A N/A 18.6 N/A 4.95
2016 22.2 19.9 18.2 18.6 18.7 N/A N/A 18.9 N/A 3.41
2017 6.09 3.27 1.98 3.01 1.84 N/A N/A 3.25 N/A 3.03
2018 5.55 8.15 9.46 9.76 7.86 N/A N/A 7.40 N/A 4.85
2019 6.19 5.98 10.3 10.6 8.48 N/A N/A 8.02 N/A 4.28
2020 -49.4 -46.1 -12.5 -9.97 -29.7 N/A N/A -33.6 N/A -59.5
2021 18.8 20.9 12.5 12.1 14.9 N/A N/A 15.7 N/A 69.9
2022 36.1 36.1 19.1 18.0 26.6 N/A N/A 28.5 N/A 36.3
2023 13.4 13.2 10.4 10.3 11.5 N/A N/A 11.9 N/A 8.48
2024 3.54 3.82 5.81 6.00 4.47 N/A N/A 4.29 N/A 2.06
2025 2.91 3.13 5.89 6.10 4.18 N/A N/A 3.93 N/A 1.91
2026 2.79 2.92 5.52 5.73 3.93 N/A N/A 3.70 N/A 1.84
Key Ratios
Imports/ Exports/ Revenue per Wages/ Employees per
IVA/Revenue Demand Revenue Employee Revenue estab.
Year (%) (%) (%) ($'000) (%) (Units) Average Wage ($)
2012 53.0 N/A N/A 107 26.6 29.2 28,465
2013 52.1 N/A N/A 111 25.9 29.5 28,673
2014 52.5 N/A N/A 115 25.2 29.6 28,927
2015 51.3 N/A N/A 121 24.5 29.8 29,804
2016 50.4 N/A N/A 125 23.9 29.9 29,845
2017 49.0 N/A N/A 130 23.2 29.9 30,258
2018 50.3 N/A N/A 127 23.7 29.4 30,129
2019 50.1 N/A N/A 125 24.1 29.0 30,002
2020 53.4 N/A N/A 89.9 31.5 23.3 28,325
2021 54.3 N/A N/A 92.9 30.7 23.8 28,519
2022 54.3 N/A N/A 100.0 29.0 25.3 28,951
2023 54.2 N/A N/A 102 28.6 25.5 29,049
2024 54.4 N/A N/A 101 28.8 25.2 28,997
2025 54.5 N/A N/A 99.5 29.1 24.8 28,926
2026 54.6 N/A N/A 98.4 29.3 24.4 28,863
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Additional Resources
Additional Boutique & Lifestyle Leaders Association
Resources http://www.blla.org
US Census Bureau
http://www.census.gov
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than
$0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of
capital for every $1 of labor.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e.
year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving
only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using
the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived
by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers
and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations are performed. Multiple establishments under
common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in the United States.
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INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top
players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other
operating income from outside the firm (such as commission income, repair and service income, and rent, leasing
and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale
of fixed tangible assets are excluded.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For
exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand:
low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by
considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments;
the amount of change the industry's products are undergoing; the rate of technological change; and the level of
customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-
employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as
revenue minus expenses, excluding interest and tax.
REGIONS
West | CA, NV, OR, WA, HI, AK
Great Lakes | OH, IN, IL, WI, MI
Mid-Atlantic | NY, NJ, PA, DE, MD
New England | ME, NH, VT, MA, CT, RI
Plains | MN, IA, MO, KS, NE, SD, ND
Rocky Mountains | CO, UT, WY, ID, MT
Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC
Southwest | OK, TX, NM, AZ
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%;
and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
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