An Overview of The Hotel industry – It’s Segments, Types & Aspects

The hotel industry is a major part of the hospitality industry. In this post, we have covered this industry in general. We have provided an overview of the Hotel industry in this post.

This post makes an effort to quickly define the hotel industry, discuss the evolution of this special industry, and then cover its major segments, types, and aspects.

This article ensures not to go into deeper details to keep this post short and informative.

So, all the hoteliers and the travel enthusiasts out there, let’s begin the fun with this interesting take on the hotel industry in totality.  It is indeed interesting how the hotel industry has evolved from small Inns to the multi-million dollar business of today.

Hotel Industry Segments – An Overview

In order to define the Hotel properly, we must also know the various segments of the Hotel industry.

Let’s talk about the segments of the Hotel industry now. Various segments of the industry are as follows:

There are 5 Major Sectors of the Hospitality industry which we have covered in another post on this Hospitality Portal.

The hotel industry is one industry that has a clear overlap with most of these sectors of the Hospitality industry.

The sectors discussed in the earlier post were:

1. Lodging- Accommodation
2. Food & Beverage
3. Travel and Tourism
4. Entertainment – Casino, Cruise, Gaming
5. Timeshare

The Hotel industry looks like a conglomerate of all these sectors.

In this post, we have covered more about the uniqueness and vastness of the Hotel industry.

Also covered in this post are the major segments of the hotel industry, aspects of the hotel industry, and unique points that make the Hotel industry quasi Hospitality industry.

While we could have made this an epic post worth thousands of words, we have ensured that we make it a bullet list with links to detailed posts on each individual point.

So, whether you want to skim these points or do an in-depth study, you are going to find this article interesting.

So, let’s begin with one simple question. ‘What is a Hotel?’

Who doesn’t know that? Isn’t it?

Well, that’s what Wikipedia says. But, is it all that it takes to define a hotel?

Well, there is always a yes and a no.

If you search ‘Definition of Hotel Industry’ on Google, you get the results for the ‘Hospitality industry’ instead as shown in the search image below.

So, even Google finds it difficult to differentiate between the Hospitality industry and its integral part, ‘The Hotel Industry’.

There must be something more to the definition that can help Google show better results in the future.

We can add commercial, customer service, and price to this definition and of-course hospitality.

But, here is another question.

Why fret so much over the complete overview of the Hotel industry? Is the Hotel industry that important?

When we discuss the hotel industry overview, it is equally important to discuss its segments which are listed below.

1. Full-Service Hotels – These include the Resort hotels and 4* and 5* hotels.
2. Select Service Hotels – These include several 3* and 4* hotels, Bread & Breakfasts, Inns, Airport Hotels, etc.
3. Limited Service Hotels – These include Hostels, Capsule hotels. Motels, 1*, and 2* Hotels, etc.
4. Boutique and Themed Hotels- These include Boutique Hotels, Cruise Hotels, Theme Park Hotels, Casino hotels, etc.

So, we have defined a few segments to get to a clear definition of the Hotel.

But, while exploring the segments we have noticed that there are several hotel types within each segment.

So, it’s also worthwhile to quickly mention the various hotel types. Isn’t it?

Key Hotel Industry Statistics

So, here is a quick overview of the revenue this special industry generates.

If we cover only the Hotel Industry, the Hotel Industry Market statistics according to Statista and Deloitte are stacked as given below:

1. The biggest player of the hospitality industry in 2020 is the Wyndham Hotel group that manages close to 9000 hotels across the world.
2. Wyndham hotel group is also the leading hotel chain in the USA with close to 7000 properties.
3. Other top companies in the hotel industry in terms of the number are Marriott International and Hilton Worldwide with 6542 and 5402 hotel properties respectively across the globe.
4. The Global Hotel Industry revenue in 2016/17 stood approximately at a staggering value of $550 Bn and it has seen an increase in 2018, 2019 and 2020.
5. Total revenue of the hotel industry in the USA alone touched $200 Billion in 2018.
6. Marriott International alone raked in over $ 20 Billion in 2018 in terms of revenue.
7. Millennial is set to become the biggest consumer sectarian in the coming years.
8. Travel and tourism industry is now over 10% worth of the Global GDP and the Hotel Industry accounts for half of that if clubbed with the Food & Beverage industry and alternate lodging.
9. The Asia Pacific region in the last few years has recorded the maximum occupancy rate with the rates in the past couple of years staying above 70%.
10. Highest Global Average revenue per room in 2018 and 2019 was recorded in the Middle East and Africa.
11. Hilton Worldwide is currently the biggest hotel brand in terms of brand value with a valuation of around $7.4 Billion in 2019 as reported by Statista. Others in the list include Marriott and Hyatt.
12. With around 1.3 million hotel rooms, Marriott International tops the list of hotel companies in 2019 with maximum guest rooms.
13. Geneva in Switzerland was most expensive in terms of recorded average prices of hotel rooms in 2019.
14. Hotel Industry alone is expected to sustain by growing at 6-7% in 2019 and beyond (This is set to fall by a huge margin in 2020 due to the Coronavirus pandemic that gripped the whole world in 2020).

Different Types of Hotels

There are numerous types of hotels in the world. You would be amazed by the variety that this industry provides to all the travellers. Have a look!

1. Boutique Hotels
2. Resorts
3. Casino Hotels
4. Cruise (Hotels) – Hotels and accommodation on Cruise Ships
5. Motels
6. Bed & Breakfasts
7. All-Suite Hotels
8. Condo Hotels
9. Airport Hotels
10. Business Hotels
11. Extended Stay Hotels
12. Luxury Hotels
13. Apartment Hotels
14. Hostels
15. Various Star Hotels (5 Star to 1 Star)
16. Inns
17. TreeHouse Hotels
18. Ice Hotels
19. Capsule Hotels
20. Serviced Apartments

And the list goes on and on.

The expanse of the Hotel industry is limitless.

A Hotel when defined as an established providing paid lodging and boarding services to travellers, does only half justice to the essence of the hotel industry.

While the above definition is good for a hostel but this definition would infuriate the passionate boutique hoteliers or hotel entrepreneurs who believe hotels are more about hospitality & service than it’s about lodging and food.

Well, we will have to agree. We pay more for the ambiance at times than for the food.

Finally, to have an all-round overview of the Hotel industry, it is also important to have a look at the various aspects that make the hotel industry.

Various Aspects of the Hotel industry

The hotel industry size is large to include broad categories within the industry that each has unique characteristics.

Regardless of the sector, one thing is clear; customer service remains to this day the backbone of the entire hospitality industry.

All the important segments of the hotel industry such as food delivery and care are also driven primarily by customer support.

Careers in the hotel industry can be extremely rewarding, however, they are also challenging and fast-paced, which can be overwhelming for most people.

This industry is a lot broader than other industries, and it is related to nearly every other profession on earth.

While this industry is very broadly classified, it has some defining aspects that are very important.

Customer Service holds the Key

As mentioned earlier, the most vital aspect of the hotel industry revolves around customer satisfaction.

Related Article- Customer Service in the Hospitality Industry

While customer satisfaction is important for any successful business, the success of the hospitality industry relies solely on whether the customer is happy or not.

In this age of the Internet, where social media platforms are king, an unhappy customer can be the source of an unnecessary headache.

To prevent bad reviews, which are the death of every business, the hotel industry must do everything to ensure satisfaction.

Healthy Consumer spending

As the economy continues to get stronger and stronger, individuals are also starting to enjoy increased salaries that are enabling them to make wise spending decisions.

The hotel industry is one sector that is benefiting heavily since it is at the heart of the growth.

According to The Caterer, Consumer spending in the Hotel industry saw close to a 5% rise in 2017 even in quarters which proved difficult for other industries.

Competition within the Airline sector

Air travel has become cheaper thanks to competing airlines which has enabled a lot more individuals to travel to various destinations across the world.

International competition, low fuel prices, and low-cost entrants in the airline industry will only help to make flights more accessible even to the budget traveller.

The number of international tourists rose to 1.2 Billion in 2015 and is still growing at a rapid pace in 2019 and beyond. The numbers fell drastically in 2020 due to the Covid-19 pandemic however 2021 had some signs of recovery.

Advancement in Technology

Advances in technology have completely reshaped the way that the hotel industry operates.

Thus it is a must to include in a holistic analysis of the hotel industry.

Thanks to social platforms, people are now more informed than ever about the places that they want to visit, as well as how they want to get there and where they want to stay.

Apart from making it easier for the customer, technology has increased the efficiency of the hotel industry and it has helped greatly to improve the customer experience.

Quality customer experience is gold and it is what will help to drive business activity in the hotel industry.

We have covered a lot of Information technology in the Hotel Industry in our earlier posts. AI in the Hotel industry is another interesting area that already has a mention on this portal among the top Hospitality technology trends.

Reliance on Disposable income and time

Another vital aspect that defines the hotel and the hospitality industry is the reliance on other people’s disposable income and free time.

Because of this, a lot of businesses in the hotel industry, whether they have to do with accommodation or transport, are targeted towards people that have extra income to spare, rich patrons or people that have free time for rest and relaxation.

During economic downtimes such as the recession, the hotel industry typically suffers because patrons are forced to redirect their income to other central issues.

Themes are a key aspect of the Hotel industry

Lastly, the hotel industry is also characterized by themes.

Many hotels, especially the smaller variety opt to stick to a theme that can help to attract customers.

For instance, a hotel can have a Mediterranean theme as a way of appealing to customers that prefer that type of food.

Not only do different and unique themes help to attract more business, but they also help to set one business apart from another.

For a business to be successful in the hotel industry, it must have an authentic theme.

Conclusion

Hope you found the overview of the hotel industry interesting and informative.

Hotel’s definition is indeed complicated. The range is huge and it is extremely difficult to provide a complete hotel industry definition.

We have tried to complete the Hotel definition by adding a few tenets to the definition by Wikipedia. But, even this doesn’t cover everything in the industry. So, it is these Hotels or establishments and people working or attached to these establishments that constitute the hotel industry.

Hope this quick yet comprehensive hotel industry overview article kept you engrossed for a while.

Keep on exploring more on the hotel industry and the hospitality industry as a whole through hundreds of articles on this portal.