Alicia Echeveste

4 May 2020
Research Report: Accommodations Industry
This report is to provide information about the accommodations industry. The information will
help clients to understand the industry and will help to allow clients and consultants to spend
more time discussing investing strategies. Below provides information about the overall
performance, relevant trends, competitive landscape, target demographics, and operating
conditions within the accommodations industry.

Industry Performance
The overall accommodations industry has had a steady and increasing performance over the past
few years. The industry is driven by domestic trips by United States residents, consumer
spending, and the consumer confidence index. The industry is forecasted to have been at a value
of 281.2bn by 2023 because of the healthy rate of growth the industry is expected to see
(MarketLine, 2020). The increase in performance based on these factors is good for the overall
industry.

Domestic Trips by US Residents

The amount of people traveling within the United States greatly affects the industry because
when people travel, they need places to stay. Hiner (2020) explains, that “when the number of
domestic trips by US residents rises, demand for campgrounds and RV parks typically
improves”. From hotels to campgrounds, people will choose a place to spend the night while on
trips across the country. The expected increase in travel will allow revenues to increase across
the industry as a whole.

Consumer Spending
Another factor that drives the accommodations industry is consumer spending. Consumer
spending is looked at in this industry as a way to tell if people will be willing to travel and go on
trips. When people are spending more in general, they are more likely to spend on vacations,
where accommodations would be needed. For 2020, it is projected that consumer spending will
increase. The industry is expected to see the results of this through more people booking at
hotels, motels, and other accommodations.

Consumer Confidence Index

The consumer confidence index is a measurement that determines how confident consumers are
in the current economy. Similarly to the other two factors above, the consumer confidence index
drives the industry because it directly influences the amount of travel people will do. Unlike the
other two factors, the consumer confidence index is expected to decrease in 2020. Consumers are
currently less confident in the economy than they have been the past few years. This creates a
risk for the industry performance because it is likely less people will be taking trips.
The graph below shows the trends for the drives described in the paragraphs above by year.

Industry Drivers

Source: https://my-ibisworld-com.ezproxy2.library.arizona.edu/us/en/industry/72111/industry-
performance

Relevant Industry Outlook

A main trend for the industry is its growth. It is projected to grow in revenue, tourism, and
locations. This is a generally good thing for the industry because the increasing trend will allow
for the industry to remain strong financially.

Revenue
The revenues for this industry are a result of consumers purchasing rooms, spaces, food and
beverages, and more. There is an expected increase in revenues over the next five years, leading
up to 2025 (Lombardo, 2020). This increase over the next few years is also expected to happen at
a slow rate. Although there has been a decrease in revenues recently, there are signs that the
financial aspect of the industry will remain strong in the long run.

Tourism
One of the leading trends within the industry is tourism. Oftentimes, tourism is promoted not
only by the companies within the accommodations industry and similar industries, but also the
government. Recently, there has not been much promotion of tourism, but it is expected that
tourism will pick up again within the next few years. It is also expected to grow, which supports
the overall financial growth of the industry.

Industry Expansion into Larger Cities

Many hotels, bed and breakfasts, homeshares, and motels are looking into expanding their
services to larger cities. There are already many options for places to stay within cities, but many
sectors of the industry are still looking into adding locations within the large cities. This gives
the industry room to grow because the industry will be represented in more locations.

Competitive Landscape
The competition within the accommodations industry has increased over the past few years.
There are many options today including, hotels, bed and breakfasts, and homeshares such as
Airbnb. Having this many players within one industry brings high competition.

Accommodation Options: Hotels and Bed & Breakfasts

There are many options within this industry for consumers to choose from. Hotels depend on
brand recognition and often have loyalty programs. This allows their customers to become
familiar with their brands and choose to stay there again. Some big-name hotels in the industry
are Hilton and Marriott. Another option is bed and breakfasts, which can make consumers feel
more at home. Bed and Breakfasts like to create themes or atmospheres that are unique to them.
“Competition is often showcased online, as many travelers sort through reviews and customer
feedback on the internet when choosing between accommodations” (Le, 2020). This adds to the
competition by giving consumers another option.

Accommodation Options: Room Shares and Campgrounds and RV Parks

Room Shares have become another popular option for travelers to stay at. The leading
competitor within the room shares section of the industry is Airbnb. Airbnb provides a diverse
range of options for people to rent homes, apartments, and other spaces for a short period of
time. Airbnb offers people the alternative to live in someone’s house or RV, and consumers
enjoy the uniqueness of this. (Gallinari, 2019). They have become a big competitor within the
accommodation industry due to the popularity and marketing of the company. Lastly,
campgrounds and RV parks provide another option for travelers. They typically provide a low-
cost option to consumers looking for a less expensive experience. Campgrounds and RV parks
add to the competition through reaching out to another demographic and keep the industry
competition high.

Target demographics
The target demographic varies based on which type of accommodation is being looked at. It is
different for hotels from home shares or campgrounds. There are different kinds of people
staying at different places.

Unique Demographics
Hotel guests are normally either people, business people or families. Many people on business
trips choose to stay at hotels. Many traditional families also choose hotels or motels because they
often come with amenities such as pools and restaurants. They are able to provide experiences
for families. Hotels are targeted towards these demographics. Homeshares, like Airbnbs, have a
very different audience from hotels because they are thought of as trendy and adventurous
(Gallinari, 2019). They are also often chosen by families that are larger or that are looking for a
more affordable stay. Campgrounds and RV parks are targeted more towards adventurous people
like backpackers and campers. They are also a more affordable option for vacations. Each option
has its own target demographic.

The graphic below shows visually how different age groups think about homeshares. Overall, the
younger the consumer, the more likely the consumer is to choose timeshare over a hotel.

Opinions of Homeshares by Age.

Source: https://reports-mintel-com.ezproxy2.library.arizona.edu/display/961474/?fromSearch=
%3Ffreetext%3Dhotel%2520industry&highlight#hit1

Operating Conditions
The overall industry has steady regulations. The industry must keep up with technology, food
and beverage standards and licensing, and labor relations. The industry does a good job at
keeping up to date with the regulations and policies.

Technology
With the increase in technology in the daily lives of consumers, the industry has been able to
keep up with the usage of technology. Hotels, motels, and Airbnbs have started to utilize
technology through online booking over the past five years (Hyland, 2020). This has allowed
consumers to book their stays quicker and easier than in the past. Most RV parks and the other
accommodations offer internet connection to their guests, as well. Through this use of the
internet, the industry has been able to keep up with the usage of technology.

Food and Beverage Regulations

Hotels that provide food and beverage services are required to follow standards. There are many
laws and regulations. The industry follows the Food and Drug Administration for food and safety
standards. The industry also follows liquor licensing regulations. The industry does follow these
guidelines and keeps them up to date.
Labor Relations
The trend is steady for labor relations within the industry. The industry follows laws regarding
minimum wages and working conditions for employees. Overall, the accommodations industry
has done a good job at being up to date with the legal aspects of labor relations.

Conclusion
This report explained the accommodations industry by providing information about its overall
performance, relevant trends, competitive landscape, target demographics, and operating
conditions. After reading the provided information, clients can understand this industry and can
spend time speaking with a consultant about investing opportunities.
 References

Gallinari, M. (2019). Hotels - US. Retrieved from Mintel.

Gallinari, M. (2019). Hotel alternatives - US. Retrieved from Mintel.

Hiner, J. (2020, April). IBISWorld Industry Report 72121.Campgrounds & RV parks in the US.
Retrieved from IBISWorld database.

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

Le, T. (2020, April). IBISWorld Industry Report 72119. Bed & breakfast & hostel
accommodations in the US. Retrieved from IBISWorld database.

Lombardo, C. (2020, March). IBISWorld Industry Report NN002. Tourism in the US. Retrieved
from IBISWorld database.

MarketLine. (2020). Hotels & motels industry profile: United States. 1-61. Retrieved from
Business Source Ultimate database.