What is the hospitality industry?
The hospitality industry is in the business of professional services, covering hotels, motels, resorts, restaurants, cafes, theme parks, tour companies, and much more, and falls into the broader service industry.
Hospitality is a global industry that’s expected to grow from $3,953 billion in previous years to $4,548 billion in the upcoming years and reach over $6,715 billion within the next decade.
It is connected to travel and tourism but goes beyond the bounds of those areas. While the travel and tourism industry caters to holiday makers and those who have travelled away from their home, hospitality offers services to tourists, travellers, locals and anyone else who may be in the area.
The hospitality industry is characterised by a dependence on discretionary spending, free time and interest of customers. As we’ve learnt in the era of COVID-19, it’s also influenced by our freedom to travel and move about our neighbourhoods freely.
The hospitality and tourism industry spurs economic growth, serves people and communities and provides employment for thousands of people around the world, with some of the most common jobs being:
- Cafe and restaurant wait staff and managers
- Retail managers and sales assistants
- Bar attendants and baristas
- Airline and travel employees
- Hotel receptionists, staff and managers
This comprehensive guide gives you the framework, knowledge, insights, actionable tips and tools you need to win more bookings and perfect the guest experience in the hospitality industry.
Table of contents
Hospitality industry definition for hotels
Hotels are at the very heart of the hospitality industry, and have been for hundreds of years. The definition of a hotel – an establishment providing lodging and often meals, entertainment and other personal services for the public – aligns closely with the hospitality industry definition that we’ve explored above.
What is the hospitality industry meaning for hotels? It’s simply a term for the broader industry that hotels share with other types of pleasure and leisure-focused businesses, such as restaurants, ski resorts, day spas and tea houses.
Hotels provide their paying customers with a wide variety of enjoyable hospitality experiences – from room service to buffet breakfasts, massages to themed weekends away.
The best tech in the hospitality industry SiteMinder, the world’s leading hotel platform is packed with clever, easy to use technology that boosts your bottom line.
What does business in the hospitality industry mean?
Hospitality is a word which means “the friendly and generous reception and entertainment of guests, visitors, or strangers.” Any business that aims to make people feel welcome, often through comfort or entertainment, will generally be considered to be part of the hospitality industry.
Particularly, a hotel business is built around hospitality, and generally spans across several areas of the hospitality industry. Like all industries, the key to being successful starts with knowing the industry inside out.
From industry fundamentals to the latest technology, trends and tips, you need to know about the hospitality industry today – all from your unique perspective as a hotelier.
How to start a hospitality business
A business in the hospitality industry can take many different forms: starting a two-room bed and breakfast is a rather different prospect to starting a theme park, for example. So rather than go into the specific mechanics of starting a hospitality business, let’s instead look at some general tips and guidance for anyone who might be interested.
Some key qualities you need as a hospitality business owner include:
- Good work ethic: Many hospitality businesses, such as hotels and resorts, never really close. Others, such as restaurants and bars, see you working evenings and weekends. You’ll need to be prepared to work hard and long at your business.
- A customer focus: The hospitality industry is all about providing pleasure to customers. You need to focus on the elevating experience you offer, and you need to be open to changing your offering with customer tastes.
- A deep passion: The best hospitality experiences are delivered by businesses who demonstrate an obvious passion for what they do – who are always looking to improve, and who are willing to try new things.
If you believe you have what it takes, a few key considerations when starting a hospitality business include:
- Do you market research: Invest in research to verify whether there’s a market for your proposed business, or whether you’re confident you can create one.
- Get advice from industry veterans: Talk to people who are already in the industry to gain an understanding of what it takes to succeed as a hospitality business owner.
- Get hospitality industry insurance: Ensure you’re covered for whatever inherent risks your hospitality business faces by securing the appropriate insurance.
Hospitality industry problems and opportunities
The hospitality industry is susceptible to an array of outside influences. Over the last few years, the tourism and hospitality industry has been hit particularly hard by the pandemic, with restricted movements resulting in complex challenges across all areas of the industry.
As the industry recovers, it’s becoming increasingly obvious that it’s not “back to normal.” Instead, the latest trends are indicating the market looks a little different with new forces driving the behaviour of travellers and hoteliers alike.
Safety and hygiene
Cleanliness has always been valued by guests at hotels, and expectations have reached new levels following the pandemic. The push for social distancing, quarantining, hand sanitiser and masks has heightened awareness of the risks of poor hygiene. Falling ill while on holiday, being required to isolate while travelling or being subject to a lockdown are new, and powerful, considerations for people when booking a hotel.
Staff shortages
In the US, there were 300,000 fewer workers in the hotel industry compared with two years prior. Some hotels have responded by shifting housekeeping to a by-request-only model and cutting back on amenities such as room service. Finding staff, building a team and retaining your people has never been more important.
When the British government held a referendum on the United Kingdom’s potential withdrawal from the European Union, this caused a worry for hoteliers on the amount of staff being drawn from European migrants.
With a devalued pound and the potential for the government to introduce a new work scheme that would require employers to request permission from a central government authority to employ foreign national workers, migration from the EU slowed significantly.
Because public concern around immigration levels was one of the motivating factors for the Brexit vote, it may be difficult for the government to negotiate a new relationship with the EU to permit the free movement of workers.
This means there may have to be a conversation about EU nationals staying in their current roles and finding ways to reduce staff churn in the hospitality industry.
Keith Edwards, chief people & development officer at Soho House, believes the uncertainty is already making a difference:
“In the weeks and months since the Brexit referendum, we have noticed it becoming harder and more expensive to recruit and we expect that trend to continue. The drop in the value of sterling means that many of those from abroad who are working here have less money to send home, and the influx of those moving to the UK to seek work is slowing.”
Having staff troubles? Check out our staff management cheatsheet.
Bleisure travel
The pandemic has blurred work and life boundaries for many, with remote and hybrid working sticking around even as pandemic restrictions are lifted. This trend means the digital nomad is not the only type of person mixing work and play these days. It might be a professional taking off on a Thursday to beat the rush to a destination and “working from anywhere” on a Friday before a weekend away. Or someone who tacks on a weekend following a week-long conference since they haven’t been able to get away for so long. This hybrid of business and leisure travel, “bleisure travel”, is something all hoteliers should have on their radar.
Sustainability
Customers are increasingly demanding sustainable products and services, and data shows that people across all generations are willing to pay more for sustainable products. For the hotel industry in particular, sustainability is becoming non-negotiable, with the sector depending on a healthy global ecosystem for its own survival. And when it comes to sustainability, it’s important hotels truly embed sustainability in their business rather than making a token effort.
Four keys to business success in the hospitality industry
There are many paths to business success as a hotelier, however most hotels that find prosperity as a hospitality business do these things:
1. Develop a strong brand
Research has shown that a strong brand is indeed critical for a successful hotel business. To develop that brand, start by looking at your competitors and your perceptions of their business. What are the things you like? And don’t like?
Also ask yourself:
- What problems are you solving?
- What makes your business stand out?
- If your business was a person, how would you describe them?
- What do clients love about your business?
Understanding how to build a great brand will help you move forward with confidence and build on your success.
2. Pay attention to the details
It’s the little details that can create excellent first impressions, build authenticity into your brand and add up to a memorable experience for guests. And it can also be those little details that – when overlooked – create disappointment or lead to disaster.
Develop your skills in this area by looking at things from your customer’s perspective, keeping on top of maintenance, and thinking about presentation in whatever you do. Good attention to detail will iron out any little issues before they become bigger problems and keep service flowing and customers smiling.
3. Understand the numbers
You might understand the industry, the market and your clients, but how well do you know the numbers? Data and metrics are so important in driving strategy and making sound decisions. All hoteliers should have a good grasp of:
4. Follow the latest hospitality marketing tips
The hotel hospitality industry is dynamic and quickly evolving, so it’s important to be agile enough to score some quick wins with easy-to-action marketing ideas. Examples of these hospitality industry marketing tips include:
- Ask departing guests to complete a quick feedback form. Direct your biggest fans to an online review platform – helping to bolster your brand reputation and drive more bookings.
- Create an ambient and brand-aligned “selfie space” – encouraging guests to spread the word about your business online.
- Audit your hotel website and ensure each page and post has a clear call to action – prompt those who are thinking things over to take the next step and create a booking.
- Set up a Google Hotel Ads campaign to get immediate results by reaching people who are actively searching for a hotel like yours – AccorHotels lifted year over year bookings by 65% and grew revenue by 84% by using a strategy that delivered more traffic to emerging markets.
- Consider partnering with travel-focused influencers on TikTok to target a younger market – 81% of users use TikTok to discover new products and brands.
Matthias Gerber, Co-owner Town Hotel
Technology in the hospitality industry to help run your hotel
As the world moves online and technology gets increasingly “smart”, success in the hotel game is also about selecting the right tech solutions and tools to streamline processes, improve the customer experience and gain a competitive advantage in the market.
Technology in the hospitality industry, when we’re talking about hotel businesses, generally covers:
- Online distributions
- Direct bookings
- Revenue management
- Property management
- Business intelligence
- Websites and SEO
- Customer service and guest-facing tech
- Marketing
As tech has evolved, various and disparate systems have been brought in to solve the problems and dilemmas hoteliers face. That’s changing, though, as hotel commerce platforms – based on tech used by online giants like Amazon and Uber – provide a single place with everything accommodation providers need to sell, market, manage and grow their business.
Find out more about the flexible pathways to start with hotel commerce and the opportunities available to upgrade or scale your business through SiteMinder’s award-winning distribution and marketing technologies, 24/7 support and the largest ecosystem of best-in-class hotel technology integrations, apps and partners.
Artificial intelligence in hospitality industry
New entrants might be surprised to find out how advanced technology in hospitality industry businesses already is. Artificial intelligence, for example, is already being used to enhance operations and customer experiences in a number of areas, including:
- Customer service and concierge chatbots
- Personalisation of customer experiences through data analysis
- Streamlining operational efficiency
- Managing and maximising revenue
Ultimately a hospitality business owner should see AI as an incredible opportunity to run their business better.
