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Hospitality Industry: Market Statistics & Analysis

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  • 0:03 What Is the…
  • 0:29 Performance of the Industry
  • 2:59 Future of the Industry
  • 6:38 Lesson Summary
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Lesson Transcript
Instructor: Nick Chandler
The hospitality industry has hit some highs and lows over the past decade. This lesson reviews the performance of the industry and considers the challenges for the future.

What Is the Hospitality Industry?

Although hotels are an important part of the hospitality industry, they are only one part of it. The hospitality industry is made up of companies that focus on customer satisfaction and leisure needs, which includes airlines, cruise ships, restaurants, event planning, companies involved in tourism, and even trains, or at least the more luxurious ones such as the Orient Express. Many of these businesses are focused on luxury services.

Performance of the Industry

So, how does this industry perform? There are a number of factors that have led to the growth of the hospitality industry over the past few decades. First, air travel became cheaper, enabling many more people to travel to new destinations around the world. Through advances in technology, people are better informed about events around the world and places they might like to visit. As economies have grown, improvements in working conditions have led to longer vacations and people with more money to spend on leisure activities. However, there have been some hiccups along the way. So, how strong is the hospitality industry? Let's look at revenue and employment figures to get an idea.

Revenue

After the hospitality industry enjoyed a steady growth in the early 2000s, there was a fall in revenue from 2004 until revenue hit rock bottom in many countries between 2008 and 2009, due to the recession. The customers of the hospitality industry are usually tourists, and so the industry is very much dependent on the amount of leisure time and disposable income people have. Disposable income is the amount of money that people have to spend after they have paid taxes from their salaries and wages. This means that if there is a recession and people have less money to spend, then the companies in the hospitality industry are often the first to be affected. The situation is getting better - the hotel industry alone had a global revenue of $457 billion US dollars in 2011 and is continuing to grow: predictions are that this figure will rise to $550 billion US dollars by the end of 2016.

Employment

But what about employment in the industry? The hospitality industry is a key provider of jobs around the world. In 2010, the industry provided jobs for over 235 million people, and on a global scale, this is 8 percent of all the people employed. The trend of growth that we see in revenue since 2009 has also meant increases in people employed in this industry. In the US alone, the hospitality industry generated 5,633,000 jobs in 2015, and this amounts to 3.8% of the total number of people employed in the US. By the end of 2016, the employment figure is expected to grow by 1.2% to 5,698,000. This upward trend looks set to continue as the industry is forecast to employ 18,493,000 people in the US by 2026.

Future of the Industry

The forecasts we looked at seem to indicate a rosy future for the hospitality industry. However, some challenges need to be faced: members of the industry recognize that customer tastes are always changing; new people with skills needed in hospitality are at a premium; retention of good hospitality employees is crucial; oil prices can change at any time; and terrorism can disrupt business unexpectedly.

Changing Customer Tastes

Customer satisfaction is a key defining feature of the hospitality industry. The problem is that customer tastes are always changing, especially from one generation to another. For example, people born between 1980 and 2000 are called the millennial generation and are now adult customers of the hospitality industry. This generation is made up of people who are more focused on themselves and their needs, as well as more open-minded and expressive than previous generations. Their understanding and dependence on social media means that they are influenced and can themselves influence the opinions of others about hotels, restaurants, and so on.

Getting the Right Person for the Right Job

New people with kills needed in hospitality are at a premium. People who work in the hospitality industry need to able to keep the customers happy and desiring to come back for more. This means hospitality employees must have a combination of interpersonal skills, including being able to solve problems for customers and resolve conflicts. It might also mean having technical skills, especially in the transportation side of the hospitality industry. In fact, the transportation section presents one of the biggest challenges for employment, as the number of people who can captain a cruise ship or pilot a plane is rather low. In fact, the pool of available employees is so low that some airlines are turning to recent graduates in the hope of training them to become pilots one day. This lack of people with the necessary skills to take the jobs available is called the skills gap.

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