Hospitality Industry: Definition & Overview

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  • 0:00 Defining the…
  • 0:51 Areas of the…
  • 1:29 Customer Service &…
  • 3:06 Economics & Key Factors
  • 4:03 Lesson Summary
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Lesson Transcript
Savannah Samoszuk

Savannah has over eight years of hotel management experience and has a master's degree in leadership.

Expert Contributor
Joseph Shinn

Joe has a PhD in Economics from Temple University and has been teaching college-level courses for 10 years.

What is the hospitality industry? This lesson defines all aspects of the hospitality industry and explains different areas within the industry, its main focus, and factors that impact the industry.

Defining the Hospitality Industry

Have you ever stayed at a hotel, flown on a plane, or eaten at a restaurant? If so, you have experienced the hospitality industry. The hospitality industry is a broad group of businesses that provide services to customers. It's focused on the satisfaction of customers and providing specific experiences for them. The hospitality industry is unique because it relies so heavily on discretionary income and free time. Think about your last vacation. You didn't necessarily need to go on the trip, but you did because you had both the free time and the extra money. In this lesson, we'll look at different areas of the hospitality industry, its strong focus on customers, and levels of service provided, as well as economics of the industry.

Areas of the Hospitality Industry

The multibillion dollar hospitality industry has three primary areas. The first area is accommodations, which includes hotels, motels, bed and breakfasts, and other lodging businesses. The next area is food and beverage. This area comprises restaurants, fast food chains, and other establishments that provide food and beverages. Food and beverage providers might be located in hotels or be standalone facilities. The last area of the hospitality industry is travel and tourism, which includes airlines, trains, and cruise ships.

Customer Focus & Levels of Service

The various areas of the hospitality industry have one common focus: the customer. As noted earlier, the hospitality industry provides services that people use when they have free time and extra money, thus providing a high level of customer service is very important, since the services provided are not necessities. For example, an electricity company doesn't necessarily have to provide excellent service to its customers because customers are still going to pay. They need to have electricity, but staying at a hotel or buying an airplane ticket isn't always a necessity.

Different levels of service are provided within the hospitality industry. Hotels and restaurants are both rated using the AAA Diamond rating system. A five-diamond hotel or restaurant is considered top of the line, having met certain cleanliness, quality, and comfort criteria to achieve that level. There are also certain services that have to be offered, such as a spa at a hotel, to be considered five-diamond.

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Additional Activities

Additional Questions

  1. What is the hospitality industry? Your answer should address the main goals of the industry.
  2. Why does the hospitality industry as a whole struggle during recessions and thrive during strong economic periods? Your answer should involve a discussion about the importance of discretionary income in the industry.
  3. There are three broad areas within the hospitality industry. List and describe these three areas. In your description of these areas, be sure to discuss the services that are provided in each. Additionally, for each of the areas, discuss at least three examples of types of businesses that would fit into the respective area.
  4. What primary focus do all three of the areas of the hospitality industry have in common? Why is this focus so important for a firm in the industry to be successful?
  5. What is the AAA Diamond Rating System? Why do hotels and restaurants strive for good ratings through this system? What would be the problems associated with them getting low ratings through this system?
  6. Assume a study was released to the public that ranked Washington, D.C. as the best place in the United States to visit for vacation. What would be the impact on the hospitality industry in the District of Columbia? Why? What about the impact on other nearby tourist destinations? Why?

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