Industry Outlook

The hospitality industry is continuously evolving. Like many industries, it weathers the economy during downturns and prospers during good times. Investments in future trends will launch the industry into another decade of profitability—provided managers and owners stay focused on the needs and wants of their customers. The preparation of responsible leaders within the industry is also critical to the industry’s success. As American cuisine has gained respect the world over, and American hotels continue to set the global standard, chefs, hoteliers, designers, and the entire range of service people involved in the industry need to be trained to be creative, innovative, and, above all, service-oriented.

According to a research report by Deloitte, prior to the coronavirus pandemic in 2020, the travel and hospitality industry had been experiencing record growth due to a strong economy, consumers' purchasing power across the globe, and digital innovation. During the pandemic, business closures and lockdowns to protect the population's health caused a steep drop in the hospitality industry. An NPR article reported that the occupancy rate in U.S. hotels was at 44 percent in 2020 and that revenue per room was down by nearly 48 percent. As of August 2020, the U.S. hotels and motels industry was valued at about $108 billion, with 87,260 businesses employing more than 1.35 million people.

The rollout of the COVID-19 vaccine and acceleration of its distribution in 2021 will help the economy rebound, with businesses reopening, employment picking up, and business and personal travel resuming. Things are still expected to be challenging for the hospitality industry overall in 2021 and it will take several years for recovery. The American Hotel & Lodging Association predicts that "travel won't return to 2019 levels until 2024." The industry remains hopeful, however, as some industry experts predict an economic boom is possible once the pandemic is contained. There will be pent-up demand for travel and leisure activities after the lockdowns are fully lifted. The research group IBISWorld predicts a rebound for the U.S. hotels and motels industry after the pandemic, with steady growth through 2025.

In the longer term, employment for workers in the hospitality industry will vary by specialty. The U.S. Department of Labor (DOL) predicts a decline in employment growth for hotel, motel, and resort desk clerks through 2028. Many resorts and hotels now have online reservation systems, reducing the need for clerks to process orders and maintain files. Clerks with an undergraduate degree and strong computer skills will have better chances of securing work. Some job opportunities will also arise from the need to replace workers who leave the occupation each year. Reservation and transportation travel agents and ticket clerks will experience 3 percent employment growth over the same period. People who want customized travel plans will still require the services of travel agents. More people are expected to use the Internet for travel arrangements, though, in the coming years. The proliferation of travel and resort Web sites continues to make it easier and faster for people to do their own research and reserve their trips directly without a middle man.

The DOL reports that lodging managers will experience little or no employment growth through 2028. Managers with prior work experience and those with a bachelor's degree in hospitality or hotel management will have the advantage in the job market. Full-service hotels, such as resorts and convention hotels, as well as upscale and luxury hotels will offer more opportunities for lodging managers and other hospitality management and administrative positions. Food-service managers, on the other hand, will have faster than average job growth through 2028. Population and income growth enable more people to dine out and purchase meals or have food delivered. Those with restaurant and food-service experience combined with a bachelor's degree in restaurant, food-service management, or hospitality will have the best chances of securing work.

There will be a decline in employment for maids and housekeeping cleaners through 2028. There will continue to be job opportunities in hotels and other lodging facilities, as there is high turnover in this field and job openings will arise when workers leave for other positions.

The National Restaurant Association states that the "restaurant industry is the second largest private-sector employer in the United States, and it adds jobs at a stronger rate than all other industries combined." Cooks are expected to have faster than average employment growth through 2028, according to the Department of Labor. There is increased demand by consumers for food from a variety of restaurants, cafeterias, and catering services. Competition for jobs will be keen as there are typically more applicants than jobs to fill. Those who can prepare complex meals, and who have training and related work experience, will find good opportunities in restaurant chains, upscale restaurants, and hotels. Waiters and waitresses are expected to have average employment growth in the coming years. Job opportunities will be best for those with prior work experience and strong customer-service skills.

Consolidation will be key to growth in the future. Consortiums composed of smaller hotels and motels will pool resources and share advertising costs to compete with bigger and better-known hotel names such as Marriott and Hilton. Many larger hotels have joined with airlines, car rental agencies, and travel agents to offer complete travel packages. These businesses can present savings and convenience for travelers while providing name recognition for themselves.

The aging baby boomer population is also expected to have a positive impact on the hospitality industry. According to a Deloitte report, people who were born in the late 1940s through the mid-1960s are either still in their prime earning years or nearing retirement. They are an important group for hotels and resorts because many can afford to travel and often have the luxury of time to take extended trips. Hotels that can focus services specifically for these age groups while also having amenities and services for younger guests will fare best in the coming years.

Additionally, more establishments will branch out and target the fast growing elderly population, many of whom have substantial retirement funds. Called assisted living communities, these complexes offer housing, food, and medical services.

The federal Travel Promotion Act, which was signed into law in 2010, established a public and private partnership for travel and tourism. The partnership, known as the Corporation for Travel Promotion, is an alliance between the federal government and the tourism industry designed to promote travel within and to the United States. As of 2017 (the most recent data available), the act has helped to support an average of 50,000 jobs each year, contributed to the U.S. economy an average of $25 for each $1 spent on travel and hospitality marketing activities, generated more than 3 million incremental visitors, $9.5 billion in incremental spend, and more than $21 billion in economic impact. The act continues to draw new partners and introduce initiatives and programs that project a "cohesive and high-quality message about travel to the United States."

Though many employees in the hotel industry have worked up from unskilled entry-level positions, advancement opportunities are best for people with college degrees in hotel or hospitality management. It is becoming increasingly important to hire skilled workers to fill new openings created by retirement, high turnover, and industry growth. The problems of finding and keeping staff are expected to become more difficult as the pool of younger workers shrinks.

Another challenge that will continue for the industry is how it integrates new technology. Most hotels, resorts, and other organizations have already established data processing terminals to process reservations, bookkeeping procedures, and other services. Other advances include security systems based on card-activated access, in-room checkouts, and TV-based guest shopping. Those establishments that are best able to provide these and other services should be able to attract a wide range of customers. As the labor force continues to shrink, the hotel industry will increasingly automate many of its services.

While the long-term prospects for growth in the hotel industry are good, it should be remembered that the industry is tied directly to the amount of money people can spend on leisure and business activities. Therefore, any downturn in the economy usually has a negative impact on industry growth.