III. Industry Analysis
[Company Name]directly or indirectly competes with all hotels nearby our hotel locations that offer business travel services or small conference space. Competition will come from small meeting spaces, inns, motels, bed & breakfasts, condo complexes, and hotels. Direct competition will come from companies offering business class services.
Industry Statistics & Trends
The industry is served by the American Hotel and Lodging Association which reports that it has 11,000 members in the hospitality industry. The AH&LA, citing Smith Travel Research, reports that the average rate for an overnight accommodation is $106.55 and the average occupancy rate for the industry is 60% leading to a revenue per available room (RevPAR) of $62. The association calculates an over 47,000 properties of 15 rooms or more, 4.3 million guest rooms, annual revenue of $133 billion, an average of 1 billion room nights sold per year, and approximately $27 billion in net profits.
Large companies include Marriott International, Hilton Hotels, Carlson Hotels, and Starwood Hotels and Resorts dominate the US hotel industry.
Major industry product lines are room fees and sales of food, alcoholic drinks, and merchandise. Room fees account for 70% of industry revenue, food is 15% and alcohol is 5%.
- “In the United States, tourism is currently the third largest retail industry, behind automotive and food stores.” – AH&LA
- “For a hotel stay, 35% of all business travelers spend one night, 26% spend two nights, and 39% spend three or more nights.” – AH&LA
- Profitability of individual companies depends on efficient operations as most costs are fixed.
- Effective marketing is a must.
- Trends to be aware of in this industry include: a growing number of travelers will demand higher levels of discounts and more free services while expecting higher levels of service as a response to the recession and the hotel industry’s desperation to fill rooms.