Hospitality Verticals, Part 2

Part
01
of four
Part
01

Hospitality Verticals: Lodging Market Size

The global market size for the lodging industry is $161.46 billion. Other requested information about the industry is presented below.

Global Market Size

  • The current global market size of the lodging industry is $161.46 billion.

Growth Rate

  • According to Zion Market Research, the industry is expected to grow at an average CAGR of 4.6%.
  • Going by this growth rate, the industry is expected to grow to $211.54 in 2026.

Additional Information

  • North America is the largest geographic market for the global lodging industry largely because the U.S. is among the most popular tourist destinations. It is also a global financial hub.
  • In 2018, the retail value of the global hotel industry was $600.49 billion.
  • In 2018, Europe had the highest occupancy rate at 72.4% with Asia Pacific region second with 70.6%.

Research Strategy

An extensive research through market reports, industry publications, and reputable news outlets did not unearth the estimated market size for 2019 or 2020. Although the information exists, it is behind paywalls and requires purchase. However, Zion Market Research has provided the industry’s 2018 size and projected CAGR. Thus, we were able to calculate the approximate market size for 2020 as shown by the calculations are below.

2018 market size was $147.57 billion. At a CAGR of 4.6%, the market sizes for 2019 and 2020 are as follows;

2019 = $147.57 billion + ($147.57 billion*4.6%) = $154.36 billion
2020 = $154.36 billion + ($154.36 billion*4.6%) = $161.46 billion




Part
02
of four
Part
02

Hospitality Verticals: Lodging Market Outlook

The global lodging industry is facing turbulent time amid the COVID-19 pandemic. However, its outlook remains positive with a predicted surge in demand. A detailed presentation of the industry's market outlook is presented below.

Current State

  • Based on recent trends in the global lodging industry, the outlook for the industry is quite uncertain, despite some major indications of a positive outlook. According to some industry statistics and insights, the industry’s outlook is varied in different countries and regions because of local conditions and dynamics.
  • For example, while the lodging industry in the U.S. has remained strong in performance, uncertainty looms in the industry in South East Asia because of volatile political climate and unpredictable economic conditions.
  • The emergence of COVID-19 pandemic has had a major impact on the outlook of the global lodging industry. Overall, the pandemic and the stringent measures taken to manage its continued spread including government lockdowns have led to closure of many lodging businesses. This had led to a significant decline in demand as people are avoiding traveling.

Next 5-10 years

  • Over the next 5-10 years, the global lodging industry will still be relevant. The industry is not under threat of closure or complete downfall since it serves a key need that will still be there from the short-term to the long-term. However, changes are expected.
  • According to Zion Market Research, the global hotels market, which basically is the major target market for the lodging industry, is projected to grow at an average rate of 4.6% CAGR between 2019 and 2026. From a market value of about USD 147.57 billion in 2018, the market will expand to USD 211.54 billion in 2026.
  • The implication of this is that the lodging industry will experience a surge in demand and hence a growth in revenues. Moreover, to accommodate the growing demand, more hotels and lodging facilities will be developed.
  • Competition is also expected to grow and intensify in the global lodging industry, especially because of the emergence of new players seeking to fill the gap between demand and supply. However, competition will also come from new kind of competitors that are using innovation to challenge the traditional lodging industry. Furthermore, companies like Airbnb will continue to exert pressure on traditional hotels and lodging businesses with their innovative approaches to providing convenient and affordable lodging.
  • Adoption of advanced technologies will be a major disruptor in the lodging industry. Thus, a growing shift towards smart hospitality where many industry players will integrate IT and IoT into their businesses will be experienced. According to some industry reports, the growing internet penetration and inclination towards IoT are driving the industry to offering smart solutions to customers by investing in digital solutions.
  • Therefore, innovation and technology will become a major competitive factor for the global lodging industry. Players that will not embrace IT and IoT are likely to be pushed out of the market in the coming years.
  • With regard to food supply, the lodging industry is experiencing a growth in supply. For example, in the United States, the lodging segment is experiencing a larger share of 2% industry supply growth. Statistics also show that food and beverage accounts for about 25% of the total expenditure of the lodging industry, with a projected growth rate of 2-3% annually.
  • Consumers in the lodging industry are also increasingly seeking transparency and traceability with regard to the food they eat. They want to know the kind of food they are served, its source, and how it was prepared. Unlike 20 years ago, consumers are increasingly placing ethics before taste.
  • Sustainability is also going to be a major factor in the global lodging industry. Players in the industry will be pushed towards embracing sustainability where apart from profits, issues of going green will also be very important. This trend will be pushed by the Millennials who are increasingly replacing the Baby Boomers and are more concerned about sustainability, even in businesses.
  • Therefore, players in the industry will be forced to adjust their brands and businesses to be more sustainable to appeal to the Millennials in terms of embracing and demonstrating support for environmental as well as social issues in addition to economic ones.

Part
03
of four
Part
03

Hospitality Verticals: Recreation Market Size

The global market size of the recreation industry is expected to reach $1.06 trillion in 2020 as calculated from the 2018 market size. The requested information about growth and market size of the industry is presented below.

Current Market Size

  • The global recreation/leisure market size is $1.06 trillion.

Growth Rate and Future Market Size

  • The industry is expected to grow at a CAGR of 4.7% between 2020 and 2025.
  • The global recreation/leisure travel industry is expected to grow to $1,464 trillion by 2026.

Additional Information

  • Geographically, North America is the largest recreational market accounting for about 33% of the global market in 2018. Western Europe came second with at 28% while Africa was the smallest at only 2%.
  • In the US, the recreation industry market size is $281.1 billion.
  • In 2020, the US market is expected to decline -17.1% in 2020.

Research Strategy

An extensive research through market reports, industry publications, and reputable news outlets did not unearth the estimated market size for 2019 or 2020. Although the information exists, it is behind paywalls and requires purchase. However, The IBIS and Market watch have provided the industry’s 2018 size and projected CAGR. Thus, we were able to calculate the approximate market size for 2020 as shown by the calculations are below.
In 2018, the leisure market size was $953.9 billion with a projected CAGR of 5.6% from 2019-2026.
Using the 2018 figure as the basis, the market size for the industry for 2019 and 2020 were derived as follows;

2019: $953.9 billion + ($953.9 billion*5.6%) = $1,007.3184 billion
2020: $1,007.3184 billion + ($1,007.3184 billion*5.6%) = $1,063.72823 billion


Part
04
of four
Part
04

Hospitality Verticals: Recreation Market Outlook

Although the recreation industry is experiencing a revenue decline currently, the market outlook is positive with estimates showing that growth is expected in the next 5-10 years. Competition is also going to intensify in the industry. A detailed coverage of the outlook is presented below.

Current Situation

  • The global recreation industry has demonstrated a strong performance in the recent past, although a revenue decline is expected amid COVID-19 pandemic. The decline will be caused by the closure of many verticals in this industry, which are considered as nonessential services.
  • However, as establishments start to reopen, revenues are expected to recover. Thus, demand in the recreation industry is expected to rebound as external drivers recover from the effects of the pandemic.
  • This year, the global recreation market is expected to decline from $1486.1 billion to $1431.6 billion at a CAGR of -3.67%. The decline is attributed to restrictions on international and domestic travels by various jurisdictions across the globe due to COVID-19 outbreak.

Next 5-10 Years

  • According to a recent report on the global recreation market, growth is expected in the next five years. Estimates show that the global recreation services market will grow at an average CAGR of 4.7% between 2020 and 2025. Other estimates show that the industry will recover from the pandemic and grow at a CAGR of 7.1% from 2020 to attain $1758.5 billion in 2023.
  • The esports market is anticipated to experience a rapid growth at a CAGR of over 16% between 2019 and 2024.
  • Apparently, a growing demand for leisure and recreation activities will drive the growth as more adults are expected to participate in recreational activities. Growth will also be spurred by changing lifestyles and the rising number of sophisticated consumers.
  • Moreover, the rising levels of disposable income in different parts of the world will spur the growth. As income levels for individuals and households continue to grow, there will be more money to spend on recreation, thus driving the growth in the industry in the next 5-10 years.
  • The industry is also expected to expand in terms of investment. There is an observable increase in the investment in recreational facilities such as amusement parks that is going to lead to an increase in the capacity of the industry with regard to recreational spaces and facilities.
  • As more recreational facilities emerge, consumers will have more options, thus impacting the industry positively. The new recreational facilities will provide new and refreshing recreational experiences to the consumers and enhance the overall customer experience in the larger industry.
  • However, competition is also going to intensify in the industry. The lucrative market dynamics will also spur an increase in entrepreneurial activities as new entrepreneurs enter the industry. The projected entry of new players in the industry will increase competition as there will be more players with different competitive approaches and strategies.
  • New business models will be a major disruptor in the global recreation industry in the next 5-10 years. Specifically, more efficient digital business models will dominate the industry. As digital technology continues to grow and affect the industry and market, there is a push towards innovation and provision of more tailored offerings.
  • From this trend, new concepts in recreation services and facilities will emerge and ultimately shape the overall structure of the industry. Specialized offerings for particular consumer groups such as the elderly will become more common.
  • Food supply will remain an essential element of the recreation industry, especially in verticals such as entertainment establishments. Consumers in the recreation industry will continue to demand for transparency that extends beyond the basic product information. Thus, information on the food supply chain, menu, and ingredients will gain more prominence as demand for transparency, especially among the young generations increases.

COVID-19 Recovery

  • Finally, in the next 5-10 years, the global recreation industry is expected to have recovered from the adverse implications of the current COVID-19 pandemic that has led to declining demand, cancellations, business disruptions, loss of revenue, and loss of jobs in the industry.
  • While it remains uncertain when the pandemic will end, there are indications that this will be quite soon as some countries and regions have already started relaxing their lockdowns measures that adversely affected the industry.
  • Even with the pandemic’s end, there are major indications that the industry will not be the same. The idea of the COVID-19 pandemic creating a long-term or permanent ‘new normal’ in almost every aspect of life has been alluded to.
  • For the recreation industry, the new normal may mean changes in how the industry operates in terms of ensuring hygiene and safety of people from potential diseases such as COVID-19. Hand sanitizers and social distancing could become the new normal for the industry even five to ten years from today.
Sources
Sources