Lodging Industry Analysis

Part
01
of eight
Part
01

Industry Structure: Lodging

The US lodging industry is a sub-sector of an overarching industry called leisure and hospitality. This leisure and hospitality industry encompasses over ten other sectors. However, accommodation, restaurant & food services, and travel & tourism are the largest segments by revenue. Since lodging is under the accommodation sector, only restaurant & food services, and travel & tourism have been discussed below.

US Lodging Industry: Structure

  • The US lodging industry is a sub-segment of the leisure and hospitality industry. The leisure and hospitality industry in the US "encompasses a wide range of services and activities such as lodging, restaurants, food services, hotels, travel & tourism, and convention centers."
  • Accommodation - including lodging, has the largest share of the US leisure and hospitality industry, 19%. This is closely followed by the restaurant and food services segment, which accounts for over 16% of the industry.
  • Currently, the US leisure and hospitality industry employs 16.8 million individuals. Up to 14,8 million of these employees are in production and non-supervisory roles.
  • The leisure and hospitality industry has 873,535 establishments (does not include multiple locations of the same establishment) and an unemployment rate of 5.3% in the US.

Overarching Industry 1: Restaurants & Food Services

  • By the end of 2019, the US restaurant and food services industry is expected to reach sales of $863 billion up from $825 billion in 2018. There are over a million restaurant locations in the country.
  • The industry encompasses all quick service restaurants, full-service restaurants, and takeout services. Cafeterias, catering companies, and university dining halls are also included in this industry. Establishments within this industry sell food to people outside their homes.
  • Current trends in the industry include an increase in the number of online orders, functional foods going mainstream, increased digitization, and the experimentation of dining experiences.
  • Within this industry, quick service restaurants account for a substantial share. Some of the corporations dominating the market include Yum! Brands, McDonald's Corp, Burger King, Chipotle, and Starbucks.

Overarching Industry 2: Travel & Tourism

Part
02
of eight
Part
02

Industry Analysis: Lodging Market Size, Part 1

Currently, the US leisure and hospitality industry has an estimated market size of $5.16 trillion. Its forecast growth rate could not be determined.

Hospitality & Leisure

  • Leisure & hospitality is the overarching industry that lodging sits. Other segments in this overarching industry include the restaurant and food services sector and the leisure and hospitality industry.
  • Currently, the restaurant and food services segment makes up 16% of the leisure and hospitality industry. Knowing that the market size of the restaurant and food services sector is $825 billion, the leisure and hospitality industry has an estimated market size of $5.16 trillion ($825 billion/0.16).
  • The growth in the US leisure & hospitality industry is fueled by the country's booming economy, digital innovation, and America's low unemployment rate.
  • Current trends in the industry include the increased emphasis on health including healthy food options, the need for seamless and efficient technology, and eco-friendly practices.
  • According to the US Bureau of Labor Statistics, there are currently 1.24 million job openings in the US leisure & hospitality industry.
  • A report by Deloitte revealed that while market conditions are "generally expected to remain strong in 2019, significant challenges capable of throwing the US [leisure & hospitality] industry off its growth trajectory loom on the horizon—many the unfortunate growing pains of an expanding industry."

RESEARCH STRATEGY

The previous response found that the lodging sector is a segment of the leisure & hospitality industry. We kicked off our research by turning to business publications like Business Insider and Forbes for any mention of the market size and forecast growth of the US leisure & hospitality industry. We found articles by these websites that discussed the current state of the US hospitality market. These articles also mentioned that the market is expected to grow within the next few years. However, there was no mention of its size or any specific forecast growth.
Next, we turned to market research reports by Grand View Research and Euromonitor among others. These research reports only offered data on the global leisure and hospitality market, no data specific to the US industry was provided. They referenced their paid reports for a detailed breakdown of the US leisure & hospitality market size and growth.
Another approach we took was combing through data intelligence resources including Statista. We tried finding any chart on the market size and forecast growth of the US leisure & hospitality industry. Again, this was unfruitful as Statista only offered data on the sub-sectors of this market, including hotels.
We attempted reviewing professional social media sites like LinkedIn. Sometimes, professionals on LinkedIn share pay-walled market reports on this platform. This was a dead end as we only found the above mentioned market research reports on the global leisure & hospitality. As a result, we used the market size and market share of the restaurant and food services sector, a segment of the leisure & hospitality market, to estimate the industry's current market size. Its growth rate, however, could not be found or determined.
Part
03
of eight
Part
03

Industry Analysis: Lodging Market Size, Part 2

The previous response identified the restaurant & food services sector, as well as, the travel & tourism sector as the top segments in the leisure and hospitality industry - the overarching industry that the lodging sub-sector is under. The restaurant & food services industry currently has a market size of $863 billion, while the travel & tourism industry has a market size of $1.1 trillion, and the lodging industry has a market size of $218 billion.

Overarching Industry 1: Restaurant & Food Services

Overarching Industry 2: Travel & Tourism

Lodging

Part
04
of eight
Part
04

Industry Analysis: Lodging Management Consulting Spend

An estimate of the amount that companies typically spend on management consulting fees in the US lodging industry is $9.40 billion. Complete details about the industry and its key players are presented below.

US Management Consulting Spend

  • The United States accounted for 46% of the global management consulting market spend in 2016 and was expected to be just as good or better in 2017.
  • The total management consulting spend across industries in the United States amounted to $58.72 billion.
  • The breakdown per industry showed that the financial services industry accounted for the majority of management consulting spend at 25%, followed by the manufacturing industry (14%), and energy and resources (13%).
  • While not clearly defined in the consultancy estimates, the lodging industry would fall under the category of other sectors which accounted for 16% of the management consulting spend.
  • Therefore, an estimate of the management consulting spend for the US lodging industry in 2017 was $9.40 billion. (see calculated items)

US Key Players Management Consulting Spend

Marriott International

  • In 2017, Marriott International spent $131 million on integration cost which covered areas such as "integration employee salaries and share-based compensation, change management consultants, and technology-related costs."

Las Vegas Sands

  • In 2018, Las Vegas Sands spent $1,483 million on general and administrative expenses which is an increase from $1,417 million in 2017.
  • The general and administrative expenses for Las Vegas Sands covers costs associated with team members, property taxes as well as "marketing and advertising efforts and property operations costs."

MGM Resorts International

  • The company has its MGM 2020 which is expected to be executed in phases, phase 1 of which began in January 2019.
  • MGM Resorts International spent $43 million on restructuring the operating model of its 2020 plan in the second quarter of 2019, which is an increase from the $41 million spent in the first quarter.
  • Dan D'Arrigo, executive vice president and chief financial officer, in an interview, stated that phase 1 and 2 of the project has an incremental spend of $75 million for technology.

Hilton Worldwide Holding

  • Hilton Worldwide Holding spent $443 million on general and administrative expenses in 2018, which is an increase from $439 million in 2017.
  • The general and administrative expenses cover areas such as professional fees which include management consulting.

Wynn Resorts

  • Wynn Las Vegas Operations spent an increase of $12.2 million in 2018 for general and administrative expenses specific to payroll and advertising.

Research Strategy:

The research team conducted a triangulation of the annual spend after searching diligently through preexisting sources. To shed light on why a triangulation was used, we share our approaches below. We also shared the calculation estimate.

Our first strategy was to search for pre-compiled information about how much companies in the US lodging industry typically spend on management consulting fees annually in sources such as the US Bureau of Labor Statistics and Forbes. However, we were unable to find this information despite narrowing our search to the accommodation segment of the leisure and hospitality supersector.

Our next strategy was to search for change management, process analysis, technical implementation, strategy development, or operational improvement services spend for the US accommodation segment of the leisure and hospitality industry by searching for a breakdown based on industries. The accommodation spend was identified in Part 1 of this project as the segment that includes the lodging industry (confirmed by the US Bureau of Labor Statistics), so this was used as our reference while searching. We found that in 2017, US companies spent 7% more on management consulting across all industries, which increased the overall spend to $58.72 billion. However, the lodging industry was not identified as an industry in the consultancy report so we assumed that it fell under the umbrella of ‘other sectors’ which accounts for 16% of the management consulting spend.

We continued our search by changing our approach using the top 5 key players as proxies to triangulate an estimate for the US lodging industry's typical spend on management consulting annual fees. In this strategy, we consulted part 5 of the project which already identified key players according to revenue. We noted that the top 5 key players are Marriott International, Las Vegas Sands, MGM Resorts International, Hilton Worldwide Holding and Wynn Resorts. We looked for these companies’ annual reports, financial statements or investor reports. We also reviewed business news sources, such as Bloomberg, and market reports including Market Screener to determine what they had spent on management consulting including change management, process analysis, technical implementation, strategy development, or operational improvement services. We found some fragmented information for the various key players including their restructuring costs, change management consulting spend and general and administrative costs which include management consulting. However, no total management consulting spend was reported for the companies.

CALCULATION
Since the information was insufficient and fragmented, we decided to use the information found earlier in our research as an estimate about the management consulting spend for the US lodging industry by calculating 16% of the total ($58.72 billion). How much companies in the US lodging industry typically spend on management consulting fees annually using the percentage for "other sectors" and the total management consulting spend in the United States for 2017. We assumed that the "other sector" includes the lodging industry.

=US Lodging Industry management consulting spend = 0.16 x 58.72 billion = 9.395 billion ($9.4 billion)
Part
05
of eight
Part
05

Industry Analysis: Lodging Key Players, Part 1

Five of the top companies in the US lodging industry are Marriott International, Las Vegas Sands, MGM Resorts International, Hilton Worldwide Holdings, and Wynn Resorts. The requested information has been entered into the attached spreadsheet.

Top US Lodging Companies

Part
06
of eight
Part
06

Industry Analysis: Lodging Key Players, Part 2

Five additional top lodging companies in the US are Wyndham Destinations, Hyatt Hotels, Eldorado Resorts, Vail Resorts, and Intercontinental Hotels Group. The requested information has been entered into the attached spreadsheet.

Top Lodging Companies

Part
07
of eight
Part
07

Industry Analysis: Lodging Industry Trade Shows

The Hotel Experience, IMEX America, and the Lodging Conference are the top trade shows for leaders in the US lodging industry. These trade shows are well attended by thousands of executives and leaders in the lodging and hospitality industry.

The Hotel Experience

IMEX America

The Lodging Conference

  • The Lodging Conference is known among influential lodging leaders as a top premier conference and trade show in the hospitality and lodging industry.
  • It is attended by up to 2,000 "high-powered hotel owners and executives from around the globe" annually. Almost 90% of the trade show's attendees are Presidents or CEOs of hotels and other lodging companies.
  • The event is also considered a Think Tank as everyone in attendance has the opportunity to join in on the discussion and talk about issues in the industry.
  • The 2019 event took place from September 23-26, 2019, at JW Marriott Desert Ridge Resort in Phoenix, Arizona. In 2020, it will take place on September 21-24, at the same place.


RESEARCH STRATEGY

In order to determine the top trade shows for leaders in the US lodging industry, we looked for pre-compiled lists of the most attended trade shows in the US. We then selected the ones that are highly regarded by leaders and are most popular in the lodging industry. We relied on three pre-compiled lists by credible sources like Social Tables.

Part
08
of eight
Part
08

Industry Analysis: Lodging Industry Associations

American Hotel & Lodging Association (AHLA), MultiCultural Foodservice & Hospitality Alliance (MFHA), and Hospitality Financial & Technology Professional (HFTP) are the top industry associations for senior leaders of the US lodging industry.

American Hotel & Lodging Association (AHLA)

  • The AHLA has five primary functions; providing networking opportunities for its members, "9 out of 10 top hotel brands, and 80% of all franchise hotels are members," representing members on capitol hill, providing educational opportunities, sharing best practices and career resources, and publishing industry news, data, and research.
  • The American Hotel & Lodging Association (AHLA) proudly serves more than 27,000 members, including CEOs, hotel owners, senior managers, general managers, and senior staff across all segments of the industry.

MultiCultural Foodservice & Hospitality Alliance (MFHA)

  • Based in Providence, USA, MFHA "partners with a wide range of organizations to encourage and promote diversity in industries in foodservice, lodging, and hospitality."
  • The association also conducts groundbreaking research, promotes the face of hospitality, and consults with organizations on how to win customers.
  • With nearly 100 members, MFHA attracts top executives, companies, and organizations nationwide to promote diversity in foodservice, lodging, and hospitality.

Hospitality Financial & Technology Professional (HFTP)

  • Based in Texus, USA, this association partner with "the financial and technology leaders of the hospitality industry" to find solutions "to industry issues and stay ahead in terms of innovation and creativity with the hospitality sector."
  • According to the membership brochure, HFTP has "thousands of members worldwide" in the United States, Canada, Mexico, and more.
  • It serves senior managers, and executives across different verticals including the lodging industry, clubs, resorts, academics, and more.

RESEARCH STRATEGY

The research team sought for pre-compiled reports of top industry associations for senior leaders of the US lodging sector in credible industry-related sources, academic databases, and more. We were able to identify such lists at SOEG, the global hospitality portal, Cornell University, etc., that listed the most prominent associations that attract senior executives in the industry. SOEG has been involved in hospitality recruitment services for over a decade and has served hundreds of lodgings and "placed thousands of hospitality candidates from all around the globe." It also has "over 500 hospitality clients on board, thousands of live jobs, and a network of over 200,000 hospitality professionals from 30+ countries." Using these databases, the team selected three lodging associations based in the United States for executives. Then, for each, we provided a brief overview of what they do and approximate membership numbers.
Sources
Sources

From Part 04
Quotes
  • "General and administrative expenses increased $66 million compared to the year ended December 31, 2017. The increase was primarily due to a $35 million increase in team member costs across all our properties, a $22 million increase at Marina Bay Sands driven by an increase in property taxes and a $15 million increase at our Las Vegas."
  • "Operating Properties due to increased marketing and advertising efforts and property operations costs."
Quotes
  • "General and administrative - Consists primarily of compensation expense for our corporate staff and personnel supporting our business segments, including divisional offices that support our management and franchise segment; professional fees, including consulting, audit and legal fees; travel and entertainment expenses; bad debt expenses for uncollected management, franchise and other fees; and administrative and related expenses."