8 Top Hospitality Trends & Statistics (2023)

Summary

• The hospitality industry is growing at a steady rate. – More

• Hospitality businesses face seven supply chain challenges. – More

• Unemployment rates in the sector have decreased significantly. – More

• Restaurant profit margins and revenue are increasing slightly. – More

• Hotels saw record-high average daily rates and revenue per available room in 2022. – More

• 853 million passengers flew with US airlines in 2022. – More

• Leisure travel is a priority for most people. – More

• The outlook for business travel is looking similar to 2019. – More

The hospitality industry is one of the fastest-growing industries in the US. With over 15 million people employed in various roles and sectors, this industry plays a critical role in driving economic growth and providing customers with unforgettable experiences. 

Hospitality covers a number of sectors, including the hotel industry, the travel industry (including business travel), and restaurants. For HR professionals and employers in the hospitality and tourism industry, staying informed about trends and statistics is crucial for making informed decisions that can positively impact their businesses. 

In this article, we will be presenting some insightful industry statistics and trends that will help you gain a better understanding of the current landscape of the sector.

The hospitality market continues to grow despite inflation

The hospitality industry, like practically any other sector, is experiencing a slow and steady recovery from the effects of the coronavirus pandemic. The market grew from $4,390.59 billion in 2022 to $4,699.57 billion in 2023, presenting a compound annual growth rate (CAGR) of 7.0%.

The Russia-Ukraine war has proven to be a hurdle for economic recovery as the conflict brought about sanctions across countries leading to inflation and supply chain disruptions. Despite this, hospitality sectors are expected to grow to $5,816.66 billion by 2027 at a CAGR of 5.5%.

The industry faces 7 supply chain challenges

Research by the AHLA and Avendra shows that there are seven market forces that have an impact on commodities and the supply chain:

• Inflation – hospitality-related products will continue to see inflation rates between 5 and 10% for the next few quarters. This is more than twice the historical average.

• Tight labor market – while the unemployment rate might be improving in the hospitality sector, other industries that it relies on, such as manufacturing and the retail trade, are still dealing with labor shortages. They have had to increase wages to retain workers, and this cost will be reflected in the cost of the goods and services they provide to the industry. 

• Product availability – manufacturers and producers are rationing their products to catch up to their demand backlog. To avoid delays, hospitality businesses need to communicate well in advance with distributors. 

• High product demand – has contributed to increases in the price of energy and items like seafood, beef, cooking oil, coffee, and to-go packaging. 

• Russia-Ukraine war – has had an impact on inflation. 

• Energy prices – Oil and energy prices are volatile due to supply constraints and the possibility of a recession.  

• Transportation challenges and lead times – we are seeing high levels of US national average freight rates. Ocean and freight rates are decreasing but are still higher than pre-pandemic levels. Lead times on equipment and textiles are longer due to delays in the Asia-Pacific region.  

Leisure & hospitality unemployment rates have reduced drastically

According to data from the US Bureau of Labor Statistics (BLS), the average annual unemployment rate in the leisure and hospitality industry in 2022 was 5.8%. This represents a 43% drop from the previous year and the third lowest in 10 years. 

The lowest rates were recorded in 2018 and 2019 at 5.7% and 5.2%, respectively. The COVID-19 pandemic saw unemployment rates skyrocket to 19.4% in 2020, largely due to the mandatory closures of many hospitality businesses. Last year’s decrease means that the industry’s unemployment rate has reached pre-pandemic levels, which is particularly impressive considering the country was also going through labor shortages and the Great Resignation. 

Restaurant profit margins and revenue have increased slightly since the pandemic

In the past year, restaurants experienced increases in both profit and revenue since the pandemic. 

Food service establishments reported an average revenue of $1.5 million in 2022 – a 7.4% increase from the year before. This increase was not felt across the board. Restaurants with over 80 seats were more likely to experience a revenue increase. A number of restaurants with smaller capacities actually experienced a decrease in revenue compared to 2021. 

Average profit margins were at 10% in 2021 and saw a slight increase in 2022 to 10.6%. Once more, higher-capacity restaurants were more likely to see an increase in profits. Establishments of 120 seats or more reported profit margins as high as 13%.

The food service industry is reported to see continued growth in 2023. The National Restaurant Association forecasts $997 billion in restaurant industry sales in 2023. This is partly due to higher menu prices. 

Hotel industry rates and revenue are reaching new heights

According to hotel industry statistics by STR, 2022 saw record-high average daily rates (ADR is the average paid for hotel rooms in a specific period) and revenue per available room (RevPAR). In 2022, ADR was up 13.6% from the pre-pandemic levels (2019) and reached $148.83. 

RevPAR is a crucial KPI for most hoteliers and owners in the hotel market. It is calculated by multiplying a hotel’s ADR by its occupancy rate (the ratio of rooms rented to the total available rooms). In 2022, the industry’s revPAR was $93.27, 8.1% higher than in 2019. 

Hotel occupancy rates, on the other hand, were still 4.9% lower than pre-pandemic levels at 62.7%. 

The report showed that hotel bookings and overall industry growth were not linear or even. The occupancy rate varied greatly depending on the month and season. In January 2022, the rate was 12 to 14% lower than 2019 levels, while less than 1% lower in October. 

Watch: The 2023 Hotel Industry Outlook with AHLA President & CEO

US airlines carried 853 million passengers in 2022 

The airline industry is on the road to recovery as domestic and global travel continues to increase, but air travel has yet to reach pre-pandemic levels. 

In 2019, US airlines carried a record-breaking 928 million passengers right before the onset of the pandemic. Travel restrictions brought these numbers down to just 3 million in April 2020.  

In 2022, US airlines carried 853 million passengers, a 30% year-to-year increase from 2021 and 8% lower than the record-breaking 2019 numbers. Of these, domestic travel accounted for 751 million passengers, and international travel accounted for 102 million. 

Most people are prioritizing and planning leisure travel this year

According to the American Express 2023 Global Travel Trends Report, the appetite for travel and tourism is alive and well. Eighty-five percent of respondents indicated that they plan on taking at least two leisure trips in 2023. Seventy-eight percent stated that they consider leisure travel as an “important budget priority.”

The research uncovered four major trends in travel tourism:

1. Tourists want to discover hidden gems and “lesser-known destinations” while also supporting local communities.
2. Travelers are looking toward pop culture when making decisions on where to travel and why. 
3. Food is an integral part of the travel experience. 
4. Restorative vacations are increasing in popularity, where travelers prioritize mental and physical self-care. 

These trends were found to be particularly prevalent among Gen Z and millennial respondents. 

Business travel is nearly back to “normal”

In a survey of 100 global corporate travel managers, Morgan Stanley found that business travel has bounced back from the COVID-19 disruptions. Many respondents believe that business travel budgets and expenditures are either back to pre-pandemic levels or, at least, very close. This is despite the fact that the costs of airfare and lodging are higher than pre-pandemic levels. 

Furthermore, there is an expectation that travel budgets in 2023 will be anywhere between 6% to 10% higher than 2019 levels. Corporate airfare budgets, for example, are expected to be 9% higher.

Three other trends affecting the business travel industry are:

1. Global hotel room rates are expected to rise by an average of 8%. 
2. In an attempt to cut costs, travel managers are looking for cheaper alternatives to upscale hotel brands for business trips. Thirty-one percent of respondents are disregarding hotels altogether and opting for short-term rentals instead. 
3. Virtual meetings are still considered alternatives to business trips. It is expected that nearly 18% of business travel will be replaced with virtual meetings. The digitalization of business trips is not just a cost-cutting measure. Sustainability is also a driving factor as companies are looking to be more eco-friendly.  

Simplify & streamline hospitality operations with Workforce.com

The hospitality industry shows promising signs of recovery after what has been a turbulent few years. It has never been more important for businesses, from neighborhood restaurants to hotel chains, to find ways to improve labor efficiency and maximize profits. 

Our workforce management software for hospitality helps you simplify hospitality employee scheduling, improve communication, and optimize labor costs.

To find out more, get in touch with our team today.