What is the Hospitality Industry?
The primary foundation of the hospitality industry is built upon customer service, an element shared by each segment of the hospitality business. Indeed, each segment focuses on delivering some or all facets of service, which gives entrepreneurs in hospitality a means to generate profits across a wide range of organizations. While careers in this industry can be challenging and fast-paced, they offer opportunities to succeed in management on a global level with prospects for high-level education to help direct an upwardly mobile career path.
Segments within the Hospitality Industry
Food and Beverage
The food and beverage segment represents the largest percentage of the overall hospitality marketplace with nearly $627 billion in revenue in the United States alone in 2013. Business that comprise the segment include exclusive restaurants, fast food dining, caterers, clubs and club management, food processing, retail and distribution. Moreover, the food and beverage category can exist within other commercial establishments such as movie theaters, planes and trains, hotels and shopping malls. Food and beverage complements a wide array of commercial trade and dramatically enhances the total satisfaction of a guest experience through first-class customer service and excellent food and drink.
Hotels, bed and breakfast ventures and other types of lodging comprise the accommodations segment. These can range from five-star hotels, exclusive resorts and luxury inns to campgrounds and youth hostels. Travelers appreciate value as well as efficiency, comfort, useful amenities and thoughtful customer service. In addition, the hotel industry grew from $133 billion in 2009 to over $176 billion in 2014 in the United States.
Of the three market segments, the accommodations segment uses specific measurements of success to pinpoint trends in the business. These include:
- Booking lead time
- Length of stay
- Day of weeks stay
- Cancellation percentage
- No show ratio
In fact, the discipline of hotel revenue management is highly sophisticated, and to achieve success on the global market, an education and degree from a highly respected university with a program in hotel management has become a necessary accomplishment to garner the attention of the top hotels in the world.
Travel and Tourism
The third segment of the hospitality industry encompasses travel and transportation, including trains, airlines, cruise ships and the respective staffs for each. In essence, cruise staff and flight attendants function as cross-over hoteliers and food servers in order to provide a comfortable experience and food or drink. In the same way, management careers in hospitality frequently cross into all three segments, which opens career paths and opportunities worldwide. Moreover, travel and tourism require experts in information technology. Indeed the other two segments do as well, and knowledgeable technology employees will find increasing opportunities by focusing on hospitality.
The Economics of Hospitality
The three segments of hospitality are dependent upon and driven by a strong economy. The hospitality industry in many respects thrives on disposable income spent on travel or dining out. Conversely, challenging economic times can trim the profitability of these areas, thus education and strong management skills represent highly sought after items for a resume.
Thus, the hospitality definition relies upon providing guest satisfaction for luxury or leisure-based activities, rather than providing goods and services that meet basic necessities. Hotels, resorts (including wellness and sports related resorts), cruise lines, airlines, and other types of travel , tourism, special event planning and restaurants comprise the hospitality industry.
These statistics from the World Travel and Tourism Council report from 2014 tell a compelling story for anyone considering a management career in hospitality.
- Hospitality is the fastest growing, global industry, and it adds one new job every 2.5 seconds.
- The hospitality industry is growing at 4.3 percent per year versus 3.0 percent for the total global economy.
- The hospitality industry contributes US$7 trillion annually to total world domestic gross product.
- The industry employs approximately 266 million people, which represent 9.1 percent of all jobs worldwide.
- According to Howard Roth, a leader in global real estate, the industry is forecasted to create another 75 million jobs in the next decade.
- The tourist population has doubled in the last 20 years and is forecasted to double again in the next 20 years to nearly 1.8 billion people up from 528 million in 1995.
Thus, the hospitality industry offers growth, solid career paths and multiple opportunities for success through specialized positions such as events planning, housekeeping or front desk operation to more mainstream positions such as finance, marketing and sales. The industry on a global level seeks candidates with a wide array of backgrounds and skills, making an exciting marketplace.