Time & Attendance
By JD Farrugia
May. 15, 2023
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 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%.
Research by the AHLA and Avendra shows that there are seven market forces that have an impact on commodities and the supply chain:
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.
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.
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.
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.
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:
These trends were found to be particularly prevalent among Gen Z and millennial respondents.
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:
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 employee scheduling, improve communication, and optimize labor costs.
To find out more, get in touch with our team today.
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