On its face, the US hotel industry is doing well. However, there are factors beneath the surface that cause concern. For one, high prices have led travelers to change the types of hotels they stay in, with a notable share of Midscale’s traffic going to the Economy tier. Moreover, occupancy has stagnated, meaning hotels need to persuade more guests to stay.
STRs (short-term rentals) still compete with hotels, though their market may be shifting toward travelers with more specific needs. STRs compare favorably to hotels in the privacy and space they offer, making them a good option for group travel. However, as financial situations improve, travelers may be more interested in lodging that provides amenities (and loyalty rewards), leaving some STRs at a disadvantage.
While brands look to AI to address inefficiencies behind the scenes, guests would rather it stay there, preferring human interaction whenever possible. In fact, sentiment around lodging can be viewed through a lens of celebrating humans. They show concern for how STRs affect destinations, have faith in concierges’ ability to provide pertinent travel information and even look to hotels near where they live as gathering places for social events.
This report looks at the following areas:
- Estimated revenue and forecast of hotels and motels
- Market drivers affecting both the hotel and STR sectors
- An overview of key players in the US
- The hotel tiers travelers use and how inflation has impacted use
- The types of lodging travelers are using for different types of vacations
- An analysis of how guests view different types of hotels
- The areas in which travelers feel STRs have an edge over hotels
- The factors that lead guests to choose a particular hotel brand and individual property
- What consumers want from hotel loyalty programs and from their local hotel properties
- Innovations and trends in the hospitality industry
- How lodging brands are speaking to consumers
To navigate improving economic conditions and travelers' evolving priorities, lodging brands must connect their offerings with guests' specific needs.
Mike Gallinari, Senior Travel & Leisure Analyst
Market Definitions
For the purposes of this Report, Mintel has used the following definitions:
Travelers:Â adults aged 18+ who have taken an overnight trip in the last 12 months and have stayed in either a hotel or non-hotel paid accommodation at least once.
Hotel: includes hotels, motels, independent hotels/boutiques, chain boutiques (“soft brands”) and casino hotels. In the consumer survey, hotels were divided into economy, midscale, upscale, upper upscale and luxury.
Hotel alternative: includes full-building home rentals, short-term apartment rentals and homeshares.
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Executive Summary
- What you need to know
- Market size and forecast
- Market predictions
- What consumers want and why
- Opportunities
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Market Dynamics
- Market context
- Key economic indicators show slow and somewhat steady improvement
- Market drivers
- What a second Trump administration means for the lodging industry
- Continued rate cuts can spur new builds in the hotel pipeline
- Graph 1: federal funds effective rate, 2014-24
- Lodging prices slow to follow other travel prices' decline
- Inflation bolsters revenue, but the industry struggles to keep occupancy up
- Global pipeline hits record high, anticipating continued growth in demand
- STR growth slowing globally as hotels rebound
- Labor issues will continue to be a problem for hoteliers
- Municipal regulations portend a difficult path for STRs to navigate
- Market size and forecast
- Industry defies headwinds, with healthy growth projected
- More confident consumers will provide steady industry growth
- Total revenues and forecast of hotels and motels, at current prices, 2019-29
- Retail sales and forecast of hotels and motels, at inflation-adjusted prices, 2019-29
- Key players
- Revenue of key hotel brands
- Overview of key hotel brands
- Marriott makes a big play into the STR space
- Hilton refines its focus on higher-tier properties
- Hyatt seeks to make it easier for higher-end guests to find what they want
- Ego bruised, Choice looks for growth opportunities
- IHG hopes its loyalty app can be a game-changer for planning
- Wyndham shrugs off a takeover, but now needs growth
- Airbnb looks for fast global expansion
- After a stumble, Vrbo begins to compete with Expedia's resources in their corner
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Consumer Insights
- Consumer fast facts
- Consumer fast facts, continued
- Lodging used
- Midscale and Upscale are still popular, but aren't what they used to be
- Graph 2: types of paid accommodations used in the past 12 months, 2024 vs 2019
- Gen Z and Millennials shoot for the ends of the tier spectrum
- Graph 3: types of hotel used in the past 12 months, by generation, 2024
- Higher costs have pushed some guests to lower hotel tiers
- Graph 4: types of hotel used in the past 12 months, by HHI, 2024
- Rentals start to compete when travelers use a second option
- Vacation types and accommodations
- Smaller travel groups suit hotels and homeshares
- Graph 5: types of vacation using paid accommodation, 2024
- Hotels and STRs beginning to silo over party size
- Graph 6: types of vacation using paid accommodation, by lodging type, 2024
- Traveling parties shrink with age; market to their vacations accordingly
- Graph 7: types of vacation using paid accommodation, by generation, 2024
- Focus on making couples' trips more premium
- Graph 8: types of vacation using paid accommodation, by HHI, 2024
- Hotel category descriptions
- Motels have an image problem; fancier hotels should shore up local cred
- Graph 9: hotel category descriptions, 2024
- Logistics give way to "softer" characteristics as tiers rise
- How to read
- Younger consumers factor in more than the room rate when considering value
- Graph 10: hotel descriptions – good value, by generation, 2024
- Reach out to traveling families as the economy improves
- Graph 11: hotel descriptions – good for family travel, by HHI, 2024
- Guests may be willing to accept a higher tier is worth the price
- Graph 12: hotel perceptions – good value, by tier of hotel stayed in, 2024
- Rentals vs hotels
- Travelers recognize space, privacy advantage of rentals
- Graph 13: homeshare advantages over hotels, by rental type, 2024
- Vrbo stresses its focus on guest privacy
- Younger travelers may be redefining amenities
- Graph 14: homeshare advantages over hotels, by generation, 2024
- Housing crunch may turn a more critical eye on STRs
- Gen Z and Millennials are STR fans, but not necessarily loyal ones
- Graph 15: attitudes toward STRs – any agree, by generation, 2024
- STR guests are even more critical of them than hotel guests
- Graph 16: attitudes toward STRs – any agree, by lodging type, 2024
- Hotel decision factors
- Brands can leverage reputation to bolster occupancy
- Graph 17: decision factors for choosing a hotel brand, 2024
- Decisions become more complex at the Upscale level, but Economy needs attention, too
- Graph 18: decision factors for choosing a hotel brand, by hotel tier, 2024
- Room choice and flexible policies can increase individual hotel appeal
- Graph 19: decision factors for choosing a hotel property, 2024
- Gen Z driving demand for flexibility, aid in discovery
- Graph 20: decision factors for choosing a hotel property, by generation, 2024
- Women weigh more factors into their hotel choice
- Graph 21: decision factors for choosing a hotel property, by gender, 2024
- Choice, human element are important to hotel guests
- Younger generations are less confident in AI services
- Graph 22: attitudes toward hotels – any agree, by generation, 2024
- Room selection can be a way for less-fancy tiers to stand apart
- Graph 23: "I would pay extra to be able to select my hotel room while booking" – any agree, by HHI, 2024
- Midscale and Economy should consider Luxury-tier attitudes
- Graph 24: attitudes toward hotels – any agree, by hotel tier, 2024
- Attitudes toward hotel loyalty
- Authenticity can enhance hotel loyalty programs
- Graph 25: attitudes toward hotel loyalty programs, 2024
- Marriott joins the Starbucks partnership train
- Use on-the-ground expertise to help young loyalty members' planning
- Graph 26: attitudes toward hotel loyalty programs – any agree, by generation, 2024
- Midscale hotels may be suffering from a crisis of conformity
- Graph 27: attitudes toward hotel loyalty programs – any agree, by hotel tier, 2024
- Hotels' role in their community
- Local residents want hotels to be a place for them, too
- Graph 28: attitudes toward hotel offerings for locals – any agree, 2024
- Younger consumers are more receptive to interacting with nearby hotels
- Hotels succeed in bringing locals together to play games
- Small-town resort builds a reputation around authentic cuisine
- Competitively priced activities would have the widest appeal
- Graph 29: attitudes toward hotel offerings for locals – any agree, by HHI,2024
- Hilton gets the word out about its F1 exhibit
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Innovation and Marketing strategies
- Trends and observations
- The age of conversion offers loyalty members more choice
- New Michelin ratings can be key to vacation planning trends
- Enhanced sleep options are filtering down from the luxury tier
- Winnow makes inroads in hotel kitchens
- Celebrate live events to stand out to travelers
- Mintel Trend Flexible Spaces
- Marketing and advertising
- STRs go big on online ad spend
- Graph 30: share of spending on digital advertising, select lodging brands, 2023-24
- Video-first platforms continue to produce lagging impressions returns
- Graph 31: share of digital ad impressions of lodging companies, by platform, 2023-24
- Graph 32: share of digital ad spending of lodging companies, by platform, 2023-24
- Airbnb's unique, artistic series draws eyeballs on YouTube
- Hilton touts connected room guarantee
- Super 8's anniversary deal needs to be a stepping stone to a greater experience
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Appendix
- Market definition
- Market size methodology
- Consumer research questions
- Consumer research methodology
- Generations
- Abbreviations and terms
- Forecast methodology
- Forecast fan chart methodology
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