inWhether you’re taking your family to your favorite restaurant, catching the train to a holiday destination, staying in a luxury hotel or going to a museum, all these events and experiences will bring you into contact with areas of the hospitality industry.
Meaning of hospitality
Hospitality refers to the industry that is designed to take care of us, cater for and host us or entertain us. It’s not just the service that counts, but also the way it is presented: with a friendly welcome, attentive service and an inviting environment.
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The term “hospitality” comes from the Latin word “hospes”. This translates as a guest, host or stranger and suggests that the roots of the hospitality industry date back to ancient times. So the concept is by no means new. However, what has changed over the years are the technological possibilities, the challenges and the needs or demands of the customers. Among other things, this change was brought about by global events such as the coronavirus pandemic. This hit the industry particularly hard and forced some companies to focus more on hygiene, safety and local markets. But climate change is also having an impact, meaning that more and more people are also placing importance on healthy and sustainable solutions in the hospitality sector.
Resilient industry
But the hospitality industry is proving extremely adaptable and resilient. And it seems to have recovered largely from the pandemic by itself. At least according to the figures. According to Statista, it generated almost 4,700 billion dollars in 2023. This corresponds to growth of around 7 percent compared to the previous year. An average annual growth rate of 5.5 percent to 5,800 billion dollars is expected by 2027.
But which businesses are we talking about here? What hospitality areas are there? How are they connected? And what can they expect in the future?
These are the most important hospitality areas:
Anyone wishing to work in the hospitality industry can choose from a wide range of jobs and vacancies. This is because the industry comprises four large sectors, which are separate from each other, but which very often overlap.
Gastronomy / Food&Beverage
The largest of the four hospitality sectors is the gastronomy or food and beverage sector. This is often referred to as Food&Beverage (F&B for short).
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Gastronomy areas
Gastronomy as a part of the hospitality industry is extremely diverse. It ranges from gourmet restaurants or cozy cafes to small bakeries and quirky pubs. But this segment also includes fast food facilities, bars and innovative food trucks. Other examples (not exhaustive) of gastronomy areas are:
- Restaurants (from Michelin star restaurants to village pubs)
- Snacks and bistros
- Cafés, bars and pubs
- Catering and party service
- Communal catering, such as canteens and cafeterias
- System catering and QSR
- Experience gastronomy
- Commercial catering
- Hotel restaurants/catering
It should be noted that not all food and beverage retailers are independent businesses. F&B services are often offered within a hotel, for example. Many cafes can also be found in museums, sports halls or office buildings and can be both independent and integrated into the company as a whole. These are therefore examples of the above-mentioned sector overlaps (accommodation & catering or leisure & catering).
Image: Premiere Inn
Digitalization as a growth driver for the gastronomy industry
Technological advances and increased customer demands are changing the gastronomy industry. The sector has long relied on professional kitchen equipment to counteract the ongoing shortage of skilled workers. However, the automatic documentation of HACCP data, for example, also facilitates some processes in professional kitchens. And even AI has already reached the industry.
Some areas of the food and beverage industry are growing faster than others. Online delivery services in particular have experienced a boom – boosted by digitalization. According to a study by the market research institute Straits Research, UberEats and McDonald’s apps are among the most frequently downloaded apps in the world, with 82 million downloads each. Just for comparison purposes: Google Maps was downloaded 88 million times, Tinder 74 million times and eBay 51 million times in the same period.
The American start-up “Wonder”, which was founded in 2018, is a particularly creative example of how to rethink delivery services. Originally, the food that could be ordered via an app was prepared in a delivery van right at the front door. However, they now work with several restaurants and celebrity chefs and also have their own locations in and around New York. The dishes are still delivered, but can also be collected or eaten at one of the premises.
The hotel industry
Beginning in the 18th century with a London hairdresser named David Low, the history of the modern hotel industry as we know it today took shape. He is said to have repeatedly heard from frustrated noble businessmen that there was no adequate accommodation on the journey. So he opened one himself in Covent Garden on January 25, 1774. But a comfortable one. In other words, with single rooms equipped with their own stoves, duvets and wooden bathtubs for taking a hot bath. There was also room service. At the time, the food was brought directly to the guests’ bed. With his “Grand Hotel”, Low laid the groundwork for the second important hospitality area: the modern accommodation or the hotel industry.
Today, this sector encompasses all businesses that provide accommodation for people, from hostels and campsites, guest houses and Airbnbs, to luxury resorts and giant hotel chains. The range of products on offer is huge.
According to real estate data company CoStar, there are now more than 18 million guest rooms and 1,200 hotel brands worldwide. According to Statista, around 2,700 more hotels are expected to be added in 2024. Here too, the market seems to be recovering after the pandemic. Some of the developments accelerated by the crisis – such as digitalization, higher hygiene standards and the demand for sustainable solutions – have also become more embedded in the industry.
Image: AdobeStock | Monopoly919
To counteract the shortage of skilled workers in the hotel industry, digitalization, automation and robotics are also used here. An interesting example is the Mercure Hyde Park Hotel in London, which is the first hotel in England to use Alexa for Hospitality. With the help of this technology, room service revenue increased by 12%. In addition, the use of service- or cooking robots, designed to take the strain off both the service area and the hotel kitchen, is reported on regularly.
Travel and tourism
The third sector, travel and tourism, includes airlines, car rental companies, coaches or cruise ships, as well as travel agencies and tour operators. Of all hospitality areas, this has the most overlaps. After all, people who decide to travel – whether on a business trip, summer holiday or studying abroad – not only have to plan how to get to their desired destination, but also where they will stay overnight, which sights they want to visit and which restaurants they want to eat at. Due to the large number of overlaps, the tourism sector also acts as a kind of indicator for the development in the other hospitality sectors. Because the more people are on the move and traveling, the more additional services are used.
While new records were constantly recorded in this area up to 2019, tourism came to an almost complete halt with the outbreak of the coronavirus pandemic. Revenues in 2020 were 73 percent lower than in the previous year. The tourism sector has now recovered, however. By 2029, Statista forecasts a market volume of USD 1,044 billion. This would correspond to an annual growth rate of 4.2 percent. The so-called “bleisure market” is currently on the rise. This refers to business trips that are extended for leisure purposes.
Leisure and recreation
Cinemas, amusement parks, spas or museums, as well as concert or sports halls, theaters and swimming pools. The list of companies that aim to provide relaxation, fun and entertainment, as well as the opportunity to pursue hobbies or take advantage of educational opportunities, is long. They are all part of the leisure and recreation area of the hospitality sector. While the other sectors are broadly aimed at satisfying the basic needs of people on the move, the entertainment industry relies on people being willing to spend money on extras such as tickets and experiences that are not necessarily vital to survival.
Image: AdobeStock | 8th
In most cases, the activities only take a few hours, but sometimes they also require a longer journey, including accommodation and food, for example when attending a concert in another city. This also leads to overlaps with the other hospitality areas. In the case of cruises, all four major sectors of the hospitality industry are covered in one place: Food and drink on board, cabins for accommodation, the ship that takes you from port to port and the ship’s own entertainment program.
