The US accommodation market is iconic. It’s 1950’s motels lining empty desert roads, sun-soaked Miami beach resorts, old-world luxury with park views and much more besides. No wonder the US is the world’s largest tourism market and its third most visited destination.
NB: This is an article from Booking.com
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Even after 3 years of pandemic shutdowns and restrictions, hospitality entrepreneurs remain resilient. Due to increasing consumer demand, many are expecting 2023 to be their best year yet. The market remains dynamic and diverse, providing an unprecedented mix of lodging options for eager travelers. Whether looking for the amenities of a chain hotel, the uniqueness of a boutique property, or the local feel of a vacation rental, there is truly something for everyone.
Small and mid-sized properties struggle to match the major brands when it comes to marketing spend and reach
As we see in almost all sectors, however, the US accommodation market is undergoing a process of “chainification.” Just as you could enjoy the same burger in Honolulu or Boston, so too could you find an almost identical hotel experience. Recent estimates show that branded properties make up more than seven in 10 hotels in the US. This trend was exacerbated by the pandemic, when travelers gravitated toward the perceived safety of well-known brands. According to Tourism Economics, 29% of US hotel guests stayed at independent hotels in 2021, compared to 46% in 2019.
A mixed marketplace of chain and independent hotels is the goal, but often independent hotels are at a structural disadvantage that makes it difficult to compete
A few factors could be at play. For one, small and mid-sized properties struggle to match the major brands when it comes to marketing spend and reach. Sole proprietors and hospitality entrepreneurs alike have limited resources (and there are so many hours in the day!), thus, they must prioritize. Understandably, guest experiences and amenities will often trump the need for revenue management systems or analytics, for example.
A mixed marketplace of chain and independent hotels is the goal, but often independent hotels are at a structural disadvantage that makes it difficult to compete. While there is a place in the market for all hotel types, and chains have their benefits (familiarity, consistency, price), we are beginning to see a lopsided marketplace. Here we focus on the US market, but this is a phenomenon that we see across the world. In the UK and Ireland, for instance, the market for independent hotels shrank by roughly 12% between 2010 and 2019.
Online platforms can help to address the imbalance, empowering small and independent properties to maintain or improve their competitiveness. There are three key areas to consider:
