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What Type of Business is a Hotel?

Are you thinking of starting a hotel business but unsure of what type of business it is? Look no further!

If you’re short on time, here’s a quick answer to your question: A hotel is a type of commercial business that provides lodging accommodations for travelers.

In this article, we’ll dive deeper into what a hotel business entails, the different types of hotels, and key considerations to keep in mind when starting your own hotel business.

Understanding the Hotel Business

Hotels are commercial establishments that offer lodging facilities to travelers and tourists. They typically provide a range of amenities and services, such as restaurants, bars, swimming pools, fitness centers, and conference rooms, to enhance their guests’ stay. Hotels can vary in size and style, from budget-friendly motels to luxurious five-star resorts.

The history of hotels can be traced back to ancient times when travelers would stay at inns or guesthouses along trade routes. However, the modern concept of hotels emerged in the 19th century, with the opening of the world’s first luxury hotel, the Tremont House in Boston. In the following decades, hotels became more widespread and began to cater to a broader range of clientele.

The hotel industry today is a vast and complex business that generates billions of dollars in revenue every year. According to Statista, the global hotel market size was valued at USD 528.3 billion in 2020, with the Asia Pacific region accounting for the largest share of the market. There are numerous hotel chains and brands operating worldwide, including Marriott, Hilton, Intercontinental, and Wyndham, which offer a range of accommodation options to meet different needs and preferences.

Types of Hotels

Hotels are a type of business that provides lodging, usually on a short-term basis. There are several types of hotels that cater to different needs and preferences.

Luxury hotels: These hotels are known for providing high-end amenities and services such as spas, fine dining restaurants, and personalized concierge services. They are usually located in prime locations such as beachfronts or city centers. According to Statista, the global luxury hotel market size was valued at $83.1 billion in 2019.

Boutique hotels: These hotels are smaller and more intimate, offering personalized services and unique experiences. They often feature stylish and contemporary designs. According to Hotel News Resource, the global boutique hotel market is expected to reach $11.2 billion by 2023.

Type of Hotel Features
Resorts Located in scenic areas, offering various recreational activities and amenities, such as golf courses, spas, and pools. According to Statista, the global resort market size was valued at $3.4 billion in 2019.
Budget hotels Offering basic amenities at an affordable price. They are usually located in convenient areas such as near transportation hubs. According to Statista, the budget hotel market in the United States generated $19.38 billion in revenue in 2020.
Extended stay hotels Catering to guests who need to stay for a longer period, often offering kitchenettes and on-site laundry facilities. According to Hotel Online, the global extended stay hotel market is expected to reach $112.1 billion by 2025.

It is worth mentioning that some hotel chains specialize in certain types of hotels. For example, Marriott International has a range of luxury hotel brands such as Ritz-Carlton and St. Regis, while IHG (InterContinental Hotels Group) has a boutique hotel brand called Kimpton Hotels & Restaurants.

Starting a Hotel Business

Starting a hotel business requires careful planning and preparation. The following are important factors to consider:

  • Market research and feasibility studies: Before starting a hotel business, it is worth mentioning that conducting market research and feasibility studies is crucial. This will help you determine the demand for hotel services in your area and identify potential competition.
  • Location, location, location: The location of your hotel is critical to its success. Keep in mind that a hotel in a prime location will attract more guests and generate higher revenues. Consider factors such as accessibility, proximity to popular tourist attractions, and the local business climate.
  • Funding and financing options: Starting a hotel business requires significant financial investment. You will need to secure funding and explore financing options. Some popular hotel chains offer franchise opportunities that can help with financing and provide support with marketing and advertising.
  • Legal considerations: There are several legal considerations when starting a hotel business. This includes obtaining necessary permits and licenses, complying with local zoning laws, and adhering to safety and health regulations. Consider hiring a lawyer to help you navigate the legal requirements.
  • Staffing and training: Hiring and training staff is a crucial aspect of running a successful hotel business. Keep in mind that your staff is the face of your hotel and can impact the guest experience. Consider offering ongoing training and development opportunities to ensure that your staff is knowledgeable and able to provide excellent customer service.
  • Marketing and advertising: In order to attract guests and generate revenue, it is important to have a solid marketing and advertising strategy in place. Consider partnering with online travel agencies, creating social media accounts, and offering promotions and discounts to attract guests.

By carefully considering these factors and developing a solid plan, you can start a successful hotel business.

Key Considerations

When it comes to running a hotel business, there are several key considerations that need to be taken into account in order to ensure success. These include:

  • Competition and differentiation: With so many hotels in the market, it is important to make sure that your property stands out from the competition. This can be done by offering unique amenities, such as a spa or fine dining restaurant, or by targeting a specific niche market, such as luxury travelers or families.
  • Pricing strategies: Setting the right price for your rooms is essential for attracting customers and maximizing revenue. Factors such as demand, seasonality, and local events should all be taken into account when determining pricing strategies.
  • Customer experience and satisfaction: In the hospitality industry, customer satisfaction is key. Hotels should focus on providing a high-quality experience for guests, from the moment they arrive until the moment they leave. This includes everything from friendly staff to comfortable rooms and amenities.
  • Maintenance and upkeep: Keeping your hotel in top condition is essential for attracting and retaining guests. This means regular maintenance and upkeep of rooms, common areas, and facilities, as well as investing in upgrades and renovations when necessary.
  • Adapting to changing market trends: The hotel industry is constantly evolving, with new technologies, trends, and customer preferences emerging all the time. Keeping up with these changes is essential for staying competitive and meeting the needs of guests.

One way to stay up-to-date on industry trends and best practices is to stay informed through relevant websites and publications. For example, Hotel News Now provides the latest news and analysis on the hotel industry, while Hospitality Net offers a wide range of resources and insights for hoteliers.

Another important consideration for hotel businesses is the impact of online reviews and ratings. Sites like TripAdvisor and Yelp can have a significant impact on a hotel’s reputation and success, so it is important to monitor and respond to reviews in a timely and professional manner.

Popular hotel chains Target market Key amenities
Hilton Luxury travelers, business travelers Spas, fitness centers, fine dining restaurants
Marriott Business travelers, families Meeting rooms, swimming pools, complimentary breakfast
Hyatt Luxury travelers, business travelers Spas, fitness centers, high-end restaurants

Ultimately, running a successful hotel business requires a combination of strategic planning, attention to detail, and a dedication to providing top-notch customer service. By staying informed on industry trends and best practices, investing in your property and amenities, and putting your guests first, you can build a thriving and profitable hotel business that stands the test of time.


In conclusion, starting a hotel business can be a lucrative venture, but it requires careful planning and consideration of various factors. Understanding the hotel industry, identifying your target market, and creating a unique and memorable customer experience are key to success.

Whether you’re starting a luxury resort or a budget hotel, the principles of good business remain the same. With the right approach and mindset, you can create a profitable and fulfilling hotel business. Best of luck!