Management Paper on Analysis of Luxury Hotel Industry

Analysis of Luxury Hotel Industry

Over the years, the hotel industry has grown into a multibillion dollar entity with new and glitzy establishment cropping up in various locations. For investors, luxury hotels offers unique investment that targets a niche market that is ever growing. For many job seekers, it offers a plethora of career opportunities marked by hefty perks and remunerations. However, as a career option the luxury hotel industry is awash with challenges that are not like any other industry. The challenges are even greater for luxury hotel managers. From high levels of competition to long working hours and unique and ever-changing and complex demands of clients, a luxury hotel manager is confounded with numerous challenges that stretch their professional qualifications, interpersonal skills and character.

History of the Industry

The luxury hotel industry has evolved over the centuries from caves, abbeys, guesthouses and inns marked by spas, warm meals, beddings and a heathen fireplace to the modern glitzy and technological-driven establishments with state-of-art facilities and room services. The transformation from offering mere accommodation to weary travelers and traders in the medieval times along trade routes into holiday destinations frequented by the wealthy and the celebrities has been driven by the changing complexity of demand. As more people in the society, especially in the developed world continue to prosper, there has been growing demand for high-end hospitality services that stretch beyond accommodation, bathhouses and warm meals.

According to Avery (2016), the opening Boston, Massachusetts’s Tremont Hotel in 1829 marked a new era in luxury hotel industry. He argues that it was “the world’s first modern hotel” marked by “free soap, bellboys and [unique] indoor plumbing.” He argues that the hotel ushered the world to a new revolution that transformed hotels from pit stops to a booming and complex sector that currently represents close to fifty percent “of the global hotels markets” (Avery, 2016). In 2016, it is estimated that there were up to 13 million luxury hotel rooms while the figure is projected to rise to over 15.5 million by 2020. This exponential growth of the luxury hotel industry over the past over two centuries has been driven by a booming tourist and travel industry, wealth growth and investor confidence who have remained steadfast in their drive to pump in billions of dollars in the industry despite being faced with financial crises over the years (Avery, 2016)/ Other driving factors include technological advancements and “academisation of the hotel industry (Customer Alliance Resources, 2017).

Current State of the Industry

The luxury hotel industry in the United States, like many territories, has been resilient in the face of challenges. One of the primary drivers of the industry’s resilience is the increasing number of individuals with high disposal income and high net with individual. According to Daniel Lesser, the president and chief executive officer of LW Hospitality Advisors, the industry’s strengths lie in the steady economic growth in the country, technological advances which have increased operational efficiencies and the country’s position as one of the world’s leading tourist destinations.

There are several associations in the U.S. luxury hotel industry. One such organization is the American Hotel and Lodging Association (AHLA) which was founded on the premise that hotels form fundamental pillars in the American communities especially when it comes to creating long-term career opportunities and spurring economic development. It is a nongovernmental trade association formed in 1953 by hotel owners. International luxury hotels in the country can also join the International Luxury Hotel Association (ILHA) formed in 2008 and comprises of experts dedicated to coming up with new ideas to overcome the emerging challenges in the industry. The experts are drawn from heads of luxury hotels and tours and travel experts globally. They hold annual conferences while also create a network of professionals in the industry in addition to the training programs and newsletters. These organizations are primarily driven by the goal of helping their members stay ahead of the pack in an industry that is increasingly becoming competitive.

The rise in purchasing power has radically changed the luxury hotel industry landscape. This has seen the demand for luxury hotel services change significantly. New trends such as luxury accommodations that stretch beyond the leisure needs of individuals have emerged. An increasing number of luxury hotels are repackaging their products and services to cater for luxury accommodations for corporate events while also digitizing them to cater for the fast-growing client bases that are technological savvy. Luxury hotels have incorporated new packages to cater for senior citizens and married couples who are seeking for luxury experience during their vacation. Other trends in the industry include luxury corporate stays and high-end leisure services by clients with high disposal income and sports teams.

Other trends include spiritual discovery or ““self-discovery” involving mindfulness and deep spiritual exploration” (Huen, 2017). Therefore, visitors prefer exciting and mythical places such as temples that are imbued by luxury and relaxing services. Huen (2017) also predicts that “snoozefest”, getaways, perceptive dining and customized services are the emerging trends (Huen, 2017).

Challenges of the Industry

One of the challenges faced by operators in the luxury hotel industry is the niche marketing strategy and high-end image propagated that has been presented over the past decades. This image has been marked by an exclusive approach that is founded on high prices and tariffs. As a result, the industry targets only a few people with high disposal income with huge purchasing power. Additionally, the industry is faced by customer loyalty problem. Most guests who seek leisure are driven by the urge to seek for new experience and therefore rarely revisit one hotel. Moreover, the time lapse between each revisit is usually prolonged because luxury holidays are far apart (Lesser, 2017).

The industry is faced with stiff competition from boutique alternatives such as Airbnb which offer highly customized and high-end accommodation services especially for leisure and holiday clients are relatively lower prices. With new and emerging trends such as getaways and spiritual discovery bound, luxury hotels are faced with the challenge of providing such highly customized services for individuals in a cost-effective manner compared to boutique alternative which thrive on low admission and operational flexibility (Lesser, 2017).

Job Opportunities

The luxury hotel industry has grown significantly with new establishments and service portfolios cropping up annually. With such growths come numerous and exciting job opportunities all across the country especially at the managerial level. There are a myriad of career opportunities in the luxury hotel industry with an increasing number of luxury hotels expanding their service portfolios to include highly customized services such as spa, yoga, perceptive dining and high end room services. Therefore, in addition to managers luxury hotels employs bellboys, masseuses, fitness and yoga instructors, chefs, bartenders and in-room service providers who are tasked with providing bespoke services.

Future Outlook

The magical allure of luxury hotels offering bespoke services is a global phenomenon. Its resilience in the face of challenging times and the ever-growing consumer purchasing and the number of individuals with disposal income portend an optimistic future outlook for the industry as an investment vehicle and source of employment. With projections indicating that the global industry stands to grow at an average rate of 3.5 percent for the period between 2016 and 2021, the future of the country’s luxury hotel industry looks bright. During the same period, it is projected that the industry’s value will rise to over $190 billion (Zion Market Research, 2017; Upadhayay, 2017).

What Next

In order to capitalize on the projected growth and existing opportunities, there is need for industry players to infuse their luxury services with emerging trends. This will ensure that they gain the much-needed competitive advantage by staying relevant to the ever-changing and complex needs of leisure seekers. For individuals seeking for employment opportunities in the industry, there is need to constantly update their skill sets with new skills. This will ensure that they become highly competitive in a job market that is marked by high perks but high professional demands.




Avery, L. (2016). Travel through time: A history of the hotel industry.

Huen, E. (2017). The 5 Hottest Luxury Travel Trends in 2018. Forbes. Retrieved from:

Lesser, D. (2017). U.S. Lodging Industry – 2016 SWOT Analysis. Retrieved from:

Zion Market Research. (2017). Luxury Hotels Market Size & Share to Touch $194.63 Billion by 2021: By Segmentation, Hotel Type & Trends. Retrieved from:

Upadhayay, S. (2017). Luxury Hotel Market by Type (Business Hotels, Airport Hotels, Suite Hotels, Resorts) – Global Opportunity Analysis and Industry Forecast, 2014 – 2022. Allied Market Research. Retrieved from: