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Hotel Industry Overview - August 2007 - History of Industry


"This document is not an official pronouncement of the law or the position of the Service and cannot be used, or cited, or relied upon as such."

History Of Industry [1]

The hotel industry is a mature industry marked by intense competition. Market share increases typically comes at a competitor’s expense. Industry-wide, most growth occurs in the international, rather than the domestic, arena.

Common American hotel classifications are as follows:

Commercial Hotels cater mainly to business clients and usually offer room service, coffee-shop, dining room, cocktail lounge, laundry and valet service as well as access to computers and fax services.

Airport Hotels are located near airports and are a conveniently located to provide any level of service from just a clean room to room service and they may provide bus or limousine service to the air lines.

Conference Centers are designed to specifically provide meeting space from groups; they provide all services and equipment necessary to handle conventions.

Economy Hotels provide a limited service and are known for clean rooms at low prices meeting just the basic needs of travelers.

Suite or All-Suite Hotels are hotels which offer spacious layout and design.  Business people like the setting which provides space to work and entertain separate from the bedroom.

Residential Hotels used to be very popular.  The typical residential hotel offers long term accommodations.

Casino Hotels are often quite luxurious.  Their main purpose is in support of the gambling operation.  Casino hotels often offer top name entertainment and excellent restaurants. 

Resort Hotels are the planned destination of guests, usually vacationers.  This is because resorts are located at the ocean or in the mountains away from inner cities.  Resort hotels may offer any form of entertainment to keep their guests happy and busy.

A summary of key events in the history of the industry would include the following:

While the practice of renting space to travelers stretches back to antiquity, what could be considered the modern concept of a hotel derives from 1794, when the City Hotel opened in New York City.  While the practice of renting space was not new, the City Hotel was purported to be the first building devoted exclusively to hotel operations.  For it’s time, the building was quite large and possessed 73 rooms.  Similar operations soon appeared in such nearby cities as Baltimore, Boston and Philadelphia.                 

Interestingly, New York City’s first skyscraper was a hotel - the six story Adelphi Hotel.            

Hotels took a distinct step up in style and class when the Tremont House opened in Boston in 1829.  This hotel was considered by many to be the beginning of what was regarded as first class service.  With 170 rooms, the Tremont House was a large facility.  In addition, the hotel offered features which, for the time, were amazing.  Private single and double rooms were available, which offered not only privacy, but also security.  In addition to water pitchers and a washing bowl, free soap was provided in each room.  The Tremont House offered French cuisine and, reportedly, was the first hotel to have a Bellboy.                

In 1908, the Buffalo Statler opened, marking the beginning of the modern commercial hotel era.  Many services now considered standard were introduced by the Statler, including such amenities as a light switch next to the door, private bathe, ice water and a morning newspaper.  The Statler set the standard of the day by being clean, comfortable and affordable.  The Statler served as the pattern for hotel design and operation for many years.

In the 1920’s, hotel building entered a boom phase and many famous hotels were opened, including the Waldorf Astoria, New York’s Hotel Pennsylvania, and the Chicago Hilton and Towers, which was originally named the Stevens.               

Motels began to replace roadside cabins as use of the automobile spread throughout society. Offering clean rooms with adjacent parking, motels enjoyed great popularity with the traveling public.         

In the 1950’s and 1960’s, the practice of franchising appeared within the industry.  Franchising enabled entrepreneurs to expand their operations without the use of substantial capital.               

For much of their history, hotels were owned and operated by individuals.  However, as franchises and chains began to appear, individually owned hotels found themselves increasingly at a competitive disadvantage.  By the 1960’s, independent prospects began to improve as the result referral organizations such as Quality Courts, Best Western, Master Host and Best Eastern.               

From the 1980’s forward, mergers and acquisitions became common within the industry, and brands become hotly traded commodities.

Recently, use of management companies has entered the mainstream.  As a result, many chains are more involved in management than in ownership.  These chains realize a much more predictable and steady income stream than had normally been yielded by ownership.               

[1] History of Hospitality.   27 March 2007.  6 June 2007.

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Page Last Reviewed or Updated: 27-Nov-2013