The Importance of the Hospitality Industry & Its Four Sectors

Full-service restaurants alone are responsible for generating over 1.2 trillion US dollars (approximately £866 billion) every year. 72% of customers will tell six or more people if they have a satisfying experience. Today, we're sharing the importance of the hospitality industry and why good hospitality will help your business.

Before we dive into some more statistics about this industry and why it’s important, first, let's look into what exactly the hospitality industry is and the five main sectors that fall under this umbrella term.

What is the hospitality industry?

The hospitality industry refers to the collection of businesses that provide services centered on guest comfort, experience, and care. The word hospitality originates from the Latin hospitalitas, meaning “friendliness to guests,” derived from hospes, meaning both “guest” and “host.” This shared root highlights the mutual relationship at the heart of the industry: welcoming, serving, and accommodating others to provide an experience the guest enjoys. Historically, hospitality began with inns, taverns, and lodging houses that offered rest and food to travelers. Today, it has evolved into a sophisticated global network of service-based businesses focused not only on meeting basic needs, but on delivering lifelong memories.

We'll look at the various parts of the hospitality industry shortly, but what unites all of them them is their emphasis on customer service and experience rather than physical products alone, like in retail. Whether someone is booking a flight, dining at a restaurant, or attending a concert, they are participating in hospitality.

Economically, hospitality is one of the world’s most powerful industries. According to the World Travel & Tourism Council, travel and tourism alone accounted for roughly $11.7 trillion in global market value in 2025, accounting for over 10% of global GDP and supports approximately 1 in 10 jobs worldwide. Statista and other industry reports highlights the sector’s continued annual growth, projected for 2026 at roughly 6.8%, and its critical role in local and international economies. From employment opportunities to consumer spending, hospitality remains a cornerstone of global economic activity.

The five main hospitality industry sectors

The five main sectors within the hospitality industry are entertainment and recreation, food and beverages, lodging, and travel and tourism. Each of these main sectors have sub-sectors within them:

1 Entertainment and recreation

This includes all businesses dedicated to providing an entertainment service. It covers everything from sporting events, music concerts, art and performance, museums, theme parks, escape rooms, and cultural events.

The entertainment and recreation sector promotes and provides services that enable people to take part in recreational activities for culture, hobby, and educational purposes. The broader entertainment and amusement market is substantial and growing with some forecasts estimating it will expand by over $1.1 trillion at a rate of 7.3 % between 2024–2029, fuelled by exciting developments in recreation surrounding more immersive experiences with new areas like VR and AR.

It includes established and amateur arts, theatre and music groups, cinema, arcades, and any other outgoing opportunities, with 2.2 million employed in the area within the EU. This makes the industry smaller than other parts of hospitality, but given the nature of the field, very visible. 

2 Food and beverage (F&B)

The food and beverage industry (F&B) industry is the largest sector within hospitality, accounting for $1.6 trillion in revenue in the US alone for 2024. This sub-sector includes cafés, restaurants, food trucks, pubs and bars, fast-food drive-throughs, nightclubs, bakeries, tea and coffee shops. 

F&B businesses can be sit-in, full-service or take-away, and are a key part of many other hospitality roles, including many of the roles in, say, travel and tourism. They also go beyond the remit of simply providing food, since restaurants compete to provide the best customer experience as well as the best food and drink.

The industry has seen some big changes in recent years building greater efficiency into business models with online ordering, Click&Collect, and delivery service options, as well as sustainable and affordable sourcing as more businesses partner with local suppliers.

3 Lodging

Businesses within the lodging sector provide accommodation to guests. This sounds simple, but covers hotels and guest houses of all stripes, resorts, B&Bs, caravan, mobile and static-home sites, hostels, log cabins, camps, cottages, and chalets and actually accounted for a whopping 58% of global hospitality activity in 2024 and supported 371 million jobs in 2025.  

The role of an accommodation provider is to provide a safe and secure place for tourists to stay, which comes in many forms. Standards differ between different providers and according to different budgets. There might be some crossover into the food and beverage sector in hotels that include a breakfast buffet, hotel restaurant or bar.

Exciting changes in the accommodation industry involve the rise of hybrid work and tourism travel, as people travel for work (or travel while working remotely), and bring the once separate lives of work and relaxation together. Meanwhile, technology continues to evolve with bio-security for rooms, mobile integration, and energy-saving technology. 

4 Travel and tourism

The fourth sector of hospitality, separate to accomodation, is travel and tourism. It includes: travel agents; cruise liners; logistics companies; sightseeing, bus and walking tours; airlines; taxis and car rental companies. 

The travel and tourism sector provides a means of transportation to move travelers from one place to another. It is an essential middle man that supports tourism and business travel. Public transport for all purposes plays a key role in this vital sector. 

The global travel & tourism sector contributes an enormous share to the global economy, projected to generate $11.7 trillion in GDP contributions in 2025, roughly 10% of the world’s economy. The travel industry is under great scrutiny for its environmental impacts, making evo-travel an area of focus and development, alongside the continual development of convenience, mobile-integration, and personalisation.

5 Meetings and events

Why is the hospitality sector important?

A lot of the services within the hospitality sector are essential to our lives from time to time, especially travel and lodging. We rely on the service industry, yet the true nature of hospitality goes beyond simply providing these services. 

The truth within the name 

The word hospitality derives from the Latin “hospitalitas”, which means ‘friendliness to guests’, from the nominative “hospes”, meaning ‘guest; host’. 

Therefore we know that it’s not just about what you do, but how you do it. People working in hospitality understand that when guests visit a restaurant they expect more than a meal. Customers expect a positive greeting, friendly, attentive service, and a nicely decorated venue. These things collectively contribute to an overall positive hospitality experience.

Improved customer retention

Happy customers are loyal customers. A great guest experience relies on focus, consideration, and the fulfillment of customers’ needs. This begins with using your initiative and being proactive enough to recognise when a guest might need something and providing it before they ask.

Any restaurant can provide guests with their food – that’s the basic prerequisite of dining out. It’s the unexpected actions you take that will make your restaurant stand out in the minds of guests. Going above and beyond to make guests feel welcome and cared for is the key to good customer retention and loyalty.

Great brand reputation

72% of customers will tell six or more people if they have a satisfying experience. And, since word-of-mouth recommendations are five times more effective than paid advertisements, we see how important good hospitality really is. These statistics demonstrate that customer satisfaction can drive new levels of growth and prosperity for hospitality businesses. 

It’s the cheapest and most rewarding form of advertising that also contributes massively to how your brand is perceived. How customers perceive your brand is vital for attracting your desired customers, solidifying customer relationships, and increasing your financial value as a business.

Lasting impact and memories for guests

People rely on the hospitality industry to fulfill their basic needs of transport, accommodation, food, and entertainment for work and recreational purposes. Given that some people will often visit dozens of hotels a year, good hospitality makes all the difference between a survivable experience and a pleasant, memorable one. 

Small touches like providing high-quality amenities providing an effective, simplified service will demonstrate that your business is reliable, and dedicated to the needs of the customer. Comfort and consideration go a long way for people who rely on your industry daily. 

Rewarding industry to work in

For the most part, people who are dedicated to a career in hospitality want to provide excellent customer service. It’s different from the typical 9-5 office job that revolves around creating spreadsheets and presentations. A key responsibility in hospitality jobs is to interact with new people and make their day. 

It’s a rewarding entry-level position for young professionals who are people-orientated and want to learn transferable life skills. Hospitality implies warmth, respect, and even protection; it builds understanding and appreciation among cultures. It’s also one of the most dynamic, exciting, and fast-growing sectors to work in. With every new development in technology or guest experience, even more diverse and specialized job opportunities can open up.

Hospitality also offers clear progression from entry-level to executive careers. Many professionals begin as servers, receptionists, baristas or housekeepers before advancing into supervisory and management positions such as department head, general manager or regional director, or opening hospitality businesses of their own. The sector has a place for both soft skills (communication, teamwork, problem-solving and cultural awareness) and hard skills (budgeting, inventory control, food safety, data analysis and digital systems), making it a good home for many different kinds of people with different skills to offer. Industry certifications, including food safety credentials, hospitality diplomas and professional development programs, can help workers formalize their expertise and accelerate career growth and find a path that suits them.

In the United States, food service and hospitality roles employ millions of workers, adding 28,000 jobs just in restaurants in January alone. Salaries vary widely by specialisation and responsibility: entry-level hourly roles often start around minimum wage to £25,000 annually, while at the other end of the scale hotel and operations managers can exceed £100,000+. Broader travel and tourism employment is expected to continue expanding globally, supporting hundreds of millions of jobs. Together, this makes hospitality not only personally rewarding, but a long-term career path with real mobility and growth potential.

Major challenges facing hospitality

Before you step out to buy a hotel, it's important to consider the difficulties those in the industry are facing. From staffing shortages to rising energy costs, today’s operators must balance guest expectations with tighter margins and evolving regulations.

• Labour shortages. Recruitment and retention remain one of the most persistent challenges across hospitality. The sector still struggles to fill millions of roles, which puts pressure on existing staff to maintain service standards, often leading to employee burnout and more staff leaving. Businesses must now compete harder for talent through better pay, benefits, and flexible scheduling.
• Climate change. Climate change directly affects destinations and travel patterns. Rising sea levels, extreme weather events, wildfires, and heatwaves disrupt tourism seasons and threaten coastal and nature-based attractions. At the same time, regulators and travelers increasingly expect operators to reduce emissions and adopt sustainable practices.
• Technology disruption. Rapid digital transformation is reshaping the guest experience. Artificial intelligence, automation, and cloud-based systems improve efficiency but require upfront investment and staff retraining, putting pressure on businesses to keep up. Companies that fail to modernise risk falling behind competitors that deliver faster, more personal service.
• Economic uncertainty. Inflation, fluctuating exchange rates, and global economic uncertainty directly affect consumer spending on travel and leisure. Hospitality is particularly sensitive because many experiences are discretionary purchases. During uncertain periods, guests may shorten or avoid trips, trade down to budget options, or reduce dining out, forcing businesses to manage tighter margins and unpredictable demand.
• Energy crisis. Hotels, restaurants, and venues are energy-intensive operations that rely heavily on heating, cooling, lighting, and refrigeration. Rising energy prices significantly increase overhead costs, especially for large properties and event spaces. This has accelerated the push toward renewable energy, energy-efficient equipment, and smart building technologies to control expenses, demanding significant investment many hospitality businesses can't keep up with.
• Supply chain issues. Food, beverages, linens, equipment, and technology hardware all depend on reliable supply chains. Global disruptions and transportation delays have led to inconsistent deliveries and price volatility in parts of the industry.

Future Trends Shaping Hospitality

Despite (and perhaps because of) the challenges, hospitality is one of the most innovative and adaptive industries:

• Sustainable travel and eco-tourism. Travelers are increasingly choosing eco-friendly accommodations, low-impact transport, and responsible operators. Hotels are responding with energy-efficient designs, waste reduction programs, and locally sourced products to stay aligned with the values of their guests.
• Wellness tourism boom. Health and wellbeing are valued higher than ever before by guests funding the travel industry. Spa retreats, mindfulness escapes, fitness resorts, and nature-based experiences are expanding rapidly as consumers seek restorative and preventative health experiences alongside leisure.
• AI and automation integration. Artificial intelligence is increasingly embedded across the hositality industry, from predictive demand forecasting behind the scenes to automated check-ins and chatbot guest support. Expect smarter inventory management, dynamic pricing, and personalized recommendations powered by AI to become more central to the industry as the technology develops.
• Experiential travel. More guests are prioritizing memorable experiences over material goods. This is driving the popularity of everything from culinary tours, local workshops, cultural immersion activities, to behind-the-scenes access. Hospitality providers that offer unique, story-driven experiences tend to see stronger loyalty and word-of-mouth referrals than their more material competitors.
• Personalisation through data. POS systems are building on their existing software to collect more accurate, detailed guest preferences, booking habits, and purchase histories to tailor hospitality services. From customized room settings to targeted promotions, data allows businesses to create better experiences for each guest, improving satisfaction and encouraging repeat visits.
• Contactless technology. Mobile check-in, digital room keys, QR code menus, and self-service kiosks have become commonplace in hospitality, but the technology is still new. There's still more improvements to be made in contactless solutions to streamline operations and improve a business's hygiene, speed, and guest autonomy, especially in high-traffic environments like hotels, airports, and quick-service restaurants.
• Digital nomad services. Remote work has blurred the line between travel and daily life. Many hotels and destinations now cater specifically to digital nomads with extended-stay packages, co-working spaces, strong Wi-Fi, and community events. This continuing trend will see the industry adapt further to cater to digital nomads, encouraging longer stays and repeat visits.

Choose an industry-leading EPOS provider

Electronic point of sale (EPOS) systems work as the backbone of hospitality businesses. Designed to work as a complete business management system, you can control all vital aspects of your company from one cloud-based system.

Receive detailed analysis on the areas that matter to your business:

• Customer management systems that save customer contact details and shopping preferences for more targeted marketing.
• Add-on customer booking services for streamlined operations.
• Hospitality management at your fingertips for remote cloud access.
• Integrations with over 100 apps including marketing, accounting, bookkeeping, and loyalty program apps.
• Employee management for more efficient scheduling and payroll.

To find out more about a hospitality system with every tool you need, submit your information below and speak to a member of our expert team.