The hospitality industry is often seen as a lucrative business opportunity. After all, business
However, while hospitality is consistently one of the biggest U.S. industries, 2019 is an especially good year to get into the business. Between corporate tax cuts and an increase in disposable income, there are several reasons to take the leap and open a motel franchise of your own in 2019.
How our growing economy encouraged travel
Since 2013, U.S. consumers and corporations have slowly started spending again post-recession. Consumers spent 4.8% more in 2017
In 2017 alone, summer vacations increased by 12.5%, with families spending more than 100 billion dollars on summer vacations in total. Seasonality aside, U.S. domestic travel
As travel increases, so does hospitality
It should come as no surprise that this recent increase in disposable income and travel would cause a soaring demand for hotels, motels, and other hospitality offerings. As a result, the hospitality industry has consistently outperformed the overall economy over the last few years.
The U.S. hotel industry reached 208 billion dollars in revenue in 2017, the highest number seen to date. Measured by occupancy rate, average daily rate (ADR), and revenue per available room (RevPAR), 2017 broke several records for hotel and motel success.
While all figures were successful, the record-breaking occupancy rate for 2017 came in at 65.9%, the highest seen since 2001. Hotel and motel chains are seeing this increase directly in their inventories with Hilton, Marriott, and IHG showing room inventories at 4.8%, 3.9%, and 4.5% respectively. All three are expected to grow at or exceed these percentages in 2018 and 2019.
When looking at these numbers, it can be easy to interpret them as a one-off fluke in 2017. However, all data signals that 2019 will show even greater growth
To top it all off, even the record-breaking occupancy rate is expected to increase another 0.3% over the next year. When considering low unemployment, higher net household income, and increased consumer spending, it makes sense that the hospitality industry is thriving in our economic climate.
Recent tax breaks
Now, corporations pay 21% in taxes, as opposed to 35%, which makes opening a franchise more affordable than ever. It’s also noteworthy that these tax cuts provided some individuals with more disposable income, which could contribute to further hospitality growth in 2019 and on.
A study completed for the American Hotel & Lodging Association projects that the government’s tax policy changes will increase direct hotel guest spending by $57 billion over the next five years. If there was ever a time to get your foot in the door, it’s now.
Why a Franchise?
It’s established that getting into the hospitality business this year is a smart business move. But, why a franchise specifically? Is it just as beneficial opening an independently-run motel? A franchise capitalizes on all the economic and political factors better than an independent motel because, on average, franchises can start quicker than non-franchises.
Thanks to existing brand awareness and decades of marketing efforts, chain motels are well-known and trusted by the general public and avid
- They require less work on your part to advertise what the business offers, which can take months, if not years, to solidify.
Franchises are also generally more easily
financed,since lenders already know the brand.
- Lastly, franchises are usually easier to start because they have set processes, services, offerings, and efficiencies from the parent company.
To get the most out of our current economic climate, you won’t want to wait a second. Franchises make starting that process faster and easier.
The hospitality industry is growing at an amazing rate, thanks to increasing economic health and consumer interest in
Find more information on the motel industry or advice on any other potential business venture at BusinessesForSale.com