Anyone new to the hospitality industry may be asking “What is a hospitality sector?” since there are few industries that span as widely in the pursuit of taking care of their customers. Knowing what hospitality sectors there are and how they influence each other and even overlap, is a step toward making sense of the vastness of a global industry that is worth an estimated USD 3.4 bn and offered 289 million hospitality sector jobs globally in 2021.

This blog explains hospitality sectors, how they operate, and how you can use this knowledge to better position your hotel business for success.

The four hospitality sectors

Traditionally, the hospitality industry is focused on providing services to people who are away from home. This immediately brings to mind what we all need in a day: nourishing in the form of food and drink, a safe place to spend the night, and a means to get to and from those locations. In addition to this, a multitude of sights, activities, and events often provide a way to spend our spare time or a reason to leave the house in the first place.

While we know over time expectations have shifted towards the hospitality industry also catering to people that are in fact at home, there are four distinct sectors of hospitality segments.

Food and Beverage

From restaurants to bars, and food trucks to museum cafés: as many discovered during the lockdowns of a global pandemic, supplying food and beverages to customers is as much a daily necessity, as it is a social experience. The food and beverage sector in the hospitality industry (typically referred to as “F&B”) has long evolved around customers’ needs and preferences by developing concepts that adequately cater to those needs. This includes the development of fast food outlets and drive-through options for speed and convenience.

It is worth noting that not all food and beverage businesses are standalone operations. Often, F&B services are provided inside a hotel, whether it be in the form of a breakfast buffet, a restaurant, or a bar. Many cafés or food outlets are located inside larger operations, such as on the premises of a museum or inside an arena. Further differences exist in their business models, with some part of a larger business, such as a hotel’s own on-site restaurant, and others leased or operated under an agreement, such as a dedicated cafeteria inside a corporate employers’ office building.

As the F&B segment keeps evolving, trends that shape the sector most recently focused on delivering the experience off-site, to the customer’s location and using technology in smart ways. Creative examples include American startup “Wonder”: when you request a meal using their app, your food is cooked and plated in a van right outside your front door.

Accommodation

Accommodation or guest lodging is the hospitality sector in charge of overnight stays, whether that is one or many nights. It is a broad market, including anything from youth hostels to motels, economy to mid-market, luxury, long-stay hotels and serviced apartments, to resort hotels and professionally run Air BnBs. While guest experience has been at the heart of this evolution of different levels of service, it also provides relative clarity on target customers.

When solely considering the aspect of providing a place to stay, hotels neatly fall into this category.

Travel & Tourism

The travel and tourism sector of the hospitality industry can be seen as an indicator of how the other sectors are going to perform: the more people are enticed to explore as part of tourism campaigns and the more they are on the road to travel, the more of the other services they are going to need. For this reason, many hotel businesses now use a set of market forecasting tools that involve, for example, flight data. The many modes of transportation businesses included in this hospitality sector usually fall into the categories of air, rail, sea, car, or bus.

Travel, of course, happens not just for leisure, but also for business or to visit family and friends, which is reflected in the many types of guests a hotel, restaurant, or venue attracts.

Entertainment & Recreation

Where the other three hospitality sectors may somewhat rely on offering necessities to people away from home, the entertainment and recreation sector relies on disposable income. Anything that people do for enjoyment can fall into this category and in return also generate travel, such as a trip to see a concert in another city.

Overlap exists in hospitality businesses that can be an attraction and an F&B operation or, in the case of cruises, covering all four hospitality sectors: on-board food and beverage, cabins for accommodation, a ship as a means of transport between harbours and entertainment in the form of organised events, concerts and activities on-board the cruise ship.