5.1 Introduction to Lodging
Lodging refers to the temporary overnight accommodations of travelers. An essential sector of the hospitality industry, lodging serves as an important economic driver. The United States hotel industry, for example, supports a total economic impact of 1.7 trillion dollars (Oxford Economics, 2025). It also supports 8.3 million direct and indirect jobs contributing $463 billion in wages, salaries, and other compensation. Offering temporary overnight housing for business and leisure travelers expands the boundaries of commerce and distributes consumer spending. Businesses can expand their geographical footprint by sending sales personnel, contractors, and other employees into neighboring areas to temporarily conduct business. Hotels, rental properties, and other lodging accommodations make these business trips both possible and economical.
The lodging industry brings tourism and business traveler dollars into local communities. Leisure and tourist travelers also seek overnight accommodations. Tourism helps to distribute consumer spending. Tourists not only need lodging while traveling, but also frequent restaurants, participate in leisure activities, and shop at retail stores while at a destination. According to the American Hotel and Lodging Association 2023 US Economic report, for every $100 a guest spends on lodging they spend an additional $220 on other goods and services in the area. Therefore, cities can benefit from popular lodging accommodations in their area. In turn, guests who have a favorable experience while on vacation act as brand ambassadors for the location they visited, attracting future business.
Hotels and other lodging establishments often charge an occupancy or tourism tax on every room sold. Funds generated from that tax are spent in ways specific to the laws of the state in which they are located. Most funds, however, are used for destination marketing and city infrastructure aimed at increasing tourism to an area. A well-maintained and successful hotel can bring direct spending dollars to an area and provide indirect marketing benefits and employment opportunities.
According to the 2025 State of the Industry Report published by the AHLA in 2024, hotels directly employed more than 2.15 million people in the United States. These jobs range from minimum wage entry-level employment to executive-level positions that offer revenue-sharing benefits. The lodging industry offers internal growth with fast upward mobility for those employees who seek continual education and training. Certification programs are often included in on-site training.
Many career paths exist for those who select direct employment or pursue a graduate degree. Due to the wide range of property types and amenities offered by lodgings, the array of possible job opportunities include most skill sets and personality types. The lodging industry serves as a major economic driver of destination success. The industry not only generates revenue through customer spending and tax contributions but also provides employment.
5.1.1 Types and Classifications of Lodging Establishments
Lodging can be categorized by the following types: hotels, boutique hotels, conference center hotels, casino hotels, resorts, extended stay hotels, motels, hostels, timeshares, bed and breakfasts, and rental properties. Each classification has unique characteristics, including price point, amenities, and the number or types of rooms offered. Travelers base their reservation purchases on these unique characteristics.
Hotels serve as popular travel lodging accommodations, providing short-stay lodging in a variety of sizes and price ranges. Hotels can range from luxury to budget models and can be part of large brand-name chains or owned individually. Hotels most often have single to double-occupancy rooms with no kitchenettes. Hotels cater to the everyday traveler and often have extra amenities to draw business. Hotels may have on-site restaurants, free breakfasts, gyms, swimming pools, shuttle service, and spas. A single hotel will often have a range of room options such as a city view, water view, suites, and penthouses. The different room types affect price and are therefore attractive to a wider range of travelers. Hotels typically have 100 or more rooms per location. Some common hotel chains are Marriott, Hilton, and Choice Hotels.
Similar to standard hotels, boutique hotels are smaller in nature, typically having fewer than 100 rooms. They might be built around a theme and are often close to tourist destinations. Boutique hotels may also offer a range of guest services such as restaurants or gyms or may not include any additional amenities at all. They also include a host of room types. Individual room prices at boutique hotels are often more expensive than those offered by a standard hotel. Guests may prefer this type of accommodation due to brand loyalty, a partiality for smaller, more intimate facilities, or a fondness for the theme of the property.
Catering to travelers attending conferences and expos, conference center hotels are connected or adjacent to conference facilities, specialize in large crowds, and often have on-site restaurants and shuttle services. These large hotels generally offer comparatively inexpensive room rates.
In a like manner, casino hotels are connected or adjacent to casinos. They are designed to fit the theme of the casino and often have restaurants and other amenities intended to keep guests on-site, encouraging them to spend additional time and money on the property. They are generally large hotels with inexpensive room rates.
Resorts are large properties that often have multiple buildings and amenities. They are typically found in destination areas like ski towns or beachfronts and are typically structured like small all-inclusive cities. They often have multiple restaurants, bars, nightclubs, and stores and may also include golf courses, fitness facilities, zoos, or other tourist activities. Resorts tend to charge higher room rates than most other lodging accommodations due to their all-inclusive nature. Guests who select this type of accommodation are typically drawn to the amenities, including easy access to shops as well as a selection of restaurants and bars.
Extended-stay hotels come in a variety of sizes, but all are designed for those individuals who need lodging for longer than a few consecutive nights. Extended-stay hotels cater to contract or construction workers or individuals who are in between permanent housing. The rooms are generally larger than a standard hotel room and often include sitting areas and kitchenettes. Extended-stay hotels typically have on-site guest laundry and gyms, restaurants, or other amenities. The price per room night can be incrementally cheaper the longer that a guest stays on the property.
Although easily interchangeable, a motel and a hotel do have their differences. A motel is a combination of the terms “motor” and “hotel” because motels are often roadside accommodations. Motels can often be distinguished from hotels because their room doors lead directly outside, whereas hotel room doors open inside the hotel. Motels are cheaper than hotels and include fewer on-site amenities. Motels can be owned by a branded franchise chain, such as Motel 6, or can be individually owned. Guests who select this type of lodging are typically looking for a cheap overnight option and do not wish to stay on the property longer than necessary.
Not as prominent in the United States as they are overseas, hostels offer shared sleeping and living spaces. In a hostel, guests rent beds as opposed to rooms and sleep alongside other travelers. Most hostels have shared bathrooms and some charge extra for shower facilities. Some hostels offer coin-operated laundry but rarely have additional amenities. Hostels appeal to budget travelers and also to those drawn to communal settings.
Timeshares, which might be resorts, hotels, or extended-stay properties, require that guests pay an annual fee in advance, which covers a set number of nights during a given year at properties affiliated with that specific timeshare company. If the guest does not stay the presubscribed number of nights, they still pay the same yearly rate. Timeshares provide a way for properties to pre-sell rooms at a fixed price. Guests who stay at timeshares are usually looking for consistent, easy-to-book lodging at well-known tourist locations and are consistent travelers.
Bed and breakfasts are typically privately owned or owned by smaller management companies. These are properties that rent rooms within a residential home. They typically include a shared living room and breakfast. Bathrooms may be shared along with other shared amenities, such as a hot tub. No other guest accommodations are generally included. The price per room is more expensive than traditional hotels and motels but the homes are generally historic or themed in nature. Guests who select this type of lodging accommodation are generally willing to pay a higher price point for a more intimate option, wish to stay in a historic building, or desire a more “homey” experience with home-cooked meals and more traditional furnishings.
Rental properties comprise a fast-growing sector of the lodging industry. Rental properties enable guests to rent a residential home, or rooms within a home via a property management website. Airbnb and Vrbo (Vacation Rental By Owner) are two popular rental property platforms. Rental properties are typically in residential communities and do not include many of the amenities traditionally found in a hotel. Most rental properties do, however, include kitchens, dishware, washing machines, and other items found in most residential homes. Individuals who seek this type of lodging usually want to stay with multiple family members or friends in one location. They may also want a more traditional home experience, want to support small businesses, or want to save money by cooking their meals.
5.1.1.1 Rating Classifications
Rating classification systems are used to identify the basic characteristics of a property. They may be star ratings, diamond ratings, or industry-standard classification systems. Examples of star rating systems for hotels are the Forbes Star and the Michelin Star rating systems. These consist of 1–3 or 1–5 stars allocated to any particular property. In general, a 1-star property would be the cheapest with the least amenities offered. Whereas a 5-star property would be more expensive, more luxurious, and have more guest amenities. Similarly, the American Automobile Association (AAA Diamond Rating) uses a 1–5 diamond rating system. In this format, hotels that are cheap with few amenities would warrant a single diamond whereas a 5-diamond property would offer luxurious accommodations and amenities. Whereas, these rating systems are imposed by secondary travel companies such as Michelin or AAA , large hotel chains often use internal rating classifications, including luxury, mid-scale, and economy. A hotel that falls under the luxury category would be the most high-end, including many guest amenities as well as a carefully curated atmosphere. Guests who stay in luxury hotels pay a higher price in exchange for better guest services. A mid-scale property is a middle-of-the-road property both for price and guest services. This is the category of hotels that most travelers frequent. An economy hotel, sometimes referred to as a budget hotel, focuses on providing lodging at the lowest price possible. In order to offer budget rates, these accommodations typically offer no additional guest services on the property. Guests that select this category of lodging are only interested in sleeping accommodations and want to find a room at the lowest price possible
5.1.2 The Role of Rental Properties in the Lodging Industry
Rental properties both compete with and complement larger hotel chains. The rental property industry caters to a new demographic of travelers. Rental properties allow large families or extended groups of families to stay under the same roof. This eases the burden of childcare and makes vacationing more affordable for families. These properties work especially well for business travelers who want comfortable office space and home-like amenities while living and working on the road for extended periods. Lastly, a new type of traveler has emerged in the last few years—the digital nomad. This type of traveler works remotely and can, therefore, travel for extended periods while still doing their job. This type of traveler wants more flexibility in their living arrangements while they work remotely from any location they desire.
The benefits of rental properties to the hospitality industry are many. By offering housing in residential and rural areas tourists can now access areas that are “off the beaten path.” Towns that were too small to attract a full-sized hotel can now host guests of their own in residential rental properties located within their geographical boundaries. This increases the tourism dollars spent on smaller and more local restaurants, bars, and shops. Guests who stay in rental properties often stay for longer periods than those staying in traditional hotels. The extended stays mean that each guest spends more money in that local economy.
However, rental properties do pose some challenges and threats. As more and more single-family houses are turned into rental properties, fewer homes are available for purchase which can shrink an already tight housing market. The advent of rental properties is still relatively new, and zoning laws have not caught up in all areas. In addition, having a revolving door of tourists in a neighborhood can degrade the sense of community that residential neighbors once felt.
Nevertheless, rental properties are growing rapidly, and the hospitality industry is taking notice. Large hotel chains have begun expanding to include rental properties in their portfolios. Secondary services are also springing to life, including apps that allow for hotel-like check-in services, or on-demand concierge.
Attributions
- Figure 5.2: Tajview Agra 2019 002, by Gryffindor, is licensed under CC0 1.0.
