By Alan Godfrey
The past two years have seen an influx of challenges for the accommodation industry. With the resurgence of the COVID-19 pandemic and global supply chain and labor shortages, businesses, including hotels, hostels and vacation rental properties, were forced to adapt to a rapidly changing market landscape.
Despite these drawbacks, the industry has continued to see slow but steady growth based on new business filing statistics compiled in Swyft Filings’ 2021 Industry Report. In 2020, accommodation businesses saw a 96.82% year-over-year growth rate and ranked third overall for industry growth. As the pandemic intensified in 2021, the industry was slower to expand with a 15.21% year-over-year growth rate but fell only to fifth place in industry growth rankings.
While the sector managed to hold these positive numbers amid the ever-changing environment of the pandemic, COVID still impacted the way accommodations businesses traditionally function. New variants, vaccine reluctance, testing unavailability and increasing workforce shortages all slowed down the industry’s growth. It’s no surprise that these businesses, among others in similar service industries, took a hard hit in revenue and overall performance as more people chose to stay home.
On the other hand, business owners saw historically low property loans in 2021 following various federal and private COVID-19 business grants introduced in 2020, which likely contributed to the steady increase in new accommodations-related business applications. The Federal Reserve has also promised to keep interest rates low after the pandemic, giving new businesses a breath of fresh air as the market shifts in unknown directions.
There is no doubt that the pressure to survive will continue to build within the accommodation industry in the coming year. As of March 2022, 76.8% of the U.S. population is fully vaccinated. And as the doors reopen for domestic travel and tourism, new accommodation-based businesses will need to plan to stay in line with present and future market changes.
Pandemic-related trends, such as the new dependency on digital and automated services, could become a permanent part of the business economy. Paired with the continued effect of the global supply chain crisis and labor shortage, businesses need to prioritize managing consumer safety and increasing convenience demands.
If new accommodation businesses can successfully pivot and adapt to these challenges, they’ll gain a substantial competitive advantage. Innovative solutions will be vital to maintaining steady industry growth from investing in emerging digital trends to navigating the industry’s labor gaps.
In 2021, the accommodation industry ranked #16 out of 18 in the overall volume of new business filings by Swyft Filings. This places it ahead of the warehousing and insurance industries. As people reenter the travel and tourism industry this year and consumer demand increases, new accommodation-based businesses have a chance to make a significant comeback.
Alan Godfrey is the CEO of Swyft Filings, an online incorporation, compliance and SMB services provider based in Houston. The company analyzed more than 63,000 new business applications filed in 2020 and 2021 to determine the year-over-year potential for new business growth and volume. You can read the complete analysis in the Swyft Filings 2021 State of Swyft Industry Report.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.