Know what is hospitality industry in detail

Completely understand what is hospitality meaning, definition, sectors, segments, customer segments, role, value and importance

All About the hospitality industry

Hospitality Industry - Definition, meaning, sectors, segments, importance

What is hospitality industry

When you are outside of your home and are paying for staying then the all the services you use during your stay and broadly within or related to or provided by the place of stay comes under hospitality industry.

Hospitality is defined as 'the friendly and generous reception and entertainment of guests, visitors, or strangers.'

Examples to understand hospitality:

  • This place is renowned for its hospitality
  • Hospitality shown by the family was appreciable

Words used to understand hospitality are welcome, friendliness, helpfulness, warmth, greeting, kindness, etc.

Hospitality means welcoming a guest and making them comfortable at your place by looking after their needs during their temporary stay.

When we do and provide the above things as a service, business to anyone, with the help of products and services, for a price it becomes hospitality industry.

Hospitality industry can be defined and understood as an industry which provides facility for stay, food and complete related services for the comfort and leisure of the travelers and visitors.

Hospitality is the industry covering all the products and services that serve travelers, tourists and all types of visitors. When you know tourism you also understand hospitality industry.

This industry is closely associated and a part of the tourism industry. it is a key part of the tourism industry value chain. This industry is mainly driven by growing tourism, yet it caters to both tourists and travelers.

Hospitality and Tourism industry are closely related and each plays an important role in development and growth of the other industry. Tourism brings revenue, growth and development for hospitality. On the other hand hospitality industry adds to the overall value and importance of tourism. It creates more tourism demand, makes it look more attractive, adds the much needed comfort level for tourists and travelers. Without hospitality tourism would be incomplete and will not achieve the growth.

Hospitality industry sectors

The hospitality industry basically consists of two major sector or segments. The first and broadest segment is the accommodation, staying or lodging industry. The second segment is the food and beverages segment which can be considered as both a part of the accommodation industry or segment, and also as an independent segment.

  • Accommodation industry
  • Food and beverages industry

Why food and beverages is a part of the lodging or accommodation segment? It is for the simple reason that food & beverages served by the place where one is staying can only be considered as part of the services or revenues of that place. If you stay in a hotel, which is a major part of hospitality industry, but eat out in a market, which is not a part of this industry, then that food and service does not become a service of our hospitality industry services. But if you eat out at a restaurant then it is not adding to the revenue of the hotel but is adding revenue for the hospitality industry.

Hospitality industry segments

Accommodation industry

The accommodation industry and the segment of hospitality is mainly associated with providing a temporary place for guests, visitors, tourists and travelers to stay. Accommodation is the most basic and fundamental aspect of hospitality as a industry. There are various sub segments within this which are according to the type of accommodation and services associated with these.


This is the first and the most prominent part of the accommodation and also of the hospitality industry. Hotels are the most preferred place to stay for the travelers and tourists. This is to much extent due to the range of services, quality and comfort provided by the hotels.


Motels can be called as a subdued version of hotels. These are places which people or overnight travelers use primarily to spend the night. These also do not provide or offer the range of services or the comfort which hotels provide.

Bed & Breakfasts

Bed & breakfasts or B&Bs, as they are called, are small places mainly for overnight stays but come with breakfast in the morning. Most of these B&Bs are located or established within a house premise with the owners also living there. They have separate private rooms especially for the guests.


Resorts are a full service accommodation specifically meant for tourists. They offer complete or as much of the services and amenities which a tourist needs. One will mostly find resorts near tourist destinations. These resorts usually offer all the basic amnesties for a comfortable stay with well serviced rooms. They also provide food, room services, and also leisure and recreation facilities.

Food and beverages industry


Restaurants provide range of food, drinks and services along with a place to eat within the same premise. While restaurants are mainly meant for customers to come, order and eat, some also provide take away food services.


Hotels also provide restaurant like site, order and eat facility. This is separate from the accommodation and its services.


Catering services are food services provided within a particular site, or in a more remote location, where food and drink are not necessarily the main service provided. Examples of this include catering provided at parks, arenas, stadiums, hotels, event venues and on certain forms of public transport.


Bars are places where people come to drink, food, spent some time and. Bars usually provide a variety of alcoholic drinks, as well soft drinks and juices. They also provide light food or snacks to be take with the drinks. Some bars also provide entertainment for the guests while they are enjoying their drinks.


Cafes provide hot drinks like tea and coffee along with soft drinks and light food or snacks.

The Hospitality Industry value chain

The hospitality Industry value chain is a part of the tourism industry value chain. All of the services, segments, sectors and components of hospitality Industry broadly come under the tourism industry.

This is because hospitality is the very important segment of tourism. Hospitality majorly caters to the tourists and travellers. The customers or the business of hospitality comes from tourism and also from travelling.

Yet, we need to look at the value chain of this industry because looking at hospitality through tourism is not that deep and detailed. Hospitality, although is an important part of tourism yet it is also an independent industry that serves and caters to all types of people including those who are not tourists.

The value chain is defined and structured across the two sectors or segments of hospitality industry i.e. accommodation sector and food & beverages sector or segment. Then it covers the sub-segments and types for each segment i.e. types of accommodation facilities and types of food & beverages services in hospitality.

Customer segment of hospitality

There are two major segments of customers that come to hospitality and are served by this industry. These are, customers for accommodation sector and customers for food & beverages sector or segment.

Five types of economic or social activities lead up to the hospitality industry. These are tourism activities, travelling activities, business activities, social activities and other various general or day to day activities.

This also helps us identify the customers of hospitality across its two main sectors and types, accommodation and food & beverages. All those people carrying out and involved in the above different types of activities are or can be the customers of hospitality.

Economic and social impact of the hospitality industry

The hospitality industry is quite similar to the tourism industry when it comes to the vastness of its value chain and the economic and social importance and impact. As we know that tourism industry is important for the economy and society of every country. Similarly, this hospitality sector is also very important economically and socially for a country, both as part of tourism and independently.

The industry of hospitality supports, boosts and drives economic activities and growth in a big way. It also is an important part of a country’s social infrastructure, providing good support.

This industry through its two core sectors creates many other economic activities, helps and boosts activities, revenues and growth for many other industries.

The accommodation or the hotel industry carries out so many activities, also covering the food segment. It is a large industry and as it is labour intensive it is one of the major employment generation industry. Besides this, it requires many equipment (like utensils, decorative, interiors, furniture, bed sheets, quilts, pillows, etc.), material and many other things.

So it boosts and drives directly the construction industry. And if we go into details of all the products or things that are used in hotels, restaurants, etc and make a comprehensive list then there would be hundreds of small medium and big industries or sectors which directly or indirectly benefit from this industry.

Two key aspects of hospitality industry

Labor intensive

The hospitality industry is a labor intensive industry. This industry employs huge manpower. Hospitality industry requires a large manpower to provide the services to its customers and also to create these services and products. Hospitality is also therefore one of the largest employment generating industry.

Customer satisfaction

Customer satisfaction is the utmost objective of this industry. Although every product, service and industry is always driven by customer satisfaction but in the hospitality industry the importance of satisfying is much more.

In the hospitality industry you need to constantly satisfy your customers and keep them happy always. We believe that in this industry the time take to consume the services and products is long and vital. The customers are at your premise all through the time of their consumption. In fact, staying in itself is a part of the service and also a key part of consuming the services. So, the businesses need to ensure that the customer is happy and satisfied throughout the time of their stay at the premise and all throughout the consumption of the services.

Role and importance of hospitality industry

To start with, the hospitality industry is a very vital aspect and component of the travel and tourism industry. As we said at the start, tourism and its industry would be incomplete without the hospitality services. Going for a holiday, vacation, to see a tourist destination, traveling for leisure or recreation or even for any other long type of travelling or journey you need hospitality services. Without it can be nearly impossible to have tourism.

Similarly, hospitality plays very important role in MICE industry. MICE means travelling for business and events, and also involves recreation. MICE industry needs facilities to host meetings, conferences. All this is provided by hotels, which are a critical part of hospitality.

Besides this, travelers, and not specifically tourists need accommodation services. Food and beverages segment of this industry serves many people, even if they are not tourists or travelers.

Growth and revenue drivers of hospitality industry

  • Travel and tourism

  • Economic growth

  • Leisure time

  • Business trips

  • Income growth

  • High disposable income

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