Hospitality Industry – Between Dream and Profitability

1. A Brief Introduction

The hospitality industry covers various domains, ranging from a small café to a hospital, corporate clinic, or even a simple luxury boutique where the Client is at the center of all our activities. In this broad industry, let’s take a brief journey into the hotel business and understand what motivates investors to develop this field. Since we cannot cover this vast and mysterious domain entirely, we will continue with several articles in the following issues that will allow you to have a general vision of this sector.

From its beginnings, hospitality has been a natural manifestation of humanity. People offered food, shelter, and protection to strangers or travelers. As society evolved, hospitality took on more complex forms, developing around three main areas:

Private Domain—This is the birthplace of hospitality—offering food, drink, and sometimes accommodation within a private household for friends, relatives, or travelers. Think of the hospitality traditions in villages or the meals offered to guests in diverse cultures. It was a gesture of generosity, respected and appreciated within the community.

Social Domain – Here, hospitality becomes a collective and symbolic act. For example, large festivals or community meals organized by cities or churches to mark important holidays. Social hospitality is influenced by cultural and social norms, often serving as an expression of social cohesion.

Commercial Domain – With the emergence of medieval inns and, later, hotels and restaurants, hospitality entered the economic realm. It was no longer just about welcoming someone out of generosity but offering services in exchange for a price. The modern example is represented by international hotel chains, where each service is carefully calculated to produce profit.

This classification helps us understand the roots of hospitality, but it does not fully explain the spectacular transformations that modern industry has undergone.

The Modern Hospitality Industry

The first modern hotels appeared in the 18th and 19th centuries during the Industrial Revolution. Travel became more accessible due to railways and steamships, and for the first time, a large part of the population began to take vacations.

This change brought with it:

• A clear separation between those who managed daily operations (reception, cleaning, kitchen) and those who owned or invested in properties (hotels and resorts).
• The emergence of investors and banks that saw hotels as portfolio assets, focusing on returns and real estate value.

Example: Major brands like Marriott or Hilton began to develop hotel chains in large cities, and investors saw huge real estate opportunities in owning these properties.

The Impact of Brands, Distribution, and Technology

At the end of the 20th century and the beginning of the 21st, three elements reshaped the industry:

• The Internet democratized access to information: Independent hotels gained visibility but simultaneously became dependent on online distribution platforms (OTAs) like Booking.com or Expedia.
• New hybrid models emerged: To survive, small hotels affiliated with collections like Ascend Collection, Autograph Collection, etc., maintaining their uniqueness while benefiting from the marketing power and technology of a large brand. The rapid development of structured investments through investment funds, including Real Estate Investment Trust (REIT)[1], also contributed to this model.
• Internet of Things (IoT) and AI flourished: Today, a guest can book, request additional information from an AI assistant, control lighting, room temperature, or order room service directly from their phone, and many operations are automated based on specific algorithms. However, we are in the puberty period of digitalization in the hotel industry and unfortunately, these technological transformations come from outside this industry.

Example: Chains like Marriott use mobile applications through which the client can check-in, unlock the room door, or request services without direct interaction with the staff. Customer experience is tracked in real time with AI and adjusted accordingly. The digital transformation of a hotel business is in full swing and without limits.

Today, belonging to a major brand has become crucial, especially in terms of obtaining development financing: banks prefer to invest in projects associated with big names and solid reservation systems.

Emotions and emotional imprint in hospitality

Hospitality is no longer just about functionality – it is about experience and emotion. Clotaire Rapaille, in his book The Culture Cod e: An Ingenious Way to Understand Why People Around the World Live and Buy as They Do, demonstrated that every interaction with a brand leaves an emotional imprint in our subconscious.

Example: A stay at a hotel where every detail is perfect (the scent of the room, the receptionist’s tone of voice, the ambient music) can create such a strong positive ‘imprint’ that the client will return and recommend the location. In the era of social media, this emotion is amplified: a good review on TripAdvisor can influence dozens or even hundreds of potential clients.

From customer satisfaction to the experience economy (Exponomy)

The classic satisfaction model—if the delivered service exceeds the client’s expectations—is no longer enough. Today, in the Experience Economy, what matters is the memorable experience. The client is not only looking for a comfortable bed or a tasty meal—they want a story to tell.

Example: A hotel that offers a private dinner on the beach at sunset is not just selling food – it is selling a life experience.

In 1999, Joseph Pine and James Gilmore developed a new way of thinking about connecting with customers and ensuring their loyalty. Their book The Experience Economy is now a classic, embraced by readers and companies worldwide, translated into more than a dozen languages. And although the world has changed in many ways since then, the path to a client’s heart has not. In fact, the idea of staging experiences to leave a memorable and profitable impression is now more relevant than ever. With a constant barrage of brands attacking consumers from all sides, how do you make your own brand stand out?

Conclusion

The hospitality industry is undergoing a revolution: from providing services to creating memorable experiences; from simple accommodation to personal transformation. Investors and leaders who understand this profound change—combining logic with emotion, technology with authentic hospitality—will build sustainable and profitable businesses in the new era of hospitality.