Hotel Industry's High Failure Rate: Only 75% Survive First Year

The hotel industry might seem accessible, but it's one of the toughest sectors. Even with economic power, understanding its unique challenges is key to survival, as proven by successful entrepreneurs.

, and Administrator

2025 October 1 . 8:04 PM

1 min read

This picture is clicked inside the hotel and in front, we see a table on which white color cloth is... — This picture is clicked inside the hotel and in front, we see a table on which white color cloth is placed. On table, we see plates, fork, spoon, glass, branches of tree. Around the table, we see chairs and behind that we see the other table which is like green in color and behind that, we see a man wearing black blazer. Next to him, we see the girl standing and behind them, we see door on which exit is written on it and behind that door, we see two men standing.

Hotel Industry's High Failure Rate: Only 75% Survive First Year

The hotel industry, while appearing accessible, is a challenging sector with high failure rates. Despite low innovation requirements and seemingly simple entry barriers, only 75% of hotel businesses survive the first year, with many closing within the first twelve months. Even established figures have struggled to succeed in this demanding sector.

José Elías, CEO of Audax, warns that the hotel industry is one of the toughest and most demanding sectors. This is evident in the high business mortality rate, with almost half of the hotel businesses disappearing after three years. Even those with significant economic capacity, such as footballers, have failed in this industry, losing all their capital.

Despite these challenges, some entrepreneurs have managed to thrive. Bernat Vicens, CEO of the FERGUS Group, is one such example. He expanded his business successfully in 2022, even in the face of high competition and sector valuation. Vicens introduced innovative concepts like tent hotels and opened premium hotels such as FERGUS Style Palma Beach, focusing on guest satisfaction and sustainable growth. However, surviving in this industry requires more than just economic power; it demands a deep understanding of the sector's unique challenges and customer demands.

The hotel industry's high failure rate underscores its complexity and demand for specific skills. While it may seem like a quick way to enter the business world, it requires careful navigation of tough competition, high customer expectations, and a demanding sector. Successful entrepreneurs like Bernat Vicens demonstrate that understanding and adapting to these challenges can lead to sustainable growth.