2019
Hospitality Giants
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Everyone loves to tell stories about a good hospitality experience. Luckily for us, in the interior design business, the work itself is providing a good hospitality experience. As in, business is robust and growing within the sector. Case in point: 74 percent of the firms surveyed saw positive growth compared with 66 percent in 2018. In fact, the 10 highest-growing firms each averaged a $6.1 million gain, 38 percent higher than last year and at the highest since 2014. Even cruise ships, which historically remained a small but steady business, are expected to drive growth, with nearly 30 percent of firms expecting more design work in this area in 2020.

Looking ahead to 2020, however, the top 75 Hospitality Giants predict the first overall revenue drop since Interior Design began keeping data. Not only do they foresee a $200 million drop to $2.1 billion next year, they also see drops coming in corporate, government, healthcare, and education. The only segment expected to grow? You guessed it: hospitality.

Read on to discover who made the list of 75 Hospitality Giants and discover their combined 2020 predictions.

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Ranking
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Firm
*New to the list

Interior Design's top 200 Giants relied on the hospitality segment for 25 percent of their total fees last year. Meanwhile, our 75 hospitality Giants, the subject of this report, get a powerful 36 percent of all fees from this specialty. This year that number came in at $829 million, a 15-percent bump from last year's $721 million, beating forecasts by $37 million. The hospitality Giants expect another $853 million in 2020. A total of 74 percent of firms saw positive growth (only 66 percent did the year before). The 10 highest-growing firms averaged a $6.1 million gain each, 38 percent higher than last year and the highest since 2014.

Market Sector

We spotted two major trends in our data, and each seems to be attached to a demographic. First, we asked firms to tell us about things within their businesses that have been changing over time. The biggest, by far, is how much AI, 3-D, and VR have taken over the design, proposal, and walk-through processes. But actual design impact on finished product also bears a distinct millennial touch: "Experience has become the new social currency for millennials," an ICrave rep says. "There's been a shift from private to shared and multiuse spaces across hospitality projects. More and more, we're developing diverse public spaces that encourage community and allow people to express themselves, whether it's for work or play."

Meanwhile, the baby boomers are in the midst of retiring and traveling the world—and for the first time we've seen a real pop in the cruise ship design business. This sector has traditionally been a steady-yet-minor segment—when compared to, say, hotels; it accounts for less than 4 percent of overall fees—worth about $11 million in fees annually since 2016. This year, however, the fees leaped to $38 million and are forecasted to stay there. Firms are bullish: 18 percent say they're doing more work in this space than two years ago (half that amount said so last year) and 27 percent expect more work in 2020, double from previous years.

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Growth

With the upswings, though, come some downward figures. Furniture & fixtures and construction products fell back this year. Last year's $23.7 billion total was unusually wonderful, so it makes but this year's $19.2 billion feel worse than it perhaps really is. But it is the first dip below the $20 billion mark in three years. Looking deeper into the numbers, construction products held steady, but the $7.1 billion in F&F is the lowest total since 2013. The overall 2020 forecast remains flat. In a similar vein: hospitality Giants totaled 4,900 projects last year, down from 5,400, and forecast 4,700 jobs for 2020. Square footage was down, too, to 230 million from 299 million but, on the bright side, average fees per staffer leaped to $176,000, up from $162,000, the highest number ever recorded in our survey. Hospitality Giants shed more than 700 staff last year to come in right around 11,000, yet the number of interior designers rose by 800. The difference? Low-level personnel took a real hit here, but this roller coaster expects to climb again with 1,000 staff additions in 2020.

The decreasing numbers are likely part of a larger story. Total fees across all segments came in at $2.3 billion for the hospitality Giants, a bump from $2 billion in 2018 that beat forecasts by $150 million, which looks good. However, looking ahead to 2020, the hospitality Giants predict the first overall revenue drop since we've begun keeping data. Not only do they foresee a $200 million drop to $2.1 billion next year, they see drops coming in corporate, government, healthcare, and educational areas. The only segment expected to grow? You guessed it: hospitality. As a result, the hospitality Giants see those fees jumping from 36 percent of their total pie to 41 percent (it should be noted that 31 of our 75 listed firms earn 100 percent of their fees from hospitality design). And even with the somewhat mixed 2020 forecast, 60 firms still believe they'll hit positive territory next year.

Global Growth Potential for Next 2 Years
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Methodology

The annual business survey of Interior Design hospitality Giants ranks the largest design firms by hospitality design fees for the 12-month period from July 2018 through June 2019. Hospitality design fees include those attributed to:

  1. All hospitality interiors work.
  2. All aspects of a firm's hospitality design practice, from strategic planning and programming to design and project management.
  3. Fees paid to a firm for work performed by employees and independent contractors who are full-time staff equivalent.

Hospitality design fees do not include revenues paid to a firm and remitted to subcontractors that are not considered full-time staff equivalent. For example, certain firms attract work that is subcontracted to a local firm. The originating firm may collect all the fees and retain a management or generation fee, paying the remainder to the performing firm. The amounts paid to the latter are not included in fees of the collecting firm when determining its ranking. Additionally, where applicable, all percentages are based on responding hospitality Giants, not their total number. The data was compiled and analyzed by Interior Design and ThinkLab.