The precursor to the modern hotel was the inn of medieval Europe. For a period of about 200 years from the mid-17th century, coaching inns served as a place for lodging for coach travelers. Inns began to cater to wealthier clients in the mid-18th century.

Before the word "hotel" became the standard in the late 18th century, establishments providing lodging were most commonly known as Inns or Taverns. The word "inn" stems from the Old English word for a house or lodging place. In the medieval and early modern periods, these were often rural waystations along major trade routes where travelers could find a bed and a meal, and stabling for their horses. In France, the term "Hôtel" actually referred to a "grand townhouse" or a noble residence (like the Hôtel de Ville or Hôtel-Dieu), and it wasn't until around 1760 that the term was adopted in London and Paris to describe a high-end place of public accommodation. Other historical terms include Hostel (a place of rest for pilgrims or students), Caravanserai (large roadside inns found across the Silk Road in Asia and North Africa), and Post Houses (where travelers and mail carriers exchanged horses). The shift from "inn" to "hotel" reflected a desire for a more "sophisticated" and "private" experience; while an inn often involved sharing a bed with a stranger, a "hotel" promised individual rooms and a higher level of service and décor for the growing middle and upper classes of the Industrial Revolution.