The purpose of the article is to establish the relationship between the market of hotel services and the development of the Lviv agglomeration. The study is based on questionnaire data, statistical analysis and logical reasoning. The author analysed 92 hotels operating in Lviv. Reports and studies of tourist flows and hospitality were conducted by the Tourism Department of Lviv City Council, and the Main Statistical Office in Lviv region. The main objectives of the study included evaluating the Lviv agglomeration in terms of attractiveness for living and doing business in comparison to other regions of Ukraine; identifying changes in the development of urban infrastructure of the Lviv agglomeration and their impact on the development of tourism and hospitality; characterising the hotel services market; identifying current trends in how the Lviv agglomeration is exploiting its current potential in the hospitality. As a result of the analysis, the author presents 1) modern features of the development of the hotel industry in Lviv; 2) an underlying inconsistency of the processes taking place in the Lviv metropolitan area, which is a complex system of relations in the urban space and, at the same time, a factor that determines the important role of hospitality establishments; 3) positive and negative aspects of the impact of the agglomeration on the hotel industry.