While many hotels do send all or part of their laundry out,there are those that do in house work. Of, course where the hotel is located and how much laundry it generates is going to be a large factor in things.
NYC for instance has tons of rules,requirements and laws regarding all commercial laundries. Also water is dear and commercial laundries pay twice, IIRC; incoming water and sewer charges. Do know when one is walking about the area of Mid-Town (from about the 50's) towards home,around early evening can see those huge bins of soiled laundry leaving service areas of hotels, with equally large bins of clean linen going the other way.
Back to linens:
From what one hears from high end European linen dealers, and better laundries, those that make linens sold in the United States are engaged in an arms race over the increasing size of the average American mattress. Between extra deep mattresses, then a pillow top layer, then perhaps a featherbed, the average size of a US mattress just keeps going up. It is very hard to design a product line for what should be a very basic set of measurements. Then there is the debate as to should elastic go all the way around the bottom edge of a fitted sheet, or just the corners.
Hotels:
There is a new trend afoot in US hotels; rather than change sheets every day of a guest's stay automatically, some hotels are now only changing sheets upon arrival, and that is it unless a request is made to change the linens for a multiple day stay. The idea is to save on laundry costs, and that sheets do not get that dirty in just one night.
Now the problem with this theory is that there are people who view checking into any hotel a "vacation" and want fresh linens daily. Especially considering what some hotels charge for room rates.
L.