Travel and tourism just had its best year ever. Hospitality operators are still struggling to celebrate.
The World Travel & Tourism Council reports that travel and tourism contributed a record $11.6 trillion to global GDP in 2025, supporting 366 million jobs. UN Tourism counted 1.52 billion international travellers, up 4% on 2024.
But the operators behind that boom tell a different story. Almost a third of UK hospitality businesses are now operating at a loss. UK pubs closed at a rate of nearly one a day in 2025. And PwC projects US hotel RevPAR will grow less than 1% in 2026.
Demand is there. Delivering it profitably is the hard part. Thankfully, every challenge is also a learning opportunity. The hospitality businesses that adapt fastest will be the ones that come out ahead.
In this article, we’ll outline the ten biggest challenges facing the hospitality industry in 2026. Then we’ll look at what your L&D function can do about each one. Let’s dive in.
A Quick Guide to the Hospitality Industry
Hospitality is a term that covers a broad range of businesses that provide services to guests and visitors. Typically, this includes organisations that house, feed, transport, and entertain people. For instance:
- Accommodation: Hotels, motels, hostels, resorts, guest houses, bed and breakfasts, campgrounds, etc.
- Food & Beverage: Restaurants, bars, clubs, cafes, food trucks, catering services, etc.
- Travel: Airlines, cruise lines, travel agencies, tour operators, rental services, etc.
- Entertainment: Theme parks, casinos, theatres, sports venues, museums, etc.
- Events: Convention centres, exhibition halls, wedding venues, etc.
As you can see, the list of associated businesses is extensive. Unfortunately, so too is the list of challenges that hospitality organisations face. With that said, let’s dive into the common obstacles that plague this industry.
The Top 10 Hospitality Industry Challenges
1. Talent Shortages & Skill Gaps
Hospitality’s talent problem has gone from acute to structural. It’s not just that there aren’t enough people. The trouble is that the gap is widening even as demand climbs.
The World Travel & Tourism Council projects a global hospitality workforce gap of 8.6 million workers by 2035. That’s roughly 18% below required staffing. In Europe, HOTREC reports that 10% of hospitality roles are currently unfilled, with the squeeze sharpest in Portugal, Spain, Greece, Romania and Czechia.
In the UK, the picture is muddied further by tighter immigration rules. Skilled Worker Visa applications to the hospitality sector dropped roughly 94% in early 2026 after the salary threshold was raised to £41,700.
Then there’s the skills problem. The UK Government’s Employer Skills Survey 2024 found hotels and restaurants now have the highest skills-gap rate of any sector at 6.2%. The WTTC warns that Gen Z workers in particular are “reluctant to take on customer-facing roles” with the long, unpredictable shift patterns that define work in this industry.
The result: total US hotel compensation is up 26.5% since 2020, and labour now accounts for 60% of operating expenses at independent hotels. Doing more with less has stopped being a slogan and started being a survival strategy.
Top Tip: The talent gap won’t close through hiring alone. Smart operators are investing in microlearning and structured career pathways to retain the staff they already have. They’re equipping managers to lead a workforce that expects training, autonomy, and visible progression rather than just a wage.
2. Evolving Guest Expectations
Guests don’t discover, book, or measure a “good experience” the way they used to.
The biggest shift is in how trips begin. Phocuswright reports the share of travellers starting their research on a search engine dropped from 51% in late 2024 to 36% by mid-2025. Meanwhile, gen AI platforms surged from 6% to 15%. MMGY found 42% of leisure travellers now use tools like ChatGPT to plan trips, a 14% jump in a single year. Deloitte describes today’s traveller as “algorithmically steered.”
On arrival, the expectations shift again. Indeed, 73% want to manage their hotel experience via mobile device. And 70% are likely to check themselves in via app or kiosk. What’s more, the Global Hotel Alliance reports 60% of its members have used AI tools to plan trips. This rises to 79% among Gen Z.
Personalisation isn’t a “nice to have” anymore. It’s expected. MMGY also found 76% of travellers value their travel memories more than any material item they bought in the past year. Operators competing on stuff are competing on the wrong axis.
Top Tip: Equip staff to understand the digital journey guests are on before they ever arrive. Mobile learning and microlearning keep your team up to speed on how guest preferences shift. They’ll also help you to deliver the small moments of personalisation that turn a stay into a memory worth keeping.
3. Reputation Management
A bad review can travel further than a good one. And both travel further than ever.
TripAdvisor’s research found that 81% of users always or frequently read reviews before booking a place to stay. ReviewTrackers reports that 40% of guests leave a review after a positive hotel experience. Unfortunately, 48% leave a review after a bad one. Negative voices are louder, and they show up first.
That asymmetry is now amplified by AI. Google, ChatGPT, and the major OTAs all summarise reviews before guests ever scroll through them. A single recent negative experience can shape an entire AI summary. This means your reputation isn’t just what your reviewers write, but what an algorithm decides to highlight.
Layer in TikTok and Instagram, where a viral negative experience can reach millions in hours, and the modern reputation challenge looks very different from the static review world of even five years ago.
Top Tip: Build a social learning culture where staff share what’s working. Then pair it with a fast, human review-response process online. Generic “we’re sorry to hear about your experience” replies do more damage than they fix.
4. Walking the Sustainability Tightrope
Sustainability used to be a simple win for hospitality. In 2026, the picture is much more tangled.
The demand is still there. Booking.com’s 2026 Travel & Sustainability Report found that 85% of travellers say sustainable travel is important or very important to them. And PwC’s 2024 Voice of the Consumer survey found consumers will pay an average of 9.7% more for sustainably produced goods.
But there’s a generational paradox. While 75% of Gen Z and 71% of Millennials want to travel more sustainably this year, just 47% of Boomers say the same.
Then there’s the political tension. The post-2023 ESG backlash has made some brands cautious about how publicly they communicate sustainability initiatives. South Pole’s Net Zero Report found that 44% of companies say communicating their climate goals has become more difficult.
The operational reality is unforgiving too. The Sustainable Hospitality Alliance reports that a hotel can use an average of 1,500 litres of water per room per day, often vastly exceeding local population usage.
Top Tip: Empower your hospitality workforce with real knowledge about your sustainability initiatives. They’re the ones who’ll be asked about it at check-in, at breakfast, and at the bar. Equip them to talk about what you actually do and what you’re working towards.
5. Employment Cost Pressures
One in five UK hospitality businesses now fear they could collapse within the next 12 months. Another 17% are already operating at a loss. The UK is the most acute case, but the pattern of cost pressure is global.
The decade-long picture is stark. According to Dojo’s UK Inflation Index, total operational costs for UK pubs and bars rose 48% between 2015 and 2025, with technology and software costs surging 167%. Catering businesses fared even worse, with running costs up 62%.
The UK has had its own immediate trigger. The Autumn 2024 Budget raised employer National Insurance contributions from 13.8% to 15%. UKHospitality CEO Kate Nicholls put the impact bluntly: “At the Budget in October, the Government delivered an increase of £3.4 billion to the sector’s 2025 annual tax bill.”
The squeeze isn’t UK-only. The National Restaurant Association found more than 9 in 10 US operators cite food, labour, insurance, energy and swipe fees as significant challenges, and 42% of restaurants were not profitable in 2025.
Top Tip: When margins shrink, productivity per employee matters more than ever. Use structured onboarding to get new starters productive faster. Equip managers to lead leaner teams without burning them out.
6. Cybersecurity Threats
Hospitality is a prime target for cybercriminals. The combination of guest data, payment information, and increasingly connected technology makes hotels and restaurants both attractive and vulnerable.
The scale is sobering. VikingCloud research found that 82% of North American hotels suffered cyberattacks last summer, with more than half targeted five or more times. The IBM 2025 Cost of a Data Breach Report puts the global average breach cost at $4.44 million, rising to $10.22 million in the US.
Three threats stand out for 2026.
- AI-powered phishing and deepfakes. Cybercriminals are using LLMs to craft hyper-realistic phishing scripts targeting hotel staff. This is a problem, as almost half (48%) of hotel IT leaders admit they lack confidence in detecting AI-generated attacks.
- IoT exploits. Smart locks, thermostats and occupancy sensors are everywhere, rarely standardised, and hard to patch. Each device is a potential entry point.
- Third-party vendor risk. The Verizon 2025 DBIR reports third-party compromises doubled in the last year to 30% of all breaches. Self-service kiosks, POS providers and cloud platforms create attack pathways that bypass the hotel’s own defences entirely.
Top Tip: Cyberattacks almost always include a human element. Your staff are the first line of defence. Run realistic phishing simulations regularly, build clear escalation protocols, and make sure every team member, from front desk to housekeeping, knows what a suspicious request looks like.
7. Supply Chain & Cost Pressures
Hospitality runs on supply chains that are more vulnerable than ever. Economic shocks, geopolitical events, climate disruptions, and now tariffs all make sourcing the basics more expensive and less predictable.
The NIQ Foodservice Price Index recorded a sixth consecutive month of increases in September 2025, reaching a record high of 151.1. Polymer and packaging costs have more than doubled since November 2024, pushing soft-drink inflation to 6.4% year on year.
In the US, tariffs are layering on additional costs. Most household goods, packaging materials, and many food imports come from countries hit by the post-2024 tariff regime. Hospitality businesses absorb the impact across menu costs, equipment replacement, and amenity supply.
The operator response is uneven. CGA by NIQ’s Hospitality Business Tracker showed November 2025 sales for UK pubs up 2.5%, restaurants down 2.1%, and bars down 5.2%. Just 26% of hospitality leaders feel optimistic about the next 12 months.
Top Tip: Train your buying and operations teams to work with volatility, not against it. Scenario-based learning helps procurement staff think through “what if the price of X jumps next month?”
8. Managing Regulations
Hospitality lives under a constantly expanding regulatory umbrella. Health and safety, food hygiene, licensing, employment law, environmental standards, allergen disclosure, sustainability reporting, and data protection all sit alongside each other. Every year brings new rules, new audits, and new ways to get it wrong.
- For UK operators, recent additions include the Employment (Allocation of Tips) Act 2023, ongoing Natasha’s Law allergen requirements, and the Plastic Packaging Tax.
- EU operators face the Corporate Sustainability Reporting Directive (CSRD), which now mandates structured ESG disclosure for larger businesses.
- US operators navigate a patchwork of state-level rules on tipping, wages, scheduling, and food safety.
Non-compliance has real teeth. Fines, license suspensions, lawsuits, and reputational damage can be permanent. In a sector where margins are already razor-thin, even one major breach can be enough to close a venue. Worse, the training that should mitigate these risks too often becomes a tick-box exercise that staff race through rather than absorb.
Top Tip: Pair compliance training with a learning management system that automates certification, refresher training, and reporting, so your managers spend less time chasing paperwork and more time leading their teams.
9. Rising Competition & Short-Term Rentals
The hospitality market is huge and growing. The Business Research Company projects global hospitality at $5.83 trillion in 2026, climbing to $7.48 trillion by 2030. But the growth is becoming increasingly lopsided.
Chains are winning. Marriott alone added 43 million Bonvoy members in 2025, bringing total membership to 271 million, with member stays now accounting for 75% of US and Canadian room nights.
Meanwhile, independents are struggling. Cloudbeds’ Six Forces 2026 report found that global RevPAR for independent hotels fell 5.4% in 2025, OTA share of independent bookings rose to 63.4%, and only 41% of independents are using AI compared to nearly 80% of chains.
Short-term rentals add another front. Airbnb posted $4.1 billion in Q3 2025 revenue, up 10% year on year. But regulatory pushback is reshaping the market.
New York’s Local Law 18 caused a 90% drop in Airbnb listings in the city, and similar restrictions are spreading across Barcelona, Amsterdam, and beyond.
Top Tip: Differentiation now lives in the staff, not the building. Equip your team to deliver an experience guests can’t get from a budget chain or a self-service apartment. The hotels and restaurants that thrive in 2026 will be the ones whose people feel proud of where they work.
10. The Generative AI Revolution
The hospitality industry has been talking about AI for years. The most transformative force shaping it now isn’t simply “AI.” It’s generative AI specifically, and the speed of adoption is staggering.
McKinsey and Skift report that 90% of travel executives surveyed in 2025 use gen AI in some capacity, and 82% have piloted it for customer service. Major chains are deploying it publicly. Indeed, Airbnb reported in Q3 2025 that its AI assistant had reduced customers’ need to contact a human agent by around 15%.
PwC frames the shift bluntly. In its US Hospitality Directions, the firm warns that “the first ‘customer’ is increasingly an algorithm.”
But guests have reservations. A Reputation survey of more than 760 US consumers found that losing the human touch was their number one concern about AI in hospitality, ahead of privacy worries (37%) and service mistakes (30%).
Top Tip: Gen AI isn’t just a technology rollout, it’s a workforce challenge. Train staff to use AI tools effectively, build clear protocols for when human judgement should override an algorithm, and identify the high-value moments where people still need to lead.
Final Words
The hospitality industry in 2026 lives in a paradox. Demand has rarely been stronger. Profitability has rarely felt harder.
The talent shortage is structural. AI is rewriting how guests discover, book, and judge a stay. Cost pressures are squeezing operators on every side. And cybercriminals are circling.
But the playbook hasn’t really changed. The hospitality businesses that thrive are the ones who invest in their people. Equip them with the right skills. Support their wellbeing. Trust them to be the difference between a customer who comes back and one who doesn’t. Technology will keep evolving. So will guest expectations. The constant is the human capacity to learn, adapt, and lead.
That’s where smart L&D comes in. Growth Engineering’s high-impact solutions include an LMS, Learning App, and Authoring Tool, all built on award-winning expertise in neuroscience, gamification, and social learning to keep your hospitality learners engaged through and through.
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