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5 Challenges Affecting the Hotel Industry

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In recent years, hotel occupancy and consumer spending on hospitality has been on the rise and it is expected that in the coming years this pattern will continue. Despite this, hotels are facing challenges and solutions to these challenges could be essential to remaining highly profitable and overcoming any competition. The top 5 challenges challenges that are the most prevalent and universal to hotels right now are:

1.Increasing Costs

Running a hotel is getting more expensive; operations, labor, and energy costs are increasing significantly. All of these costs affect a hotel’s bottom line. In order to remain profitable, hotels need to find ways to both increase revenue as well as decrease these costs without compromising the guest experience.

2. Meeting Customer Demands

Technology and sustainability are increasingly important to people, hotels are not immune to this desire and need to adopt advanced consumer facing technology and sustainable practices in order to meet these consumer needs.[1] Embracing technological development as well as sustainability increases the overall public opinion of a hotel as well as meets the demand of more customers.

3. Growth in Competition

With the existence of apps like Airbnb, options for accommodations other than hotels are becoming more popular, in addition more and more international destinations are becoming popular, international travel to the U.S only grew 2% in 2018 and the share of inbound international travel the U.S. fell to 12.2%[2], even hotels in places like New York face more competition than ever.

4. Economic Cycles / Possibility of Industry Downturn

The hotel industry has been in a long lived upturn and in the near future demand and consumer spending in hospitality are expected to remain stable or grow.[3] Those involved in the industry need to be aware, however, of the fact that political and economic factors play a large part in the health of the hospitality industry and have the potential to cause a downturn.

5. Improving Customer Experience

Guests of hotels are looking for high quality experiences, it’s what determines their perception of the quality of the hotel, so hotels need to be able to provide improved quality of experience. Currently part of why this could be a challenge to hotels includes the lack of available labor for positions in the hospitality industry because baby boomers are retiring and college graduates are often overqualified for positions in hotels, having enough high quality employees is an important aspect of a customer’s experience at a hotel.[4]


[1] Kenney, Dave. “3 Big Challenges Facing the Hospitality Industry and Restaurants.” Efficient Forms, 20 May 2019, www.efficienthire.com/3-big-challenges-facing-hospitality-industry-restaurants/.

[2] Bender, Andrew. “Worrying Trend As U.S. Loses International Tourism Market Share.” Forbes, Forbes Magazine, 1 Feb. 2019, www.forbes.com/sites/andrewbender/2019/01/31/worrying-trend-as-u-s-loses-international-tourism-market-share/#4d3f21d214d2.

[3] Langford, Guy, and Guy. “2019 Travel, Transportation, and Hospitality Industry Outlook.” Deloitte United States, 10 Jan. 2019, www2.deloitte.com/us/en/pages/consumer-business/articles/travel-hospitality-industry-outlook.html.

[4] Langford, Guy, and Guy. “2019 Travel, Transportation, and Hospitality Industry Outlook.” Deloitte United States, 10 Jan. 2019, www2.deloitte.com/us/en/pages/consumer-business/articles/travel-hospitality-industry-outlook.html.