Hospitality Industry Trends 2023

Hosting problematic guests: Labor shortages and rising risk.

Learn about hospitality market trends and insurance rate changes for 2023.

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Hospitality

HUB 2023 Outlook

What's covered...

Setting the Scene

What to Expect in 2023

Make a Plan

About HUB

Profitability

Vitality

Resiliency

Sustainability

Take care of employees

Emphasize safety

Meet the Experts

HUB Hospitality

Setting the Scene

Bumps in the road may cause trouble in paradise.

As the public’s fear from the COVID-19 pandemic receded, pent-up desire for travel and leisure boosted revenue across various sectors. But as high inflation affects the cost of goods, services and labor, profitability and stability remain elusive.

What to Expect in 2023

Investments in technology and a pivot in business practices kept the hospitality industry afloat through tough times, but lingering challenges remain: economic uncertainty, ongoing labor shortages, higher costs on everything from supplies to insurance and changing consumer demands. Hospitality employers that engage in risk management and focus on recruitment and retention will be poised to thrive in 2023.

Make a Plan

Download our 2023 Hospitality Outlook and Insurance Market Rate Report to see what to expect in the coming year.

Download Report

Be Prepared

Emphasize safety.

Supporting employees’ health, safety and wellbeing can be a significant differentiator in today’s employment market. Offering personalized plans using HUB’s QEX approach will give you a competitive advantage.

Seek alternatives.

Be transparent with your broker.

Take care of employees.

An injured worker isn’t just a workers’ compensation claim — it leaves a hole in the workforce as well. Make safety a tenet of the organization. Train and onboard employees so they understand expectations and commit to maintaining a safe work environment.

Emphasize safety.

Identify the most significant insurance costs and seek alternatives. Whether it’s embracing a hospitality benefits captive to reduce health insurance costs or changing the mix of self-insured retentions and deductibles for property and liability policies, working with a HUB hospitality insurance specialist can help you find the best alternatives for your organization.

Seek alternatives.

Seek alternatives

Be transparent with your broker.

Take care of employees.

Emphasize safety.

Be transparent with your broker.

Let your broker know what changes you’ve made to the business, so there are no surprises at renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, so your broker can identify the best options.

Take care of employees.

Emphasize safety.

Be transparent with your broker.

Seek alternatives.

Meet the Experts

Practice Leader & Chief Sales Officer

Hospitality Practice

Kim Gore

Linkedin Profile

Cross Border Practice Leader

Karim Chandani

Hospitality Practice

Linkedin Profile

Risk Advisor

Placito Miceli

Hospitality Practice

Linkedin Profile

Hospitality

When you partner with us, you’re at the center of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB hospitality insurance specialist.

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in commercial insurance premium brokered by HUB

$641M

hospitality clients

15,156

insurance policies managed

35,815

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Uncertain economy will tighten profits in 2023.

Hospitality industry profit margins will shrink in 2023 as supply chain shortages, inflation and increasing wages for workers continue to put pressure on profit margins. Hotel and lodging industry revenue has rebounded from the COVID-19 pandemic, with room revenue expected to reach $188 billion in 2022, an 11% increase over 2019. However, adjusted for inflation, revenue per available room is unlikely to surpass pre-pandemic levels until 2025. The industry will continue to feel inflationary pressure on food, beverages and labor in 2023, with 95% of restaurant sales going toward these increasing expenses. More than 90% of restaurant owners have raised prices; 65% have made menu changes because of food costs or ingredient availability. Many restaurants have cut back hours and postponed expansion plans. The skilled labor shortage is raising wages, further shrinking the bottom line. Hotel industry wages are up nearly 18% in 2022 compared with 2019, and the pressure is particularly acute for companies in California, which increased its minimum wage for service

2. American Hotel & Lodging Association, “Hotels' Recovery Continues, Workforce Challenges Remain,” July 27, 2022.

Sustainability

Resiliency

Vitality

Profitability

Sustainability

Resiliency

Vitality

Profitability

Personalized benefits is part of a benefits strategy centered around delivering quality employee experiences (QEX). Delivering quality experiences through benefits increases worker satisfaction, engenders greater loyalty and creates an attractive workplace where potential employees will want to work.

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Putting personalized benefits on the menu.

Staffing remains below pre-pandemic levels, with the restaurant industry down 750,000 jobs compared with 2019. The hotel sector is short 400,000 workers, with 87% of lodging operators experiencing staffing shortages. Hospitality businesses will want to take creative measures to recruit and retain workers, such as offering improved benefits, wellness plans and more schedule flexibility. In addition, hotels and restaurants are prioritizing employee safety with improved risk management measures and training. This safety emphasis includes monitoring hours to ensure staff is not overworked, which puts them at greater risk of costly accidents and mistakes. Employers will want to consider personalized benefits to show workers they are valued.

7. CNBC, “Restaurants are short-staffed, and that’s taking a big toll on customers and workers alike,” July 17, 2022.

Sustainability

Resiliency

Vitality

Profitability

regions, forcing hospitality businesses to improve building resiliency and prioritize ongoing maintenance. With rates expected to rise at least 5% — 10% to 20% for properties in catastrophe-exposed areas — hotels and restaurants need to show underwriters they are mitigating risk. Those with a proven risk management strategy that includes a post-disaster plan for recovery will secure better coverage terms and conditions. For more information on what to expect with insurance rates, download our 2023 Hospitality Outlook and Rate Report.

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Security remains the biggest peril in paradise.

The hospitality industry’s long-term success depends on its ability to adapt to new trends and technologies and mitigate threats to business continuity, such as natural catastrophes and criminal activity, especially cybercrime. Expanding technology-based services like online delivery and remote guest check-in that became popular during the pandemic has given hackers greater access. The hospitality industry is the third most targeted by cyber criminals, largely because of the amount of personal and financial data that resorts, hotels and restaurants store in their databases. Most major hotel and restaurant franchises now require franchisees to have some level of cyber insurance, but obtaining coverage is difficult and expensive. Underwriters will look for hospitality businesses with proven cybersecurity protections like cybersecurity audits, multifactor authentication and employee training.

8. Financial Times, “Hotels in hackers’ sights as technology replaces personal touch,” March 27, 2022.

Sustainability

Resiliency

Vitality

Profitability

Hospitality businesses should work with insurance specialists to ensure they are adequately covered for any sustainable or “green” upgrades made to their business or property.

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Spend the ‘green’ and embrace sustainability.

Consumer pressure on the hospitality industry to implement more environmentally friendly business practices is growing. In 2022, 87% of Americans said sustainable travel was somewhat or very important to them, compared with 62% in 2016. From reducing waste by eliminating single-use items like toiletries or plastic food containers, to conserving energy with more efficient lightbulbs and thermostats, hospitality businesses that want to appeal to environmentally conscious travelers would be wise to increase their sustainability efforts in 2023. The cost of doing so can be significant, particularly for the hotel industry, but the potential payoff is huge — more than 78% of global travelers indicated they intend to stay in a sustainable property at least once in the next year.

9. Hospitality.net, “Greenwashing, Ecotourism and Sustainability Are Now a Major Concern for Travelers,” September 6, 2022.

HUB hospitality specialists will work with you to develop a tailored strategy that will protect the bottom line, support your workforce and build resiliency for 2023. Here are some initial considerations:

HUB hospitality insurance specialists will work with you to develop a tailored strategy that will protect your bottom line, support your workforce and build resiliency for 2023. Here are some initial considerations:

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Be prepared. Talk to a HUB advisor today.

1. AHLA, “Report: Hotels' Recovery Continues, Workforce Challenges Remain,” July 27, 2022.

Seek alternatives

Work with your broker

workers, a trend that may spread to other states. Rising insurance costs for lodging and food and beverage will compound the industry’s profit burdens. Hospitality companies with liquor liability or live entertainment exposures can expect to pay 5% to 20% more for insurance in 2023, and those with amenities such as spa services will see similar rate hikes. Training workers on how to identify alcohol-related risks and maintaining risk management protocols will be paramount to reduce liabilities.

Using data analytics and tools that help identify what matters to workers, hospitality employers can offer benefits tailored to meet employees’ individual needs without increasing costs. Personalized benefits is part of a benefits strategy centered around delivering quality employee experiences (QEX). Delivering quality experiences through benefits increases worker satisfaction, engenders greater loyalty and creates an attractive workplace where potential employees will want to work.

The hospitality property insurance market will also remain challenging in 2023, particularly in high-hazard regions, forcing hospitality businesses to improve building resiliency and prioritize ongoing maintenance. With rates expected to rise at least 5% — 10% to 20% for properties in catastrophe-exposed areas — hotels and restaurants need to show underwriters they are mitigating risk. Those with a proven risk management strategy that includes a post-disaster plan for recovery will secure better coverage terms and conditions. For more information on what to expect with insurance rates, download our 2023 Hospitality Outlook and Rate Report.

Hospitality businesses should work with insurance specialists to ensure they are adequately covered for any sustainable or “green” upgrades made to their business or property.

10. Booking.com, Sustainable Travel Report, accessed September 23, 2022.

1. AHLA, “Report: Hotels' Recovery Continues, Workforce Challenges Remain,” July 27, 2022.

California, which increased its minimum wage for service workers, a trend that may spread to other states. Rising insurance costs for lodging and food and beverage will compound the industry’s profit burdens. Hospitality companies with liquor liability or live entertainment exposures can expect to pay 5% to 20% more for insurance in 2023, and those with amenities such as spa services will see similar rate hikes. Training workers on how to identify alcohol-related risks and maintaining risk management protocols will be paramount to reduce liabilities.

10. Booking.com, Sustainable Travel Report, accessed September 23, 2022.

2. American Hotel & Lodging Association, “Hotels' Recovery Continues, Workforce Challenges Remain,” July 27, 2022.

3. National Restaurant Association, “Restaurant Operators Endure Weaker Business Conditions as Economic Pessimism Grows,” August 18, 2022.

4. National Restaurant Association, Restaurant Business Conditions Survey: August 2022, accessed September 23, 2022.

6. Washington Post, “Newsom signs law with sweeping protections for California fast-food workers,” September 6, 2022.

7. CNBC, “Restaurants are short-staffed, and that’s taking a big toll on customers and workers alike,” July 17, 2022.

11. Booking.com, Sustainable Travel Report, accessed September 23, 2022.

6. Washington Post, “Newsom signs law with sweeping protections for California fast-food workers,” September 6, 2022.

5. American Hotel & Lodging Association, “Hotels' Recovery Continues, Workforce Challenges Remain,” July 27, 2022.

4. National Restaurant Association, Restaurant Business Conditions Survey: August 2022, accessed September 23, 2022.

2. American Hotel & Lodging Association, “Hotels' Recovery Continues, Workforce Challenges Remain,” July 27, 2022.

5. American Hotel & Lodging Association, “Hotels' Recovery Continues, Workforce Challenges Remain,” July 27, 2022.

4. National Restaurant Association, Restaurant Business Conditions Survey: August 2022, accessed September 23, 2022.

3. National Restaurant Association, “Restaurant Operators Endure Weaker Business Conditions as Economic Pessimism Grows,” August 18, 2022.

6. Washington Post, “Newsom signs law with sweeping protections for California fast-food workers,” September 6, 2022.

Practice Leader & Chief Sales Officer

Kim Gore

Hospitality Practice

Linkedin Profile

Cross Border Practice Leader

Karim Chandani

Hospitality Practice

Linkedin Profile

Risk Advisor

Placito Miceli

Hospitality Practice

Linkedin Profile

Hotel industry wages are up nearly

18%

in 2022 compared with 2019.

87%

of lodging operators are experiencing staffing shortages

HUB

Hospitality industry profit margins will shrink in 2023 as supply chain shortages, inflation and increasing wages for workers continue to put pressure on profit margins. Hotel and lodging industry revenue has rebounded from the COVID-19 pandemic, with room revenue expected to reach $188 billion in 2022, an 11% increase over 2019. However, adjusted for inflation, revenue per available room is unlikely to surpass pre-pandemic levels until 2025.2 The industry will continue to feel inflationary pressure on food, beverages and labor in 2023, with 95% of restaurant sales going toward these increasing expenses.3 More than 90% of restaurant owners have raised prices; 65% have made menu changes because of food costs or ingredient availability. Many restaurants have cut back hours and postponed expansion plans.4 The skilled labor shortage is raising wages, further shrinking the bottom line. Hotel industry wages are up nearly 18% in 2022 compared with 2019,5 and the pressure is particularly acute for companies in California, which increased its minimum wage for service workers,6 a trend that may spread to other states.

Practice Leader & Chief Sales Officer

Hospitality Practice

Kim Gore

Linkedin Profile

Karim Chandani

Cross Border Practice Leader

Hospitality Practice

Linkedin Profile

Placito Miceli

Risk Advisor

Hospitality Practice

Linkedin Profile

Practice Leader & Chief Sales Officer

Hospitality Practice

Kim Gore

Linkedin Profile

Karim Chandani

Cross Border Practice Leader

Hospitality Practice

Linkedin Profile

Placito Miceli

Risk Advisor

Hospitality Practice

Linkedin Profile

HUB

7. CNBC, “Restaurants are short-staffed, and that’s taking a big toll on customers and workers alike,” July 17, 2022.

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Go to HUB site

Head to hubinternational.com to learn more about us.

Keep pace with the latest trends

Stay In the Know

Privacy Statement

Terms & Conditions

Sitemap

Outlook Home

Industries

Agribusiness

Construction

Cannabis

Education

Entertainment & Sports

Financial

Healthcare

Hospitality

Real Estate

Transportation

Nonprofit

Employee Benefits & Retirement

Private Client

Go to HUB site

Head to hubinternational.com to learn more about us.

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Cannabis

Construction

Education

Entertainment & Sports

Financial

Healthcare

Hospitality

Nonprofit

Real Estate

Transportation

Agribusiness

Employee Benefits & Retirement

Private Client

Industries

CA | EN

CA | FR

Employee Benefits & Retirement

Private Client

Industries

CA | EN

CA | FR

Cannabis

Construction

Education

Entertainment & Sports

Financial

Healthcare

Hospitality

Nonprofit

Real Estate

Transportation

Agribusiness

Employee Benefits & Retirement

Private Client

Industries

CA | EN

CA | FR

Employee Benefits & Retirement

Private Client

Industries

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