Hospitality
Risk management is the essential ingredient in the recipe for success.
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What to Expect in 2025
Hospitality will continue to shake off the lingering pandemic-era impacts in 2025, with a pickup in corporate travel expected to offset a leisure market slowdown. But uncertainties over a riskier environment – for the economy, public policy and the markets – stand to put a damper on prospects for the road ahead. Leaning into enterprise risk management strategies will be essential to position organizations to win big in 2025.
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1
Profitability
Uncertainties over emerging and ongoing pressures may stifle rebound.
2
Vitality
Fortify your workforce through flexibility, personalized benefits and anti-violence initiatives.
3
Resiliency
Integrated risk strategies reduce uncertainty.
4
Technology
Tech adoption expands – a big differentiator and a big risk.
Uncertainties over emerging and ongoing pressures may stifle rebound.
1 | Profitability
64%
identify increased costs as the top risk most likely to affect profitability in 2025, and only 35% say they are prepared to address it today.1
Fortify your workforce through flexibility, personalized benefits and anti-violence initiatives.
2 | Vitality
"Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt cupidatat non."
Integrated risk strategies reduce uncertainty.
3 | Resiliency
The North American lodging sector continued its rebound in 2024, a market expected to reach US$650 billion from US$600 billion in 2023. Revenue per available room (RevPAR) levels should hit 121% of 2019 figures in some regions, while the average daily rate may reach US$1552 versus US$130.50 in 2019.3 Canadian restaurants also are booming, with 2024 sales likely to hit $120 billion, an increase of nearly 5% over 2023.4
While Canadians are ready to travel and dine out again post-pandemic, economic uncertainty seems to be keeping them home. Restaurants are feeling the pressure, with nearly two-thirds of Canadian eateries operating at a loss or just breaking even, and with bankruptcies up 44%, the highest figure in 10 years.5
In good news, the Global Business Travel Association forecasted strong Canadian travel numbers for 2024 totalling US$25.9 billion, eclipsing an all-time high in 2019 of US$25.7 billion.6 In 2025, those business travelers may be pivotal in helping offset a leisure travel slowdown as consumers cut non-essential spending to pay off a record $122 billion of credit card debt, a 17-year high.7
Positive developments can’t offset continuing drags on profitability. Hospitality’s most significant operational risk remains the labour shortage and its impact on wage costs. As 2024 progressed, for example, Canadian hoteliers were struggling with staffing shortages, prompting 86% of them to increase wages and enhance benefits.8 But other costs affected by inflation – food, linens and cleaning supplies – also continue to pressure profitability.
Hospitality businesses who proactively approach these challenges with creative solutions are the ones who will emerge both victorious and profitable. With uncertainty also comes the opportunity to plan for unforeseen disruption, yet according to the HUB International 2025 Outlook Executive Survey, only 23% of hospitality companies say they have enough insurance coverage to protect their profit margins.
A new approach to risk management can strengthen organizations and protect profitability during what will continue to be a very tough insurance market. Several lines of insurance, notably commercial auto, are under pressure as insurers grapple with losses.
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Filling hospitality jobs is challenging, even in the best of times, and finding an engaged and dedicated workforce will remain top of mind for hospitality businesses. While the lodging sector saw employment pressures ease somewhat in 2024, the food service side is struggling with 73,000 job vacancies.9 As a result, restaurants are operating at 80% of their normal capacity.10
Improved pay is only a partial solution, though it’s still important, as hotel workers from Vancouver11 to Montreal12 are going on strike to demand higher wages. Benefits that are personalized and deliver an optimal employee experience are increasingly important.
And more than “benefits,” per se, matter. Restaurant employees, for example, cite bad managers (37%) and lack of recognition (44%) as reasons for leaving jobs,13 which policies and training can help counter.
Difficult working conditions, toxic cultures and abusive customers can hinder recruiting. One study found 47% of female and 31% of male workers had reported experiencing harassment or sexual assault.14
However, the challenges go beyond merely holding on to workers. According to the HUB survey, 75% of hospitality
executives most often identified employee productivity as their top HR priority for 2025, compared with 69% of executives overall.
A focus on training does more than improve job readiness and enable career advancement. It keeps workplace vitality invigorated. This should include manager awareness training and a hard look at hiring practices about workplace violence and how to de-escalate violent situations. Doing so will improve the workplace culture – and recruitment and retention. Additionally, better access to mental health benefits will positively impact overall employee satisfaction.
Case Study
A HUB motel client periodically gave employees cash rewards for jobs well done. Instead, HUB suggested a reward to engage employees’ help in identifying potential safety issues on the property. Each month, the entire staff would focus on identifying an area of property risk, such as lighting failures or water leaks, for the maintenance team to fix. Each quarter, all participants are entered in a raffle for a single prize, like a small flat-screen television, resulting in a morale boost and a heightened awareness of safety.
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Uncertainty continues to be the defining characteristic of the outlook for the hospitality industry. It will take preparedness to maintain resiliency.
The risks span every front – regulatory and political; economic and business; and climate impacts. Complex and unpredictable, 60% of Canadian businesses responding to the HUB survey say they’ve adopted enterprise risk management (ERM) to better anticipate and manage roadblocks to success.
Internal alignment around risk management, accordingly, has vastly improved. In the HUB survey, 66% of respondents said C-suite objectives are aligned with risk management, insurance and HR strategies, versus only 53% in 2023.
The shifting insurance environment underscores the need for hospitality businesses to make strategic choices. These choices may include a three- to five-year maintenance plan with regular planned investments to maintain the property and position themselves to be more attractive to underwriters. Hospitality
companies that increase their spend on mitigation efforts will be seen as best-in-class businesses by underwriters and well-positioned for the best coverage options.
Comprehensive business continuity planning is essential to getting back to business when an event occurs. It also signals “best in class” to insurance underwriters, making a big difference at renewal time.
Commercial auto insurance rates will rise 5% or more, depending upon the services offered. It will be a challenge for hotels offering courtesy van services and restaurants that manage their own delivery. Outsourcing those services is one way to transfer risk.
Organizations that choose not to outsource need to implement stringent hiring processes and strong training programs. Additionally, employing telematics to see real-time data on drivers will ease underwriters’ comfort with the risk.
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Technology continues to evolve as the game-changer for the hospitality industry, helping to deliver a stand-out customer experience, narrow the labour gap and improve operational efficiencies.
But the industry must be able to effectively balance tech for efficiency with giving customers the experience they want, whether that is face-to-face or digitally.
In the next few years, more than 60% of global hospitality executives expect a fully contactless experience to become standard for all basic hotel transactions. Only 9% of travellers want direct human contact when they have service needs.15
On the restaurant front, many quick-serve businesses are deploying self-ordering kiosks. They close the labour gap but also provide customer insights, driving upselling and cross-selling. Even more importantly, Canadians prefer restaurants with technological solutions: two-thirds of survey respondents valued the ability to preview menus and nutritional information before setting foot inside the restaurant, and roughly half anted the ability to track their orders or pay for food via a mobile device.16
AI-powered automation enables a high level of personalization – delivering hospitality that feels genuine even though it’s completely automated. Hilton, for one, uses AI to develop detailed guest profiles to offer personalized recommendations for dining and local attractions.17 For restaurants, AI can do everything from respond to reviews to confirm reservations and follow up via text with guests to ask about the experience and offer them an incentive to come back.
Hospitality’s embrace of technology does have a distinct downside in the rising exposure to cybercrime. For example, QR codes can be easily hacked and take down the ordering system and lead to ransom demands. The cost of a data breach has fallen in Canada over the last few years, but the average is still $6.32 million.18
Trends underscore the need to sharpen cyber security protocols and ensure cyber coverage is written to align with hospitality-specific risks. Before rolling out new technology, hospitality businesses should consult with their broker about appropriate policies, procedures and additional risk strategies to protect against vulnerability.
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Tech adoption expands – a big differentiator and a big risk.
4 | Technology
Navigating Your Next Steps
HUB hospitality insurance specialists will work with you to develop a tailored strategy for 2025.
1
Thoughtfully lean into risk management.
Despite decreasing inflation, nuclear verdicts and an increase in severe weather events are making insurance more expensive. Consider alternative insurance vehicles, such as captives. Ask your HUB broker about devising an insurance strategy that meets your risk profile and budget.
Invest in your facilities.
2
Develop a three- to five-year plan with regular budgeted investments to maintain your property and reduce exposure. Investing in roofing repairs and upgrades for water leaks and to support the weight of heavy snowfall, for example, demonstrates to underwriters your commitment to property management and safety.
Hospitality businesses have difficulty attracting and retaining employees, but those with a benefits strategy based on personalization and fostering a quality employee experience (QEX) will boost engagement, have an advantage in recruiting and retention and lower risk as well.
Increase workforce engagement through benefits.
3
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.
Be transparent with your broker.
4
Be Prepared
Download our 2025 Hospitality Outlook and Insurance Market Rate Report to see what to expect in the coming year.
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Meet the Experts
Practice Leader
Hospitality Practice
Jean-Francois Beaulieu
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Practice Leader & Chief Sales Officer, U.S.
Kim Gore
Hospitality Practice
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Risk Advisor
Placito Miceli
Hospitality Practice
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HUB Hospitality
When you partner with us, you’re at the centre 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.
About Us
$860M
in commercial insurance premium brokered by HUB
16,000
hospitality clients
38,800
insurance policies managed
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Related Resources
3. Statista, “Average daily rate of the hotel industry worldwide from 2008 to 2019, by region,” May 22, 2024.
4. Restaurants Canada, “Restaurants Canada: Charting a Path to Prosperity,” September 17, 2024.
5. Restaurants Canada, “Challenges for the Restaurant Industry Persist into 2024 after Record Breaking Bankruptcies,” February 22, 2024.
6. Global Business Travel Association, ”Canadian Business Travel is Forecast to Return to Pre-Pandemic Levels in 2024, Reaching $25.9 Billion USD and 13.5% Annual Growth," April 24, 2024.
7. Equifax, “Equifax Canada Market Pulse, Q2 2024: Economic Pressures Could Impact Credit Performance of Consumers, Especially Young Adults,” September 2024.
8. Hotel Association of Canada, “Workforce Shortages,” accessed October 10, 2024.
9. CityNews, “Restaurants Canada predicting severe consequences following changes to foreign workers policy,” September 22, 2024.
10. Restaurants Canada, “The foodservice sector is grappling with nearly 100,000 job vacancies,” February 12, 2024.
11. Press Progress, “Vancouver Hotel Workers Are Pushing Back Against Low Wages and High Costs of Living by Going on Strike,” July 17, 2024.
12. BNN Bloomberg, “Quebec Hotel Workers Aim for 36% Wage Boost in Contract Talks,” August 8, 2024.
13. Toast, “How to Survive the Restaurant Industry Labor Shortage,” accessed October 29, 2024.
14. The Standard, “Canada’s Epidemic of workplace abuse is hurting employees and the country,” October 26, 2024.
15. Oracle, “Hospitality in 2025: Automated, Intelligent...And More Personal,” accessed September 23, 2024.
16. Hospitality Technology, “2024 Canadian Restaurant Customer Engagement Technology Study: What Guests Really Want,” accessed October 10, 2024.
17. Forbes, “AI in Hospitality: Elevating the Hotel Guest Experience Through Innovation,” March 6, 2024.
18. IBM Newsroom, “IBM Report: Escalating Data Breach Disruption Pushes Cybersecurity Costs in Canada,” July 30, 2024.
1. Results from HUB’s Outlook Executive Survey, which polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.
2. Bismart, “The Hotel Industry 2024-2025 in 10 insights,” accessed October 29, 2024.
75%
of hospitality respondents to the HUB survey identified employee productivity as their top HR priority for 2025.
$6.3M:
the cost of the average Canadian data breach.
0%
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Keep pace with the latest trends.
Stay in the Know
Industry Outlooks
Private Client
Employee Benefits & Retirement
Product Outlooks
Transportation
Real Estate
Nonprofit
Hospitality
Healthcare
Financial Institutions
Entertainment & Sports
Education
Construction
Cannabis
Agribusiness
North American Outlook
Learn more about us. Visit hubinternational.com
Private Client
60%
of Canadian businesses responding to the HUB survey have adopted enterprise risk management (ERM).
75%
of hospitality respondents to the HUB survey identified employee productivity as their top HR priority for 2025.
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CA | FR
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CA | EN
Transportation
Real Estate
Nonprofit
Hospitality
Healthcare
Financial Institutions
Entertainment & Sports
Education
Construction
Cannabis
Agribusiness
Industry Outlooks
Industry Outlooks
Private Client
Employee Benefits & Retirement
Product Outlooks
Product Outlooks
North American Outlook