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 stand to put a damper on prospects for the road ahead.
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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
63%
Percentage of hospitality businesses identified 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
Integrated risk strategies reduce uncertainty.
3 | Resiliency
The North American lodging sector continued its rebound in 2024, a market expected to reach $650 billion from $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 $1552 versus $130.50 in 2019.3 U.S. restaurants also are booming, with 2024 sales likely to set all-time records of $1.1 trillion.4
The industry enjoyed a welcome boost in 2024 due to an improving economy, as inflation and interest rates relented. Growing technology adoption continues to bolster the sector. Business travel has been slower to come back but is resurging with the accelerating return-to-office push. In 2025, it may be pivotal in helping offset a leisure travel slowdown as consumers cut non-essential spending to pay off a record $1.14 trillion of credit card debt.5
Positive developments can’t offset continuing drags on profitability. Hospitality’s most significant operational risk remains the labor shortage and its impact on wage costs.
As 2024 progressed, for example, over three-fourths of hoteliers reported staffing shortages, prompting 86% of them to increase wages.6 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 Survey7, only 26% 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 and liability — 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, 82% of operators on the food and beverage side entered the second half of the year still on the hunt for new staff. The hottest commodities: chefs and cooks, represent 30% of open roles.8
Improved pay is only a partial solution, though average hotel wages have outpaced others in the overall economy by more than 20% since the pandemic.9 Increasingly important in this environment are benefits that are personalized and deliver an optimal employee experience. Hospitality workers highly value flexibility: 52% of hotels have adjusted work hours and location policies accordingly.
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,10 which policies and training can help counter.
Difficult working conditions, toxic cultures and abusive customers can hinder recruiting. One study found 37% of female and 14% of male restaurant workers had been sexually harassed, while 53% of hotel workers had experienced workplace aggression.11
However, the challenges go beyond merely keeping 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, 63% of the U.S. hospitality businesses responding to the HUB survey say they’ve adopted enterprise risk management to better anticipate and manage roadblocks to success.
Internal alignment around risk management, accordingly, has vastly improved. In the HUB survey, 75% of respondents said C-suite objectives are aligned with risk management, insurance and HR strategies, versus only 46% 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 who increase their spend on mitigation efforts will be seen as best-in-class 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. Another solution for a hard market is to shift away from a one-year placement mentality, especially when capacity is shrinking.
Commercial auto insurance rates will rise 10% or more, depending on the services offered. It will be a challenge for hotels offering courtesy van services and restaurants that do their own delivery. Outsourcing those services is one solution as a 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 labor gap and improve operational efficiencies.
But the industry must be able to effectively balance using 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 travelers want direct human contact when they have service needs.12
On the restaurant front, many quick-serve businesses are deploying self-ordering kiosks. They close the labor gap but also provide customer insights, driving up-selling and cross-selling. After implementing tablet kiosks, Panera saw sales surge 11.5% in two years.13
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.14 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. Talk to your insurance broker before you roll out a new technology solution. The average cost of a hospitality data breach in 2023 jumped 13% to $3.36 million.15
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.
Inflation, increasing catastrophes and nuclear verdicts 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 windows and roofing that can withstand hurricane winds or adding water sensors throughout buildings, 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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Paul DiBenedetto
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HUB 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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2 | Vitality
3 | Resiliency
4 | Technology
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3 | Resiliency
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2 | Vitality
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3 | Resiliency
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3. Statista, “Average daily rate of the hotel industry worldwide from 2008 to 2019.”
4. Axios, “Restaurants are having their biggest year ever,” June 5, 2024.
5. Forbes, “Average Credit Card Debt Study 2024,” September 24, 2024.
6. AHLA, “76% of surveyed hotels report staffing shortages,” June 10, 2024.
8. Expert Market, “Food and Beverage Industry Trends 2024: Trends, Challenges and Future Predictions,” August 19, 2024.
9. AHLA, “AHLA workforce report: Hotels add 700 jobs in May,” June 7, 2024.
10. Toast, “How to Survive the Restaurant Industry Labor Shortage,” accessed September 23, 2024.
11. Florida International University, “The costs of workplace violence are too high to ignore,” April 25, 2025.
7. HUB’s Outlook Executive Survey polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.
12. Oracle, “Hospitality in 2025: Automated, Intelligent...And More Personal,” accessed September 23, 2024.
13. QSR, “How Kiosks Empower Guests and Boost Restaurant Business," June 29, 2023.
14. Forbes, “AI in Hospitality: Elevating The Hotel Guest Experience Through Innovation,” March 6, 2024.
15. Asimily, “3 Cyberattacks That Devastated Hospitality in 2023 and 2024,” accessed October 7, 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 September 23, 2024.
75%
of hospitality executives most often identified employee productivity as their top HR priority for 2025.
$3.36 million:
average cost of a hospitality data breach in 2023.
63%
of U.S. hospitality business respondents of the HUB 2025 Outlook Executive Survey have adopted an Enterprise Risk Management approach.
of hospitality executives most often identified employee productivity as their top HR priority for 2025.
75%
of U.S. hospitality business respondents of the HUB 2025 Executive Outlook Survey have adopted an Enterprise Risk Management approach.
63%
average cost of a hospitality data breach in 2023.
$3.36 million:
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© 2024 HUB International Limited. 150 N Riverside Plaza, 17th Floor, Chicago, IL 60606. All rights reserved.
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Keep pace with the latest trends.
Stay in the Know
Industry Outlooks
Retirement
Private Client
Personal Insurance Marketplace
Employee Benefits
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