Navigating hospitality’s future: 5 tips to thrive in 2025

Hospitality leaders seem to be cautiously optimistic about 2025. Forecasters predict low single-digit growth, and trends appear to be settling into more “normal” patterns. Business travel is returning, and leisure demand is showing resilience. 

Owners are rightfully concerned costs will outpace top line growth. The labor market continues to be tight, so wages are rising and open positions remain unfilled. In the U.S., interest rates are still high, challenging supply growth and high inflation is making consumers conservative. Competition continues to be fierce, both from traditional and emerging players.

In a highly competitive environment, those that are willing to challenge the status quo win. There are headwinds for sure, but there are also opportunities in today’s environment. Consumers report they plan to continue to prioritize travel, even as budgets tighten. With tighter budgets, high-value or unique experiences become most attractive and will require innovation.

We are in year three of generative AI availability. Solutions based on this technology are becoming both more mature and better understood, setting the stage to drive significant value. There’s still plenty of opportunity for competitive advantage here and at much less risk than even a few months ago.

Now is not the time to pull back and wait it out. If you do, you’ll be left behind. 

I have five pieces of advice that will help you successfully navigate 2025 and beyond:
 

Focus on customer needs
 

As competition increases, the way to win is to “own” your customers, and that means understanding what they need and how to best deliver it. Part of the challenge is that we have many “customers” in hospitality. Of course, there’s the guest, but owners are a key customer, too—as are the travel management companies (TMCs) and SMB travel managers in the B2B segment.

The key here is to understand your customers’ needs from their perspective. This means taking a hard look at customer data with fresh eyes, setting aside previous assumptions. Remember, you should be focused on those customers you can serve best, given your brand promise and service delivery. Advances in natural language processing are making it much easier to mine online feedback more comprehensively and broadly than just understanding volume or sentiment, turning the entire internet into a giant focus group. When combined with the data you collect internally, this can be a powerful tool to identify customer needs. 

Encourage your individual agents, sales reps and developers to ask their clients how you can serve them better. Apply the same analysis techniques on this feedback as you do on guest feedback.

Invest in commercial strategy

Sales, marketing and revenue leaders have been talking quite seriously about moving from siloed disciplines to a more holistic “commercial” strategy. This is exactly the right idea. However, as usual, the more we talk, the harder it feels to act. Getting serious about commercial strategy is going to require serious investment. Technology will need to be overhauled, incentives aligned, roles redefined and training developed. 

Organizations must invest in decision support technology. Teams shouldn’t be hunting for insights—they should be evaluating recommendations and taking action. They shouldn’t be reformatting reports of past performance—they should be analyzing future trends and setting the organization up for success. This will require different technology, but it will also require a different mindset from the teams. Instilling this mindset requires investment in skills development, leadership and potentially some new roles on the team.

The benefits of this new approach to revenue generation are obvious, and long overdue, but they won’t come without investment. Start now and reap the benefits sooner. 

Competition for labor is only increasing, as labor costs continue to rise. Humans must be preserved for the things that humans do best. Any manual, repetitive tasks, large or small, even those requiring human judgment or action, are candidates for automation. Automation solutions can handle very complex workflows like report building and distribution, rate loading and responding to guest and franchisee queries. These solutions significantly reduce human workload, resulting in cost savings and improved productivity.

Recent advances in AI are expanding automation opportunities. AI can now be used for advanced human activities like roleplaying a sales call and providing meaningful feedback or evaluating the quality of a revenue strategy call. These automated evaluation tools provide meaningful, bespoke feedback at scale and preserve leadership time for individualized coaching and, importantly, strategy building.

While every organization is being pressured to jump on the AI bandwagon, it’s crucial to be purposeful and responsible in how you implement automation, particularly AI-driven solutions. I have two pieces of very strong advice:

1. Stay focused on solving the most pressing business pains. These should be pains that when solved would drive significant value for the organization. Then pick the right tool to solve that problem. There are a lot of “shiny object” AI solutions out there that won’t deliver value to justify the investment.
2. Start with internal-facing processes before you expose AI solutions to guests. Even with growing maturity, mistakes are common, and you don’t want them to become public failures. Ensure there are ample opportunities for “human-in-the-loop” validation in any solution you implement to minimize the impact of inevitable mistakes.

Distribution remains one of the least understood areas in hospitality, even by hospitality insiders. Most leaders don’t usually think about how products and prices are made available for sale, and when they do, they just assume data magically flows from internal systems to the myriad (and growing) partners we work with. The truth is that the integrations we distribute through are extremely complex and quite fragile, and under-resourced distribution teams labor in obscurity to keep price and availability flowing. The consequences are severe. If these integrations break, the best-case scenario leaves you out of parity, meaning you lose valuable positioning that drives bookings. The worst case is revenue loss, either from incorrect pricing or rates not being available for sale.
 

When it comes to distribution strategy, there seem to be two prevailing, though not very nuanced, thoughts. First, more is better, so we should work with every partner we can to sell every room. Second, third parties are bad, so we should push everything direct. Neither strategy is exactly correct. Companies need to be careful about the partners they work with, ensuring they’re getting value from the commissions they pay. Third parties can be extremely valuable and a necessary part of your demand landscape. The challenge is leveraging these partnerships to your full advantage, a process that requires nuanced evaluation and careful negotiation.
 

Hospitality has been struggling to get control of B2C distribution since online travel agencies came on the scene a couple decades ago. And now the B2B distribution landscape is becoming more complex with NDC and GDS bypass solutions exploding on the scene. Hospitality companies need to get a handle on this soon, before they lose control and get pushed even farther from their customers. A comprehensive commercial strategy requires solid distribution strategy and execution, which means distribution teams need a seat at the table. An important first step is for hospitality leaders to ensure they understand this crucial function. 

Hospitality leaders in 2025 must get ready to make some big changes. It’s much better if you purposefully drive change, rather than react to it. That’s going to mean proactively challenging norms and changing the status quo.

Work that was traditionally done by a person will shift to digital. Teams may be deployed differently, moving off property and even out of the market. People will need to learn to rely on recommendations made by models—not just our teams but eventually our customers too. Team sizes will shrink, so leaders will need to get comfortable being judged on the quality of their results and the scope of their influence, not the number of people they lead.

Of course, challenge and change still need to come from a solid foundation. There’s a lot of “new” these days, so keep learning. Follow thought leaders you trust, look at demos and ask hard questions. Get inspiration from all around, not just hospitality or your competitors.

Even though 2025 may look like business as usual for hospitality, if you approach it as business as usual, you’ll be at a huge disadvantage. If you follow my advice about meeting customer needs, investing in commercial strategy, driving efficiency through automation and understanding the distribution landscape, you’ll have a strong foundation to build from as you challenge and change. 

Never stop asking yourself, “Does it have to be this way?” And certainly don’t ever stop learning.