5 challenges facing the hotel industry and what you can do about them

The numbers alone don’t give us the full story. We know the hotels that are surviving are not just cutting costs, but are changing how they run their operation. They’re making deliberate decisions about their people, their guests and their technology to stay one step ahead. This article is written with that view in mind by giving you practical steps from within the industry, for the people running it.

Below, we’ve laid out the 5 challenges we’re seeing most in the hotel industry right now, and what you can actually do about each one. Once you know how to tackle these pressures effectively, you’ll be able to protect your profits, retain your staff and keep guests coming back.

There are more areas of hotel operations that now come with a hefty price tag which most of us wouldn’t have considered a few years ago. Labour costs remain the biggest pressure according to Savills report, rising by 4.1% due to the National Living Wage changes and operational expenses adding to the bill. The sector wage bill is also estimated to have grown by over £3.2 billion, according to the Office for National Statistics, raising more uncertainty around what that means for hotel profit margins and future expenses. But energy, business rates and F&B costs are adding to the pile and when they all hit at once, it’s a lot to take on. Here are the 5 biggest challenges we’re seeing most across the hotel industry and what you can do about each one.

If you’re feeling the heat on profit margins right now, you’re not alone. The average profit margins in our sector have dropped by 3.6%, according to Savills report, and the pressure isn’t coming from one place. Energy, food, linen and business rates are all moving in the same direction at the same time which makes it difficult to get a clear view of where costs are rising, until you’re already feeling it.

“Following a £3.4 billion cost shock, we’ve lost 84,000 jobs; a larger portion than the wider economy. Favourite venues are closing and high streets are losing the vibrancy they need.”

This is from an open letter to the Government by our Managing Director, Champa Magesh, where we received hundreds of signatures from hospitality operators. We understand that the cost shock isn’t all we have to think about now. It's the added pressure on every payroll run, supplier invoice and business rates bill.

Practical steps to bring your costs under control

• Start tracking your gross operating profits alongside RevPAR to see where revenue might be being missed. This tells you if you’re making profits in the right places. Try setting up a spreadsheet where you can collaborate with other teams and get the full revenue picture.
• Tighten your staff scheduling so you’re not giving individuals more overtime than others. A few hours per person per week adds up and may not flag until payroll arrives. Keep those costs down by organising rotas well in advance to ensure your service quality is always the top priority.
• Don’t wait for the business rates revaluation to hit before acting. The 2026 reassessment could push average hotel bills up by 115%, according to UKHospitality. Now is the time to review supplier contracts, cut operational waste and review any refurbishment plans that aren’t essential. You can’t control the revaluation, but you can control what you spend before it hits.

We know our sector gives young people some of their first real career opportunities, with a third of the hospitality workforce being under the age of 25, according to The Caterer. They arrive expecting their workplace to feel as connected as the tools they use at home. With 84% of Gen Z using AI every month, as reported by Space and Time, that gap shows up fast. Slow or clunky systems, poor rota communication and pay frustrations are still some of the most common reasons good people leave. If your team isn’t settled, your guests feel it.

How do you stop good people leaving your hotel?

• Start the first few weeks strong for new staff. Give your staff a clear onboarding structure explaining shifts, expectations and who to ask for help. It doesn’t need to be complicated as you want to help them feel confident and comfortable from day one.
• Mobile-first training matters more than you might think. Digital training tools that are mobile friendly and easily accessible allow new staff to complete mandatory learning in their own time rather than under controlled conditions. Your staff get more flexibility and you gain their focus in practical training.
• Stay on top of rota scheduling by publishing them in advance in case of any changes. Last-minute changes are one of the most common reasons people leave hospitality as they can’t plan their lives around it. This shows you’re respecting their time by staying ahead rather than leaving it to the last minute.
• Telling someone there’s areas to grow in their role isn’t enough. Show them a real example of progression such as someone who started on reception and is now a general manager. A defined path with honest timelines gives people a reason to stay when they might think about leaving.

Guests have never had more options, and they know it. Online comparison sites and AI booking tools mean guests can filter what they want right at the search stage. The way guests search has shifted significantly, and they expect to find you before they’ve even opened a booking site. Our AI hotel booking masterclass discovered there are around 5.5 billion monthly visitors to ChatGPT alone, showing that AI search is becoming the norm.

Not only are guests expecting quick online results, but they also want experiences that feel personal. Our guest loyalty report found that personalised content is one of the top preferences from guests in the younger age group. A further 82% said they would be encouraged to book a stay if they’re sent a promotional offer via email. Technical Product Manager Robert Ventura at Access Hospitality explains that:

"Guest engagement isn’t just about sending messages. It’s about creating meaningful touchpoints that drive loyalty and repeat bookings. When you know a guest’s preferences before they arrive, you’re not just meeting expectations but you're exceeding them."

Keep your guests happy from the very start

• Get found before guests have decided where to stay. That means investing in hotel marketing strategies like local SEO and social media to show up better online. Guests are comparing options before they’ve even opened a booking site. If you’re not showing up early in that process, you won’t show up at all.
• Use guest data that’s already available to you. Your hotel PMS and CRM hold everything you need to send guests follow-up emails and offers that are personal to their experience. Most hotels have the data, they just aren’t using it consistently.
• Stop leaving upsell revenue on the table. Think about the areas of your operation you can promote like local experiences, spa packages, room upgrades or dining offers. Guests are open to these, especially when they’re offered at the right moment. Most hotels don’t realise they’re missing revenue in these areas and it can boost profits without adding a single extra booking.

The more your hotel relies on connected technology, the more valuable your systems become to cybercriminals. You’re keeping all sorts of information like payment details, passport numbers, email addresses and booking histories that can be lost if your hotel cybersecurity isn’t strong. This data holds a lot of value, especially in the systems that store it like your PMS, booking engine, EPoS and guest Wi-Fi acting as potential gateways for cybercriminals.

Combat cybercriminals to protect your hotel operations

• Start with the basics that aren’t too complicated. Installing anti-virus software and strong password policies across every login point helps to block the most common cyberattack areas. Shared passwords and outdated security software are how hotel systems get compromised. Once the cybersecurity foundations are in place, loss of guest data is more preventable.
• Train your teams to spot phishing emails and fake invoices that could be missed. A convincing email pretending to be a supplier or booking platform is easy to miss if a shift is busy. If your teams are not familiar with the telltale signs of a cybercriminal then it can be costly for your hotel operation.
• Know exactly where your guest data is kept and who has access to it. Only give staff system permissions when they have completed essential training to ensure sensitive data is secure. If someone leaves, revoke their access the same day.
• Have a data breach response plan ready before you need it. When something goes wrong, you don’t want to be making decisions under pressure like who to call and what to tell your guests. Staying one step ahead helps you prepare for the worst without the extra admin.

Most hotels we speak to are running multiple systems to keep things moving and most of those systems don’t talk to each other. When that happens, your teams end up pulling reports manually and chasing numbers instead of focusing on the guest in front of them. According to our AI report, hotels are switching between 5 different systems and wasting 322 hours per year doing so. Nicola Longfield, Chief Commercial Officer for Global Accommodation & Payments at Access Hospitality, spoke to UKHospitality about how hoteliers are embracing technology to help them stay ahead:

“The operators who will be best positioned over the next three to five years are the ones making deliberate technology decisions today. Not panic decisions, not rip-and-replace, but strategic ones informed by where the industry is heading.”

This is where AI is starting to change things, as our AI report shows that 45% of hotel operators already believe that AI could meaningfully improve their efficiency. The smart move isn’t adopting AI as a stand-alone tool, but as a supportive layer that holds your systems together, so data is actually working for you. Platforms like Access Evo are already taking that step for hotel operators by acting as an AI layer that gives you one connected place with intelligence built into every step.

Using hotel technology to get ahead rather than just keep up

• Rotas, reminders and guest communications are still manual in most hotels, and they don’t need to be. Identify the one process that’s costing the most time and fix that first with the right processes.
• Look for AI platforms that connect your systems without taking over. The goal isn’t more technology, but to stop your systems from operating independently. That means your team spends more time actually running the hotel rather than manual workloads.
• Start with an audit of what you already have. Map which systems your team switches between most and where data falls through the gaps. Fix the biggest friction point first.

None of these challenges are going away, and we wouldn’t suggest ignoring them. Rising costs, staff retention, higher guest expectations, cybersecurity threats and disconnected systems are all applying pressure at once.

But the hotels we know are managing well right now have something in common. They have a clear view of where their profits are going. They are investing in their teams, applying cybersecurity processes and using technology to connect their operations so they can make better decisions faster. That clarity lets them make better decisions faster and it’s what separates the properties that are growing from the ones that are being left behind.

If you’re looking to fix one challenge or implement a fully connected platform, Access Hospitality has the right tools to get you there. With Access Evo now acting as the connective AI layer across your products, you bring your teams, guest data, reporting and distribution together in one place, so your people spend less time chasing numbers and more time with guests.