by Josiah Mackenzie
Founder & Publisher, HotelOperations.com
In addition to being the founder and publisher of this website, Josiah is also the Principal of Benchmark Research Partners and the Host of Hospitality Daily Podcast, from which he drew insights and observations for this article.
What’s happening in the hotel industry now in 2025?
I wanted to know the answer, so I launched a research project through my firm, Benchmark Research Partners, to survey hundreds of hotel industry participants – from hotel owners to asset managers to management companies to brands to on-property teams – and ask them what the top challenges they are experiencing and the opportunities they see and are excited by.
This article summarizes the top stats and takeaways from this research on the state of the hotel industry. It includes insights and case studies from hotel industry leaders I’ve spoken with recently for the Hospitality Daily Podcast towards the end:
Before we get into the research, a bit of context on where hotels are in 2025.
“As an industry, we’re at a really unique inflection point.”
Zach Demuth, Global Head of Hotels Research at JLL, on Hospitality Daily
Hotels in 2025 face a balancing act as they navigate profitability pressures and rising operational costs while embracing the transformative potential of innovation. Challenges that have been persistent since the pandemic (and before!),weigh heavily on hotel operators, from rising labor costs to evolving guest expectations. Yet, innovation in business models and rapidly advancing technology offer new pathways for growth.
Now, let’s review some of the data from the study I ran that shows this.
Data: Financial pressures are the biggest challenge for hotels in 2025
Specifically, hoteliers said revenue generation and profitability was the toughest challenge they faced:
Data: Hoteliers are most excited about guest experience innovation in 2025
When asked what aspect of hospitality excites them most, the hoteliers participating in the study most frequently said “innovating in guest experience delivery”:
If we consider these two data points together – the top challenge and the area hoteliers are most excited about – it reveals a clear theme:
Hotels in 2025 will focus on driving profits through better guest experiences
People and the organizations they lead are always motivated by two things – what pain they’re driven to fix and what they want to move toward because they see the potential there.
What’s compelling about the hotel industry is when you innovate to improve guest experience, it creates a powerful chain reaction. Delighted guests not only return to your property, but they also recommend it to others. This word-of-mouth marketing is both free and incredibly effective. These satisfied guests develop real loyalty to your business, leading them to book directly rather than through third-party channels. Direct bookings have lower acquisition costs, which ultimately increases profitability.
Why focus on operations and guest experience to drive hotel financial performance?
Adele Gutman, a hospitality strategist and former hotel sales, marketing, and revenue leader, focused on hotel operations and guest experience as the foundation of her success. Despite her title as a commercial leader, Adele realized that exceptional guest experiences created a ripple effect that drove revenue. By empowering her team to deliver unmatched care, Adele’s hotels consistently ranked at the top of guest satisfaction scores, including multiple placements on TripAdvisor’s “best hotels” global list.
Adele understood the direct connection between guest satisfaction and financial performance.
If my guests leave happy, I’m going to have an easy time filling up the hotel. They’ll pay a premium because it’s a great experience.
Knowing this, she cultivated a culture of empowered staff who had the freedom to exceed guest expectations without fear. This approach created unmatched loyalty and demand, allowing her hotels to achieve industry-leading RevPAR without spending a lot on advertising or marketing programs.
Listen: How Focusing on Operations Drove Demand and Revenue for Me as a Hotel Group Commercial Leader
OK, now let’s move on to some other takeaways from this survey…
Data: Hoteliers are looking to people to succeed in 2025
When asked what resources would most help their business succeed in 2025, hoteliers overwhelmingly chose “people” – whether that means more staff or better talent. Notably, technology ranked last among the options.
There are a number of ways you could interpret this. It could mean that hotels and hotel companies need people who know how to use technology to drive results, or there’s a misunderstanding in the hotel industry about how technology can drive significant change.
I think both are true.
Data: Hoteliers see investments in people, sales, and marketing as driving the highest ROI in 2025
The research identified two areas tied for the highest expected ROI in 2025: Staffing & talent development and marketing & sales:
Data: Hoteliers see technology as driving the best ROI over the next 5 years
While technology isn’t seen by hotel leaders in the study as providing the highest immediate return on investment, they do believe it will drive the highest ROI over a five-year timeframe.
This might indicate that hoteliers think it takes time to see the benefits of technology. However, as someone optimistic about technology, I think this could be the result of experiences with subpar technology.
Great tech should deliver high ROI quickly.
Data: Hoteliers want to see AI used more in their work
Three out of four hoteliers in the study indicated wanting to see more AI used in hospitality, with owners and investors showing the strongest support for this.
Since owners typically influence operational decisions, expect an increased focus on AI implementation across the industry in 2025.
Putting these research insights into practice to succeed in 2025
Now that we’ve looked at the stats and data for hotels in 2025, let’s explore what my top takeaway from this research – that innovation in guest experience delivery will drive revenue and profitability for hotels in 2025 – looks like in practice, starting with the very first part of the guest journey – the way they experience your hotel or hotel brand before stepping foot on property.
Case study: Collaborating to create an experience that drives brand awareness and affinity
Kyle and Katina Connaughton are the founders of SingleThread, a 3-Michelin star restaurant and inn in Healdsburg, California. A hallmark of their hospitality is showcasing the artisans, farmers, and producers behind their dishes. To elevate this approach, they partnered with Auberge Resorts, OpenTable, Audi, and others to create ThroughLine, an immersive dining experience that integrates storytelling with fine dining.
Guests watch short films that highlight the origins of their food, connecting them with the people and processes behind each ingredient. This innovative project enhances the guest experience and increases awareness of SingleThread’s brand, creating a stronger connection with their audience.
Case study: Website personalization to power profits
The guest experience starts before someone even steps foot on your hotel property. Ed Skapinok told me how Appellation’s website was designed to deliver a highly personalized experience – and how that drives higher revenue and profitability.
By leveraging data from guest interactions—such as browsing behavior, past bookings, and even dining preferences—their website tailors the content each visitor sees.
“If you were to go to our website, it might look completely different from what another guest sees, based on what we know about your preferences and past interactions.”
This approach not only improves the guest experience but also increases engagement and drives higher conversion rates, showing how personalization – a key driver of guest experience – can directly contribute to profitability.
Case study: Starting the guest experience before arrival at Club Med
Sabrina Cendral is a hospitality strategist and former SVP of Marketing and Sales for Club Med North America. At Club Med, Sabrina also emphasized the importance of engaging guests early. Her team focused on the post-booking, pre-arrival phase to build excitement, share essential travel information, and ensure guests felt confident in their choice. First-time visitors received an introduction to Club Med’s unique offerings, while repeat guests were recognized with loyalty perks and personalized communication.
“Between booking and travel, there’s this critical phase where you need to reassure guests that they made the right choice. It’s about building excitement and providing the information they need to make the most of their vacation.”
This proactive engagement created a seamless transition from booking to arrival, enhancing the guest experience and increasing the likelihood of repeat visits.
Case study: Driving upsell revenue by empowering team members with technology
Another way innovating in guest experience delivery drives revenue is through enabling upsells – both before arrival and on property.
Appellation built a tech stack that makes this easy. By integrating all guest services—including rooms, spa bookings, dining, and events—into a single unified platform, team members can assist guests seamlessly, no matter where the interaction happens.
For example, a barista can book a guest’s spa appointment while serving coffee, eliminating the need to redirect the guest to another team member or part of the property.
Case study: Giving guests choices for their experience to increase satisfaction and drive profitability
Innovating in guest experience delivery can also look like rethinking everything when it comes to hotel operations, something Roman Pedan has done as the founder and CEO of Kasa, a quickly-growing hotel brand that blends high-tech efficiency with high-touch service.
At Kasa, guests can choose between a fully automated experience or more personalized human interactions. For independent travelers, digital check-ins and automated service is available. For those who want a more traditional hotel experience, Kasa’s team members are empowered by technology to offer service fast, meaningful service.
“We want to deliver hospitality that’s rarely seen but always felt. Automation handles the repetitive tasks, allowing our staff to focus on creating memorable guest interactions.”
This approach not only caters to diverse guest preferences but also streamlines operations, resulting in the ultimate goal of any hospitality company: happy guests and higher profits.
Thriving in 2025 and Beyond
Hotel operators today are in the midst of a delicate balancing act: addressing persistent financial pressures while innovating to delight guests and drive profitability. As the research and examples in this article demonstrate, the path to success lies in focusing on three interconnected pillars of hospitality: guest experience, people, and technology.
Guest experience innovation is not just an aspiration but a strategic imperative, creating a ripple effect that enhances guest loyalty, reduces acquisition costs, and boosts revenue. When innovation is carried into the operational systems that deliver these elevated guest experiences, it also boosts profitability.
Doing all this takes teams empowered with the tools and insights to perform at their best consistently. Staffing and talent development, ranked by hoteliers in this study as the most impactful investments, remain central to success. At the same time, the strategic use of AI and other technologies will shape hotel operations today and tomorrow, providing opportunities for personalization, operational efficiency, and revenue growth over the long term.
The winners in 2025 will be those who integrate these elements seamlessly—building operational excellence while continuously innovating in ways that surprise and delight guests. By connecting every initiative back to profitability and cultivating a culture of creativity and adaptability, hotel leaders will maximize their chances of success.
I’ll close with something Zach Demuth shared with me that he heard from Matthew Upchurch, CEO of Virtuoso, that I like to think of as a North Star of innovation in hotel operations:
Automate the predictable. Humanize the exceptional.
This article is based on comprehensive industry research conducted by Josiah Mackenzie and Benchmark Research Partners in December 2024. To access the complete results from this survey, participate in this AI in hospitality survey.
