Perspective

14 Jan 2026

7 minute read

The future of hospitality

Navigating new frontiers

The hospitality industry is facing shifting consumer behavior and macroeconomic headwinds. And the days when scale alone guaranteed success are fading. Explore six imperatives that can help hospitality providers stand out and adapt to a changing market.

Authors:

Matt Josephson

Jeff Casullo

Arne Panzer

The future of hospitality

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Amid the stunning landscape of California’s Joshua Tree National Park, a new hotel debuted in 2025. Set across 180 acres of desert land, the hotel utilizes steel-frame modular units on commercially zoned property, aiming to meet visitor demand for accommodations while addressing community concerns about the impact of short-term rentals in residential neighborhoods. Elsewhere, similar approaches are being taken: a recently opened eco-lodge near Grand Teton in Wyoming uses off-grid water and energy systems to minimize environmental disruption, while a small retreat in Vermont was converted from historic farm structures, integrating renewable energy and local materials to support the surrounding community.

These properties are examples of a new path forward for a hospitality sector that is experiencing many parallel challenges—from rapidly changing guest behavior and changing attitudes about tourism to AI dominating trip discovery and inspiration.

Today’s travelers are digitally fluent and algorithmically steered. They find and latch onto experiences through reels, AI trip planners, and influencers—not only through brand loyalty. In this environment, standing out requires delivering experiences that resonate emotionally and create memorable, authentic interactions. If those experiences can deliver financial success, it will become another proof point for hospitality companies striving for success in a capital-constrained, attention-splintered market.

Key hospitality industry forces

The hospitality industry faces shifting consumer behavior and macroeconomic headwinds. Our research shows that guests expect more tailored experiences, many of them at a discount. Labor, capital constraints, and regulatory pressures are reshaping what’s possible on the back end. Traditional growth models are under pressure from a convergence of multiple forces:

A transforming consumer market

A digital nomad checks into a co-living hub that boasts workspaces and a juice bar. This guest is part of a growing cohort of mobile travelers. In 2024, 18.1 million Americans—about 11% of the workforce—identified as digital nomads, a 147% increase since 2019. Their requirements may differ from those of luxury travelers who expect discreet check-ins or personalized concierge service. Yet hospitality companies should cater to these diverse preferences without diluting brand or service quality.

At the same time, discretionary travel is in flux. For instance, financial analysts who cover the cruise industry have taken note of later bookings, shorter trips, and reservations for less expensive cabins. Rising costs and economic anxiety are driving other changes in travel behavior, including demands for discounts and expectations for flexible use of loyalty rewards. Hospitality providers should manage these pressures while figuring out how to keep guests coming back.

Customer acquisition complexity

A guest often makes a booking based on what they see in their social feed—dazzling visuals featuring a hotel rooftop pool in a 30-second reel. In this world of AI-driven search and influencer content, algorithmic suggestions and peer reviews team up to drive traffic in ways that search engine optimization (SEO) can’t. As digital behaviors evolve, conventional acquisition models may struggle to keep up with these new journeys—and hospitality providers are learning how customer acquisition approaches are evolving with modern technologies and media outlets.

Adding to the intensifying customer acquisition complexity includes short-term vacation rentals, whose flexibility and local immersion often force hospitality providers to stay on their toes to reevaluate and optimize their value proposition.

Capital crunch

A resort chain’s property improvement plan might include a streamlined, tech-enabled check-in hub; multiple stylish lounges for socialization and relaxation; and a selection of family-oriented restaurants offering a range of culinary options. But research shows that hospitality operators are pressing pause on many of these plans. While there’s been a steady improvement in commercial credit health/quality in the leisure and hospitality industry since 2020, the number of hotels under construction in the US hit a five-year low in mid-2025.

Elevated interest rates are squeezing capital-intensive projects such as new builds, renovations, and upgrades. At the same time, supply chain disruptions and tariffs are pushing construction material and equipment costs upward. By contrast, the picture is somewhat different in the cruise industry: One trade group reports that 56 new ocean-going vessels are on order through 2036—a $56 billion pipeline of investment in the sector.

Tourism backlash

When residents of Barcelona, Spain began spraying tourists with water guns, the images went viral. This act of revolt illustrates what’s happening in many high-traffic areas as mass tourism strains life for local residents. Housing prices soar. Large crowds overrun local infrastructure. Wastewater from arriving cruise ships pollutes local ports. The environmental stress has contributed to insurers raising premiums and forced local governments to put limits, taxes, and rental bans into place.

For the hospitality industry, the risks seem clear: Expanding operations under these conditions means likely dealing with an increasingly fraught local landscape.

The workforce dilemma

Operational stability in the hospitality industry is under pressure as labor markets tighten and staff expectations evolve. Even though inflation has pushed wages higher, recruitment remains agonizingly slow. One hospitality analysis shows that employment recovery sits at roughly 88% of 2019 levels, yet payroll costs are at record highs. In response, some hoteliers are narrowing their operations, favoring streamlined, select‑service formats—offering only essential amenities.

In places like Los Angeles, policies like a $30 minimum hourly wage for hospitality workers is driving talk of hotel operators closing restaurants or converting to self-service food operations. And these pressures aren’t limited to frontline roles: Hotels are leaning on technology to help teams work smarter, with 81% of hoteliers prioritizing increasing employee productivity and 49% listing integrating AI-powered solutions as priority tech initiatives.

Six imperatives for hospitality companies to consider

The days when scale alone guaranteed success are fading in the hospitality industry. Operators should tailor their offerings to meet shifting traveler profiles and stand out in a highly fragmented market.

Here are six imperatives that we believe can help hospitality providers stand out and win:

1. Capture demand through portfolio innovation and diversification

Hospitality companies should rethink how value will be delivered to—and perceived by—future travel personas. This includes adapting to shifting demographics, deepening engagement with emerging audiences, and adjusting to digital expectations.

2. Activate AI-driven travel experiences

From travel discovery to onsite interactions to post-stay engagement, AI presents an opportunity to rewire the travel experience to be more intuitive, immersive, and rewarding.

3. Unlock new growth markets

Hospitality companies should prioritize market expansion strategies that take advantage of demographic and socioeconomic trends, new travel patterns, and brand amplification.

4. Achieve breakthrough efficiency by becoming a predictive enterprise

Hospitality companies should consider accelerating AI adoption to automate tasks, enable employees to enhance the customer experience, and respond to shifting guest needs. From the back office to the guest suite, automation and prediction are becoming essential tools to enhance profitability and guest satisfaction.

5. Operate responsibly—it’s a core value

Consumers, regulators, and investors expect hospitality businesses to operate transparently, legally, ethically, and with integrity.

6. Invest in the future-ready workforce

Hospitality leaders should equip the workforce with the capabilities needed to navigate evolving market and technology demands.

How hospitality should adapt to a changing market

In a future likely to be shaped by new trends, new technologies, and new travel habits, the hospitality industry should find the right balance of pursuing the strategies that have worked versus trying new approaches, strategies, concepts, and models.

The right portfolio allocation is meaningful. It will likely involve a shift in the way resources are deployed and the way hospitality operators capture value. The potential risk in the status quo is not only in missing out on future growth and opportunity; those who wait to act may also find themselves a step or several steps behind early adopters, especially in new applications of AI-powered tools and tactics.

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The future of hospitality