The Hospitality and Tourism industry is a uniquely challenging field that, while delivering so much to the people and communities it serves, requires continuous excellence in its design and execution, 24 hours a day, 7 days per week. The fact that it encompasses every aspect of modern travel and leisure—from airlines and cruise ships to accommodations and resorts, to attractions and entertainment, to food and beverages, plus the planning and logistics activities—makes it an exciting and compelling employment option for millions of workers. At the same time, industry complexities keep hospitality and tourism HR and business leaders on their toes as they strive to balance quality service delivery with the constraints of restrictive labor markets and financial goals. As a result, HR leaders and their teams must be agile, creative, and resourceful to meet both business objectives and local needs simultaneously.

Understanding the industry

The hospitality and tourism industry is broad in both scope and geographic spread. Consider its primary segments:

• Transportation: Airlines, railways, buses, ships, rental cars, tour operators, and travel agencies.
• Accommodation: Hotels, motels, resorts, vacation rentals, timeshares, campgrounds, and hostels.
• Food and beverage: Restaurants, fast food, cafes, bakeries, catering services.
• Recreation and attractions: Theme parks, casinos, sports venues, golf courses, convention centers, beaches, and water parks.

Hospitality and tourism HR teams must provide consulting, guidance, and management support across a vast network of geographically dispersed, people-intensive operations and labor pools. The industry is estimated to provide over 371 million jobs and generate over $11.7 trillion in revenue annually, equivalent to 10.3% of global GDP. In the U.S., Statista estimates that the industry employs over 18 million workers, while the Bureau of Labor Statistics (BLS) projects it will account for 23.1% of new job growth by 2031.

What makes the industry unique is the predominance of customer-facing jobs, a high proportion of which pay low-to-moderate wages, and a consistent focus on customer experience. However, while the industry roles that most people think about are the highly visible customer service jobs, such as hotel clerks, waitresses, maids, tour guides, or flight attendants, they also include a wide range of jobs such as groundskeepers, pilots, cargo or material handlers, operations, and logistics planners, repair and maintenance mechanics, facility and power engineers, sales, and data, IT, eCommerce, and cybersecurity specialists. 

Companies in this industry also operate long hours, with shifts and uneven, changing schedules that require staffing, monitoring, and management oversight for 15-24 hours per day, seven days a week. Seasonality drives heavier staffing needs in short bursts, such as during the summer, spring break, and major holiday periods. Managing geographically dispersed facilities, operations, and teams presents unique challenges for leadership teams, especially for large companies in accommodation, transportation, and attraction segments.

Key trends in hospitality and tourism

As in any business, hospitality and tourism HR teams must stay abreast of industry trends that are implemented or considered for adoption and, therefore, assess them for associated changes to talent requirements, such as upskilling, process redesign, hiring requirements, or management priorities. These involve company responses to rapidly advancing technologies and customer preferences. As the industry evolves, shifts are being seen related to:

• Guest convenience automations: Customer expectations have risen for seamless digital experiences, including mobile check-in, digital room keys, app-based room comfort adjustments, and special requests. Restaurants and airlines are leveraging automated platforms for ordering, recommendations, and requesting assistance.
• Artificial intelligence applications: The use of AI for more efficient and responsive customer service, travel planning, and recommendations on the customer-facing operations is exploding. Meanwhile, Deloitte has reported that nearly 75% of restaurants are testing or implementing AI solutions to enhance the crew experience, replenish and manage resources, right-size staffing by shift, streamline hiring and onboarding, and automate “back-of-house” repairs and improvements.
• Personalized guest experiences: The use of analytics, AI, and the internet of things (IoT) to identify customer preferences, habits, and needs is playing a major role in creating total experiences that drive purchase decisions. These data-driven tools (e.g., wearables, smartphone apps) and approaches (past purchase and location histories) help anticipate which benefits and amenities individuals would most appreciate. Room preferences, concert tickets, rounds of golf, spa days, late check-in or out, communications and alerts (e.g., “Pickleball tournament at 2:00”), and tailored bundling options (travel times and locations, concert or sports tickets, specialty events, dinner reservations) are designed and recommended to “delight” the customer.
• Health, well-being, and ecological sustainability: Consumers are increasingly requesting or responding positively to eco-friendly practices, cleanliness and touchless surfaces, healthy and sustainable meal options, as well as customized itineraries that include wellness-centered trips, fitness classes, mindfulness sessions, nutritional education and guidance, ecotourism, and cultural immersion. At the same time, ecological concerns continue to intensify as companies respond to consumer demands for environmental stewardship policies and practices related to energy consciousness, climate costs, food waste, farm-to-table, and supply chain energy use and costs.
• Crowded and local tourism pushback: Local residents of vacation and tourism hotspots have been protesting and pressuring their governments to control tourism in popular locations such as Barcelona, Amsterdam, Venice, Honolulu, Juneau, and Key West, leading to noise, congestion, rising housing prices, and environmental damage. At the same time, overcrowding at popular destinations has led many to seek more unique, less-traveled destinations. In fact, McKinsey reports that 63% of travelers are considering visits to less-known areas (e.g., Albania, Curacao, Greenland).
  
  

Business challenges facing the industry

Hospitality and tourism HR and business leaders face constantly shifting fortunes and headwinds, requiring agility and resourcefulness at the enterprise and local levels. The sector faces ongoing pressures from rising transportation, labor, insurance, and security costs. Given the number of employees and the associated hiring and turnover rates, compliance with labor laws and regulations can be an enormous undertaking. 

On the competitive side, brand saturation (e.g., Marriott has 30 accommodation brands, IHG has 20+, and Hilton has 20) means there are tens of thousands of choices worldwide. The resulting confusion can create pressure for marketers and sales teams to differentiate their offerings and attract customers across markets, large and small.

Of equal concern is the extent to which periodic volatility and shifts in financial and commercial markets, as well as geopolitics, impact the industry. Consider, for example, how currency exchange or interest rate fluctuations in a country or region can affect consumer travel plans, companies' costs of goods and services, workers' cost of living, etc. Similarly, the impact of trade imbalances and related government policies on industry operating costs and on access to supplies and materials needed to meet customer expectations requires strong leadership expertise and back-office agility at both the enterprise and local levels. Energy cost fluctuations are a constant concern and require arbitrage expertise for multinational and multi-location operators, as well as price optimization for those involved in transportation and supply chain activities.

Industry labor opportunities and challenges

The industry offers unique benefits that hospitality and tourism HR teams can promote and leverage to their advantage. Consider, for example, how the geographic spread and number of locations offer advancement and mobility opportunities that can help workers “find their place”, while typically low barriers to (employment) entry in many segments make it ideal for new workforce entrants, as a multitude of career options can help them find their niche professionally. 

The jobs in this industry also tend to offer more opportunities for autonomy to make their mark, while higher turnover can lead to more (and faster) advancement opportunities. The geographic spread also offers more choice of locations, especially those in markets close to family, in lower-cost, shorter-commute areas, resort settings, and even higher-paying locations. 

At the same time, however, a number of challenges face hospitality and tourism HR leaders, requiring continuous oversight, tracking, and management.

High turnover 

The industry has the highest turnover rate of any industry, with the Bureau of Labor Statistics reporting annual rates over 70%. This is due to a number of factors, starting with irregular work schedules and hours, the preponderance of low-paying, repetitive jobs, limited benefits, and the ease with which workers can secure new, replacement jobs within the industry.

The critical nature of turnover is underscored by studies from Cornell University’s Center for Hospitality Research, which found that every 1% increase in turnover leads to a drop in customer satisfaction scores of up to 5%. Consider how a year-over-year increase of 5-6% can substantially multiply the impact on customer loyalty and repeat sales.

Labor market shortages

The availability of a sufficient pool of qualified and eligible workers is a well-established global phenomenon, exacerbating turnover across the industry. For example, a survey by the American Hotel & Lodging Association found that 67% of hotels reported staffing shortages and 72% were unable to fill open positions. Other significant trends include immigration restrictions across many developed nations, which have created more difficulties, with estimates of 98,000 industry roles going unfilled in U.S. businesses alone. 

Some industry segments with higher tenure rates (e.g., airlines, luxury accommodations, resorts) are also experiencing high retirement eligibility among their workforces, which equates to a loss of expertise and staffing issues. Short-staffed organizations across the industry directly impact the ability to meet customer demands for minimum service and for product quality, cleanliness, timeliness, availability, and reliability.

Worker burnout 

Hospitality and tourism HR teams must manage burnout rates among the highest in any industry, with Axonify reporting that 47% of front-line managers and 64% of staff are experiencing exhaustion and burnout. Aside from having less schedule flexibility, long hours, and working in understaffed operations, 53% of workers report that dealing with demanding, difficult, or even hostile guests is a major source of stress. Making matters worse, Gen Z workers (who represent 25-30% of the total available US labor force) consider work-life balance a major driver of career and employer choices.

Low wages

With an abundance of line-worker roles that require minimal education and experience, hospitality and tourism HR teams understand that these roles have historically offered low compensation. The industry averages $24/hour, which may be considered a living wage, but in reality, many earn less than that, despite legal pressure to raise minimum wage laws in the US and abroad. Changes in customer tipping behavior have become a social cause célèbre, prompting changes in establishment policies and practices, but are also affecting the compensation levels of line workers. Even pay rates for management roles, which typically range from $100,000 to $ 118,000 per year, must be balanced against salaries in other industries.

Time for training and development

In an often schedule-dependent, labor-budget-constrained world, hospitality and tourism HR teams struggle to meet the skill-development needs and demands of their workers. Time away from work must be balanced with customer and operational requirements, particularly in understaffed work environments. As in healthcare, regulatory-required compliance training on health and safety, cleanliness and food hygiene, data privacy, environmental protection, and anti-harassment and discrimination often takes precedence. The competition for time away for learning and development can limit professional growth, a top driver and incentive for longer tenures, higher engagement levels, advancement, and succession management.

Hospitality and tourism HR priorities

With such a range of issues and volatility to manage, industry HR teams must possess and leverage a full tool belt of HR solutions that can be applied individually, paired, or packaged to address local and enterprise issues and challenges. Start by identifying critical HR capability requirements and creating strategies to boost or acquire those over time, followed by adopting practices that have been demonstrated to make an impact on operational and talent outcomes in the industry.

Critical HR capabilities

HR consulting skills

The development of internal HR consulting capabilities represents an absolute must for building and sustaining local HR teams’ ability to quickly respond to and design effective solutions to the needs of an individual location, property, or operation. These include collaborating with business leaders and developing effective solutions using proven approaches to organization development and team building, work process improvement, performance consulting, and union or employee relations conflict resolution.

Evidence-based HR approaches

Develop a culture that leading hospitality and tourism HR teams rely on, using “evidence-based HR” (EBHR) to identify the (true) root causes of issues and trends and develop more sustainable, lasting solutions. This involves a disciplined approach (as in high school or college science classes) that relies on objective fact-finding, leverages organizational (and benchmark) data and analysis, draws on external research on best practices, and engages employee and manager input on problems and solution options.

Leading practices to adopt

1. Employee and customer listening and action

Proactive and continuous engagement with leaders, managers, and workers provides an early warning system for hospitality and tourism HR professionals, as the near-constant work performed around the clock creates opportunities for errors and misaligned behaviors. Employee listening is critical for managing worker productivity, as highly engaged frontline staffers are 13% more productive, leading to greater workforce stability and improved guest experiences. Furthermore, HR teams should always be involved in reviewing customer feedback (reviews, surveys, interviews, and complaints/kudos) that can reveal issues immediate or longer-term attention. In both cases, listening is only effective when followed up with decisive action and visible, well-communicated improvements.

2. Leveraging technology to support staffing 

A new generation of workforce management platforms and tools offers automated scheduling and labor optimization capabilities that can help match staffing levels to demand and assign employees to required roles, headcount, and expertise. Given the staffing shortages common across the industry, such modeling can help assign the right people to the right work at the right times, while improving labor cost management and maintaining compliance with local and national labor laws.

3. Improving hiring strategies

Hiring at scale and in times of dire need is a well-established path to poor decision-making. The need for smarter and more effective candidate attraction, screening, selection, and onboarding cannot be understated—primarily because it improves the hiring of those better suited and equipped to be high performers who are more likely to be high tenured. The development of automated, validated candidate assessment methods and tools, and the creation and use of talent pools are two high-impact practices. When hiring temporary, seasonal, or special project/”gig workers,” take a strategic approach to fully exploit the organization’s ability to access and manage them as a reliable supplemental talent pool.

4. Efficient skill development approaches

As employee development is a significant driver of productivity, retention, and engagement, hospitality and tourism HR professionals should prioritize delivering growth experiences for workers at all levels and roles. The starting point should be to support the acceptance and adoption of newly automated processes, AI-enabled management and customer experiences, and newly digitized tools for workers and customers/guests. The next priority should be identifying strategies and platforms to deliver bite-sized learning “chunks” that are recommended/personalized for each employee based upon their role, skills/proficiency levels, career interests, and aspirations. 

As the adoption of customer self-service technologies increases, more time is available for workers to engage in “personal touch” moments with customers that build loyalty and, as a result, should be prioritized for upskilling. Talent marketplace technologies can be used to identify skill gaps and associated resources, as well as career mobility opportunities that can drive skill and experiential development and boost retention, engagement, and performance.

5. Pay and benefits upgrades

The pressure to pay employees more may be constant, but not supported by compensation benchmarks or escalating operating costs. When developing strategies to attract, hire, motivate, and retain high performers, consider options that employees most appreciate and others that are self-funding. For example, employees are attracted to benefits and policies that support their aspirations for growth (e.g., educational reimbursement, loan repayment plans) or their desire for flexibility (effective schedule swapping, personal time off). 

Lower-wage earners especially appreciate the financial flexibility that Earned Wage Access (EWA) brings, and it has been found to reduce turnover in those roles by up to 60% in U.S.-based hotels and fast-food restaurants.

Self-funded options include creating profit-sharing and gain-sharing programs that motivate employee contributions while driving higher retention, engagement, and improvements in customer/business outcomes.

6. Wellness and well-being programs and resources

Given the widespread and elevated levels of stress, exhaustion, and physical strain reported across the industry, hospitality and tourism HR teams should focus on worker health and well-being to ensure workers are safe, productive, and able to attend to the needs of customers, processes, and facilities they manage. Excellent resources can be provided digitally (wellbeing platforms), onsite (meditation, scheduled breaks, or “cool-down” periods), and through coaching by the direct supervisor or an online EAP. Digital capabilities can be tied to IoT wearables (badges, watches that track steps, time in continuous active movement, body temperature, heart rate) that send texts suggesting rest periods, water, or food intake.

Relevant Practices & Tools

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