This term reflects the dynamic and unpredictable nature of today’s business environment, highlighting the necessity for agility and adaptability.
From 2020 to 2024, the hospitality industry faced significant VUCA challenges, including pandemic-induced travel restrictions in 2020 that prompted massive layoffs and supply chain disruption, slow recovery with business and group travel lagging and labor shortages in 2021, inflation, financial hardship and continued labor shortages in 2022, leisure travel rebound amidst ongoing workforce issues in 2023, and a focus on sustainability and technological innovation in 2024. Adaptation and resilience were key themes throughout these years.
Notably, the disruptive forces from 2020 to 2024 were predominantly external and beyond our control, compelling us to adopt a reactive posture. Going into 2025, the industry must navigate the transformative impacts of technology as a disruptive force, something within our control to adapt and innovate in reshaping guest experiences, operational efficiencies, and competitive landscapes.
It is our choice how we move forward leveraging technology, which made digital transformation the focus of the 2025 Survey. To paraphrase John F. Kennedy’s famous quote regarding the space race, we choose to embrace digital transformation and organizational agility – “not because they are easy, but because they are hard.” 97% of this year’s survey respondents recognize the digital transformation paradox, that digital transformation is a goal, not an end state. 93% of respondents agree that digital transformation is “Very” or “Somewhat” important to their business, and 69% of respondents are building a “People First” implementation approach, recognizing the importance of people and culture in creating an agile organization. While digital transformation is within our control, it’s far from easy to execute. 64% of respondents cited “Budget Constraints”, 51% “Employee Adoption” and 49% “Shadow IT” as the top three (3) digital transformation challenges. While significant efforts are being made to address these issues, continued work and commitment will be needed to enable digital transformation success.
The industry is rolling out the virtual red carpet for GenAI in 2025. Not only does GenAI promise to make hotel stays more convenient; it has the potential of turning them into a finely tuned symphony of guest engagement and satisfaction. 80% of respondents agree that “GenAI will have a meaningful impact on their business in the next three (3) years” with 33% seeing the greatest impact on “Customer Engagement” and 31% seeing the greatest impact on “Customer Service”. The only thing that we can’t promise is a robot to carry your luggage…yet.
In 2025, several macroeconomic headwinds will likely impact the hospitality industry, including economic growth, foreign exchange dynamics, employment trends, monetary policy decisions, and sustainability considerations. These factors will shape consumer spending, travel patterns, and operational costs, requiring businesses to adapt and innovate to remain competitive. Therefore, it is expected that 2025 will continue to see the VUCA
conditions, as they are not likely to go away.
Finally, each year respondents are asked to supply two (2) or three (3) words to describe their approach to the upcoming year. The word “Optimistic” has been the favorite choice of respondents for the past four (4) years. The mood of respondents remained cautiously optimistic going into 2025, tempered by the turbulence and instability experienced in recent years. Colin Powell, a trailblazing US military leader said, “Optimism is a force multiplier.” Continued optimism will be a crucial component, acting as a force multiplier that enables organizations to fully leverage the potential of technology. It will also motivate teams to innovate and thrive amidst change.
The AWS/Skift 2024 Travel and Hospitality Innovation Report characterized it this way: “Travelers expect a nuanced balance of both technological sophistication and direct, in-person, human-to-human contact to fulfill their needs for engagement and service.” While a “trip” is a singular event, it still involves multiple vendors, transactions and touchpoints.
The difficulty of meeting demands across disconnected trip segments highlights the potential role of technology in enhancing the modern traveler experience. The 2025 Industry Plans for IT Investment Survey included a section on digital transformation, its potential impact on organizations, their current progress, planned investments, and expected areas of effect.
Artificial Intelligence/Machine Learning/Generative AI
When asked about the specific goals for AI/ML applications, “Revenue Optimization” was the primary goal of 59% of respondents, followed by “Customer Service”, “Operational Efficiency” and “Forecasting” at 46% each.
2025 Investment Priorities
The investment survey asked respondents to list their Top 5 hotel-level investment priorities. For the third year in a row, the No.1 investment priority for 50% of respondents is “Customer Engagement.” It should come as no surprise that investing in new tools can significantly enhance customer engagement by streamlining operations, personalizing interactions, and improving response times.
The 2025 report presents the findings of a survey of leading CIOs representing approximately 32,677 hotels and 2.76 million rooms. The study examined staffing, budgeting, information security, and broad investment priorities at the enterprise and hotel levels. The report then drilled down to focus on the dynamic market conditions introduced by the labor shortages, technological innovation, increased competition, changing consumer behaviors, and the geopolitical and economic uncertainties creating market volatility; and its projected impact on 2025 and beyond, and how that anticipated impact shifted investment priorities.
