The year 2026 is here, and the hospitality industry faces challenges across nearly all fronts, from ongoing employee retention stress to consumer economic concerns to shifting tourism demands. Each has the potential to take a toll on the bottom line and reputation and brand preference.
Hotel operators should not only be following the latest trends and updating internal and external offerings accordingly, but also implementing cost containment and insurance strategies to reduce financial burdens and address evolving risk.
1. Profitability Concerns Amid Shifting Economics
An ongoing one-two punch—an uncertain economy and rising costs—is likely to create financial headwinds across the hospitality sector.
Inflation, job insecurity and shifting tariff policies have consumer confidence in decline, and international visitor spending in the U.S. is falling. These factors combine with ongoing internal stresses on hotel profitability, including increasing operating expenses, necessary technology and property investments, and rising wage and benefit costs.
Some operators also are seeing higher insurance rates for some lines of coverage, such as liquor liability, which rose as much as 20 percent in Q4 2025, and auto liability for businesses with guest transport services, which climbed as much as 15 percent, as well as anticipated higher rates for areas prone to extreme weather events, including coastal properties. Hotel operators should work with their broker to determine what strategic upgrades may help improve coverage options.
2. Ongoing Labor Shortages
Recruiting and retaining employees remains an ongoing challenge for hotel operators, one that may expand further due to recent changes in immigration policies.
While pay and traditional benefits will always play a role in getting and keeping employees, employers also should look to career advancement opportunities and enhanced benefits like financial wellness.
Well-being options—like expanded mental health benefits, gym memberships and policies that encourage work-life balance—also are crucial, particularly for younger workers. In fact, HUB’s 2025 U.S. Workforce Vitality Gap Index found that while 20 percent of employers believe health concerns are a top factor impacting productivity, 60 percent of employees say they would use well-being benefits.
Comprehensive, layered benefits, such as first-day minimum essential coverage for all employees, will help hospitality companies differentiate themselves in the competition for highly coveted workers. Benefits modernization using software-based solutions also can play a role by providing employees with interactive coaching, wealth management tools and other forms of support.
3. A Changing Insurance Landscape
Several rapidly changing threats are driving stricter insurance policy terms and underwriting practices for hotel owners. These include:
- Workplace violence: Violence against hospitality workers and customers has risen. As a result, insurance carriers are increasing documentation requirements around risk management planning, workplace violence and harassment policies and active shooter protocols, as well as policies to safely de-escalate aggressive customer situations.
- Natural disaster risks: As the rate and severity of floods, storm damage and wildfires increases, so have complications around property insurance rates and availability. Hotel owners and operators must take steps to minimize the potential for losses during these events to help offset broader cost pressures. They also should alert their brokers to flood exposures so they can identify private market options that provide better coverage.
- ADA compliance: Ensure the website and mobile app platforms you use for booking, reservations and guest services are accessible under the Americans with Disabilities Act. Noncompliance can lead to lawsuits as well as reputational harm and loss of business.
- Cyber security risks: As use of POS systems, mobile apps and AI continues to grow, so does the risk of data breaches and ransomware attacks. Strengthening your company’s cyber security is essential, with a layered approach that includes third-party vendor management, strong internal protocols and training and staff readiness. Also, connect with your broker to ensure you are carrying the correct level of cyber insurance.
4. Growing Demand for Wellness Hospitality
Like employee wellness benefits, demand for wellness tourism—from yoga retreats to outdoor experience opportunities—is also on the rise. Wellness tourism in the hotel/lodging sector has grown faster in the five years since the pandemic than any other segment of the industry.
As you respond to this trend, keep in mind that these enhancements can create new risk liability, safety and regulatory exposures; be sure to communicate changes to your insurance broker. It also adds layers of operational needs to help reduce risk, including proper training for employees, supervision considerations, equipment maintenance and monitoring and more.
Trends can Impact Your Insurance Coverage
Keeping your property relevant, attractive, financially solvent and cost competitive often requires responding to the shifting needs of customers and employees alike. But every change can also invite new risks. Stay in communication with your broker as your operations evolve to ensure your coverage is adequate and up to date. And review exposures and insurance needs at least 90 days prior to policy renewal so they can identify the best options for your property’s ongoing needs.
Kimberly Gore is the national practice leader of global insurance brokerage Hub International’s hospitality specialty practice.
This article was originally published in the January edition of Hotel Management magazine. Subscribe here.