5 biggest challenges facing the hospitality industry and how to tackle them

1. Staff retention and workforce pressure 

Staffing has been one of the biggest issues in hospitality for years, but the question has changed. It's less about where the next employee will come from, and more about how to keep the people you already have. 

Our 2026 Hospitality People Survey found that 54% of hospitality employees are happy in their current role, down from 61% in 2025 and 69% in 2024. Work-life balance is slipping too: 53% say theirs is good, compared with 59% two years ago. 

The survey also shows what keeps people. After working with great people, the top reasons to stay are exciting work and challenges (68%) and learning and development (59%), and both have risen sharply since last year. Training is where many businesses are falling short: 44% of employees say they've had some training, but not enough to feel confident in their role. 

Practical ways to keep your best people: 

Digital checklists, training resources and automated processes can help here, by reducing the time managers spend repeating instructions, chasing tasks or checking paperwork. That frees them up for the parts of hospitality that need a human touch. 

2. Rising costs and pressure on margins 

Hospitality has always operated on tight margins, but rising costs continue to make profitability difficult. 

Labour, energy, food, business rates and other operating costs are all putting pressure on businesses. The April 2026 rise in the National Living Wage added an estimated £1.4 billion in costs across hospitality, according to UKHospitality, on top of higher employer National Insurance contributions from April 2025.  

At the same time, businesses can't simply increase prices indefinitely. Customers are becoming more conscious of value, while operators need to remain competitive. 

This makes controlling avoidable costs increasingly important. 

There are several areas businesses can look at: 

Small inefficiencies can quickly become expensive when they happen every day across multiple sites. 

For example, a missed temperature check, unnecessary food waste or a poorly followed closing procedure might seem insignificant in isolation. Across a year, however, these small operational issues can add up. 

Having clear processes and making them easy for teams to follow can help businesses maintain standards while keeping unnecessary costs under control. 

3. Increasing regulation and compliance 

Compliance is another growing challenge for hospitality businesses. 

Operators already have a long list of responsibilities covering food safety, health and safety, employment, allergens, waste, fire safety, and licensing. New legislation and changing requirements can make keeping up even more difficult. 

The Employment Rights Act 2025 is one example. Its measures are being phased in, with further changes affecting areas including workforce scheduling and employment protections. Hospitality is particularly exposed because of its reliance on flexible and variable staffing models. 

Other areas of compliance are also becoming more demanding. Hospitality businesses need accurate records, reliable processes, and clear evidence that important checks have been completed. 

The challenge is making sure compliance doesn't become another layer of paperwork for already busy teams. 

This is where standardised processes can help. 

Digital checklists can give teams a clear sequence of tasks to follow, while giving managers visibility of what has been completed and where action is needed. Instead of relying on paper forms, spreadsheets or memory, businesses can keep operational checks in one place. 

The result is a more consistent approach to compliance without creating unnecessary work for the people responsible for running the venue. 

4. The challenges of sustainability in hospitality 

Sustainability is no longer something hospitality businesses can treat as an optional extra.

Customers increasingly expect businesses to think about their environmental impact, while rising energy and waste costs mean there is also a financial reason to operate more sustainably. 

For hospitality businesses, some of the biggest sustainability challenges include: 

The difficulty is turning sustainability goals into consistent everyday actions.

A sustainability strategy is only useful if it changes what happens in the kitchen, restaurant, bar, hotel or back office every day. That could mean switching off equipment when it isn't needed, reducing food waste, reporting maintenance issues quickly or moving paper-based processes online. 

Digital operations can play a small but useful role here. Replacing printed checklists with digital ones, for example, reduces paper use while also making it easier to track whether important tasks have been completed. 

5. Changing customer expectations and the role of technology 

Guests are choosing more carefully where they spend, and the basics decide whether they come back. 

In our 2025 loyalty research with KAM, 53% of guests named food quality as their top priority, and the same number said value for money was crucial. Quality of service matters to 44%, and 42% say convenience is the main reason they return to a venue. 

So what sends guests elsewhere? Mostly, it's the things that happen behind the scenes. 47% won't return to a venue that isn't clean, half say unfriendly staff are a deal-breaker, and 15% are put off by an experience that changes from one visit to the next. Most of those moments come down to cleaning routines, opening checks and the standard a team works to on every shift. 

Practical ways to meet guest expectations: 

How can hospitality businesses tackle these challenges? 

There is no single solution to those current issues in the hospitality industry; however, improving operational efficiency is one area where almost every hospitality business can make progress. 

Start by looking at the everyday tasks that take the most time or regularly cause problems, then think about what would make them easier: a clear list of what needs doing and when, guidance that's there at the moment someone needs it, and a simple way to see what's been done. 

That's what Trail is built for. Trail is operations software that helps hospitality teams run their daily routines and prove the work was done, whoever is on shift. 

The businesses best placed to manage this changing environment will be those that understand where their time and resources are going and find practical ways to use them more effectively. 

Strengthen your daily operations with Trail 

In this article, we've looked at the five biggest challenges facing hospitality right now, from staff retention and rising costs to new regulation, sustainability and changing guest expectations, along with practical steps for each. 

To see how Trail could help your teams keep their daily routines on track and prove the work was done, book a demo with our team, or try Trail free for 14 days. 

For more on the employment law changes covered above, visit our Employment law & rota compliance hub for practical guidance created for hospitality. You can also download the full Hospitality People Survey 2026 to see what keeps hospitality teams motivated.