Top Risks Facing Hospitality, Travel and Leisure Organizations

November 28, 2023 12 mins

Top Risks Facing Hospitality, Travel and Leisure Organizations

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Hospitality, Travel and Leisure industry respondents to our Global Risk Management Survey (GRMS) ranked cyber attack or data breach and economic slowdown or slow recovery as their two most critical risks.

Since 2021, the global hospitality, travel and leisure industry has shown some signs of recovery. Nevertheless, hospitality remains one of the industries most severely affected by the pandemic and, because of a range of key challenges, has been one of the slowest to bounce back. The 2023 survey results reflect this dynamic.

Because the hospitality business model is primarily built around in-person experience, few remote work opportunities exist for frontline workers. Consequently, a large portion of the pre-pandemic workforce left the industry for higher-paying jobs and more flexible remote or hybrid work opportunities. This has left hospitality employers understaffed as they seek to attain pre-pandemic service levels and pursue growth objectives. The industry has responded to these workforce challenges by focusing on improving efficiency and productivity while adapting to a changing environment.

Recovery has also been uneven: personal and luxury travel business picked up relatively quickly once pandemic-related restrictions were lifted, while business and group travel segment recovery lagged behind. And because their guests travel from all corners of the globe, hospitality businesses in a single location can still be affected by evolving dynamics around the world.

Current Risks

The hospitality industry ranked cyber attack or data breach as its number one current risk in the 2023 survey, up from number four in 2021. Cyber risk is a central risk for hotel companies and gaming organizations that handle customer information in addition to employee records and other confidential or strategically sensitive data. New technology such as mobile room keys, guest room automation and mobile engagement with guests adds even more complexity to hospitality’s cyber vulnerability.

Top 10 Current Risks
  1. Cyber Attack or Data Breach
  2. Economic Slowdown or Slow Recovery
  3. Business Interruption
  4. Damage to Brand or Reputation
  5. Weather and Natural Disasters
  6. Workforce Shortage
  7. Property Damage
  8. Failure to Innovate or Meet Customer Needs
  9. Cash Flow or Liquidity Risk
  10. Pandemic Risk and Health Crises

Some of the biggest risks facing the industry remain relatively unchanged since our last survey in 2021, including the risk ranked number two, economic slowdown or slow recovery, as well as business interruption, damage to brand or reputation and failure to innovate or meet customer needs (numbers three, four and eight, respectively), but weather and natural disasters, workforce shortage and property damage risks are new to the top 10. While climate change does not appear in the industry’s current top 10, two of the new entrants (weather and natural disasters and property damage) are driven by the impacts of climate change, and climate is linked closely to the number three risk, business interruption. This suggests the hospitality industry is very conscious of individual perils that create immediate impact at the time of loss and is focused on leveraging resources to mitigate their impact. However, businesses have not yet dived more deeply into the underlying cause, which has a longer planning timeline and requires additional layers of complexity in mitigation strategy.

With respect to failure to innovate or meet customer needs, it is notable that some hospitality companies have been creative in considering alternative use cases for locations with low occupancy rates, including contracts for migrant or other unhoused populations, as well as pursuing other ways to distinguish their value proposition to win business and grow in desired geographies. It is important to anticipate how these changes may affect the organization’s risk profile and proactively identify, assess and mitigate emerging risks related to those impacts.

While pandemic risk and health crises fell in the global risk rankings from number seven in 2021 to number 32 in 2023, it remains a top 10 risk for the hospitality industry — ranked 10 in the most recent survey, after being the industry’s second-highest-ranked risk in 2021. One of the reasons it continues to be in the top 10 for hospitality may be holdover effects from the pandemic, particularly related to understaffing and lower occupancy in some places, which continue to pose challenges.

Underrated Risks

It is surprising to see that geopolitical volatility is not in the 2023 top 10 risks for the hospitality industry, particularly given how globally interconnected this sector is and how changes in one country can have ripple effects on travel patterns in that country and around the world. The conflict in Ukraine and tensions in other areas of the globe present an evolving dynamic that can change quickly. As was true with the pandemic, the hospitality industry is likely to be among the first to experience the impact of geopolitical shifts and, we believe, would benefit from situation analysis and strategies that identify, assess and mitigate these impacts.

That workforce shortage is included in the top 10 current risks, while failure to attract or retain top talent is not, illustrates that achieving or maintaining the staff levels needed to reach desired service levels is a fundamental struggle for hospitality organizations in some geographies. However, having the right skills and experience in key roles could actually enable growth and innovation, so we believe hospitality organizations would benefit from recruiting and retaining top talent while creating a career trajectory that results in higher levels of engagement and less turnover.

Losses and preparedness

A third of respondents in the Hospitality, Travel and Leisure industry suffered a loss due to the risks in the top ten, while two thirds have plans in place to respond to them.

  • 33%

    average percentage of respondents who indicated risks in the top ten contributed to a loss for their organization in the 12 months prior to the survey.

    Source: Aon's 2023 Global Risk Management Survey

  • 65%

    average percentage of respondents who stated their organizations have set up a plan to respond to risks in the top ten.

    Source: Aon's 2023 Global Risk Management Survey

Future Risks

While hospitality’s top 10 future risks mirror many of the industry’s current top 10, there are notable differences that point toward some of the more strategic risks faced by respondents.

Top 10 Future Risks
  1. Economic Slowdown or Slow Recovery
  2. Cyber Attack or Data Breach
  3. Business Interruption
  4. Pandemic Risk and Health Crises
  5. Weather and Natural Disasters
  6. Workforce Shortage
  7. Climate Change
  8. Geopolitical Volatility
  9. Failure to Attract or Retain Top Talent
  10. Interest Rate Fluctuation

Climate change, geopolitical volatility and failure to attract or retain top talent enter the top 10 future risks, ranked seven, eight and nine, respectively. The inclusion of these new risks, along with the absence of property damage, cash flow or liquidity, and failure to innovate or meet customer needs, illustrates a shift in focus to more strategic areas of asset protection and growth, and can open the door to solutions and actions that promote greater resilience. Building resilience is critical to hospitality organizations’ success, but it can and should be pursued in tandem with efforts to expand and diversify offerings and differentiate themselves so that they remain compelling, distinctive and relevant.

Additionally, the new entry of interest rate fluctuation as the hospitality industry’s number 10 future risk foreshadows organizations’ concern over loan and mortgage debt coming due in the near future. Strategic planning to refinance those obligations may be driving the heightened ranking of this risk, given interest rate fluctuations and the resulting volatility in energy, materials and labor costs that further challenge thin margins.


Despite being the industry's third most critical risk both now and in the future, only 3 percent of hospitality, travel and leisure respondents indicated that they had quantified the potential impact of business interruption events.

Source: Aon's 2023 Global Risk Management Survey

How Can Hospitality, Travel and Leisure Organizations Mitigate These Risks Effectively?

Hospitality respondents reported a 14 percent increase in risk readiness in 2023 compared to 2021, with 2 percent fewer respondents recording losses from the top 10 risks. This suggests greater confidence in organizations’ ability to be resilient. With the risk landscape evolving at pace, companies should continue to be vigilant and remain focused on business continuity planning, cyber response and resiliency strategies, climate-related assessment and quantification projects and crisis management to further enhance resilience, potentially improve their client profiles and lower their total cost of risk.

With cyber a key risk for the industry and a continuously evolving threat, hospitality organizations should shore up their cyber resilience with a strategy that includes a fresh view of assessment, mitigation, risk transfer and recovery approaches. Organizations need data and assessment to understand how their cyber protections and risks affect their financial exposures. Once vulnerabilities are assessed with fresh eyes, a holistic approach to mitigation can help optimize returns on investments in security enhancements.

By assessing risks and quantifying potential losses, organizations can determine their appetite for risk and make informed decisions on whether and how to transfer risks. However, only 34 percent of hospitality industry respondents reported that they assessed risk for the top 10 current risks, and only 12 percent said they quantified that risk. Quantifying exposure is especially important when inflation is affecting asset valuations and other costs. Otherwise, organizations could find themselves without appropriate levels of insurance coverage and asset protection in the event of a loss.

To help address workforce shortage concerns, organizations may benefit from taking a renewed look at hiring processes, training approaches, benefits packages and compensation benchmarking to realize efficiencies and enhance their value proposition to employees while still managing cost where appropriate. This can also deliver longer-term gains in differentiating organizations from their competitors and attracting and retaining talent.

General Disclaimer
This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent, or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss caused by reliance on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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