EY Business Woman Working Hard from Hotel

Hospitality industry makes a strong comeback, but face key challenges

Hospitality industry CFOs surveyed share that leisure travel continues to grow while business travel shows slower rebound.

In brief

  • While revenue per available room (RevPAR) recovery is exceeding expectations, labor shortages are still creating challenges for hotels.
  • The hospitality industry is adapting to meet challenges by  adjusting amenities, outsourcing more and increasing reliance on technology.

According to a survey of 20 hospitality industry CFOs, vacations dominate hotel bookings, as companies continue to pull back on business trips. However, corporate travel demand is returning as well, even if at a slower pace. 

The boom in leisure travel is consistent with the EY 2022 Hospitality Consumer Survey, which found that 89% of respondents planned to take at least one leisure trip in 2022, and 24% intended to take three or more trips for recreation. 

Hotel recovery beats expectations

The EY 2022 Hospitality CFO Survey gleaned responses from CFOs at 20 leading travel and hospitality companies. When the pandemic hit in early 2020, the entire hotel industry basically shut down. Analysts predicted it could be 2023 or even 2024 before RevPAR would return to pre-pandemic levels. However, 16 of the 20 leading CFOs surveyed believe the industry will reach that benchmark by spring 2023. Nine of those CFOs are even more optimistic, predicting a return to 2019 levels by the end of 2022.


Business travel still lagging

The EY CFO survey revealed a deep lack of confidence in the ability of business travel to aid RevPAR recovery. While 16 out of 20 CFOs said leisure travel would be the No. 1 factor in this effort, only two cited business travel and two others indicated group travel to lead the way. When asked for specific matters that are having a negative impact on RevPAR, respondents cited recession fears, a slowing economy, geopolitical concerns, companies cutting back on discretionary spending and air travel delays. This reduction in business travel has led to large conventions either not happening or being scaled back significantly from past events. 


Seven out of 20 CFOs surveyed ranked group travel as their third biggest concern, potentially having a negative impact on RevPAR recovery. It stands to reason that as confidence grows with leisure travelers, there will also be an impact on people traveling to weddings, conventions and other group excursions.

Long-term concerns temper industry optimism

One of the biggest issues facing hotels right now is labor shortages. Twelve of the 20 CFOs in the EY survey cited this challenge as causing the most strain on hotel net operating income (NOI). More than half of the respondents in the survey said they are adjusting amenities to customers and outsourcing various functions to try to reduce costs. Hotels are also raising pay to attract talent, with 17 out of 20 CFOs surveyed claiming they plan to do this. More than half of the respondents are also relying on technology more than before to get things done and create more efficiencies. 


While consumers confront higher average daily rates (ADRs) and even fewer amenities that now come at a price, there still seems to be a steadily growing pent-up demand for travel.


Deal market in hospitality sector remains active

On the transaction market, 13 CFOs in the survey said they expect 2022 deal activity to come out below pre-pandemic levels, and only four expect a return to pre-COVID levels. When asked to name the top three factors that would drive hotel transaction volume in 2022, 10 CFOs said interest rates would have the biggest influence on deal activity. In addition to making deals more expensive, rising interest rates could also boost pricing expectations for sellers, potentially putting deals out of reach for prospective buyers.


Hotel transaction activity is still forecasted to trend positively, and values are continuing to rebound. There is still a high level of interest in pursuing deals as the industry continues to bounce back and perform well. It’s worth noting, however, that transactions have slowed and could continue to slow in the coming months because of inflationary impacts and the rising cost of debt due to interest rate increases.


The hotel industry has been nimble in reacting to outside pressures to get its financial performance back on track. But more challenges lie ahead, and the industry will need even more creativity to continue its recovery. The data from the CFO survey supports our findings in the consumer survey as part of our CxO survey series examining the perspective of C-level executives. The consumer survey showed that 89% of people said they were planning to take at least one trip, with 50% planning business travel.

About this article

Related articles/webcast

Real Estate, Hospitality and Construction sector insights – Macroeconomic update and the impacts on investors and lenders

Join EY for a discussion on how macroeconomic trends, geopolitical risks, oil prices, inflation, and monetary policy are impacting the real estate sector.

14 Sep 2022 | 06:00 your local time

How digital transformation opened new channels for growth

With help from EY professionals, Royal Caribbean’s digital-first approach is transforming their business and the cruising experience.

04 Apr 2023

Why consumer travel sentiments are good news for hospitality industry

There are sunny skies for the travel and hospitality industry, but economic clouds are gathering. Learn more from the EY 2022 Hospitality Survey.

05 Aug 2022 Umar Riaz