What’s Next for Hospitality in 2025? Expert Predictions from Industry Leaders
- By Harri Insider Team | March 13, 2025
Hospitality is heading into a high-cost, high-pressure year. Business rates are climbing, wages are rising, and employer national insurance is taking a bigger bite. On top of that, new government regulations will force operators to rethink how they hire, schedule, and retain staff.
Some businesses will tighten their belts and fight to stay afloat. Others will find ways to grow.
Peter Martin, co-founder of Peach 20/20, captured the mood during a recent Hospitality Experts Fireside Chat: How to Get Ahead in 2025:
“We said we’ll be talking about how to get ahead in 2025, but I suppose in some senses it’s about how to get through 2025 in terms of the feeling out there in the market.”
He was joined by David Sheen, Public Affairs Director at UK Hospitality; Jo Lynch, Director at KAM; and Pete Willis, UK Commercial Director at Harri. Together, they broke down the biggest challenges facing hospitality like rising costs, labour shortages, shifting workforce expectations, and the strategies businesses are using to stay ahead.
Despite the pressures, consumers are still spending. New openings are happening. The industry isn’t standing still, but success will belong to those who adapt.
Here’s what the experts had to say.
Hospitality in a High-Cost Market: Growth vs. Survival
The numbers aren’t pretty. In April, the National Living Wage will jump, employer national insurance will rise, and business rates relief will shrink. For operators, that means higher payroll costs, tighter margins, and difficult choices.
David Sheen, Public Affairs Director at UK Hospitality, laid it out clearly:
“That cost pressure that we’re seeing is monumental… businesses are now obviously looking at April, when those cost increases particularly hit business rates for the small independents and employer national insurance contributions.”
For some, survival will mean scaling back by cutting labour costs, delaying investments, and tightening operations. Others will take a different route, using this moment to invest in efficiency, optimise scheduling, and make technology work harder for them.
Even with the pressure, demand hasn’t collapsed. People are still dining out. Operators are still opening new sites, particularly in the QSR space. Hospitality isn’t shutting down, but the businesses that make it through will be the ones that move fast and adapt.
The Workforce Challenge: Retention, Engagement, and Compliance
Wages are going up, but that doesn’t mean workers feel secure. Many hospitality employees, especially part-timers and those over 55, are worried about job stability. Others are frustrated by inconsistent scheduling, lack of career growth, and poor communication from management.
Jo Lynch, Director at KAM, shared insights from fresh industry research:
“Employees generally are feeling secure in their jobs… but the concerns remain about long-term career prospects and shift availability, particularly for younger and part-time staff.”
Well-being is another issue operators can’t ignore. Employees want financial, mental, and physical support, and they know when they’re not getting it. Research shows that strong well-being programs boost retention and improve customer experience. Yet many workers report getting little to no support. Cutting benefits might seem like an easy way to save money, but it’s a short-sighted move that risks losing good people.
Then there’s compliance. The UK government is pushing for major employment law changes, including stricter rules on shift scheduling and a crackdown on zero-hours contracts. Businesses that don’t get ahead of these changes will be scrambling when enforcement kicks in.
David Sheen warned that these new laws aren’t just coming—they’re expensive.
“We’ve said to the government, this is a colossal change you are putting on the industry… is there any way we can have some sort of fund for transitioning to this new system?”
Workers expect flexibility. Governments are demanding predictability. Operators are caught in the middle. Those who balance both will keep their teams engaged and avoid compliance headaches.
The Role of Technology: AI, Automation, and Efficiency
The industry is hitting a tipping point. With labour costs rising, operators are turning to tech not just to cut costs, but to work smarter. AI-driven scheduling, automated labour forecasting, and real-time workforce insights are giving businesses the edge they need.
Pete Willis, UK Commercial Director at Harri, has seen the shift firsthand.
“Instead of the traditional ‘let’s just cut hours,’ there are about nine different metrics that operators can actually measure, and they all point towards greater profitability.”
It’s no longer just about reducing labour costs. Operators are optimising staff deployment, ensuring the right people are in the right roles at the right time. That means fewer shifts running short-staffed, less burnout, and better customer experiences.
But while big brands are making these investments, many independents struggle to afford them. Industry leaders are pushing for government support to help smaller businesses access the tools they need.
Tech isn’t a silver bullet, but for those who embrace it, it’s the difference between staying ahead and falling behind.
Consumer Spending and the Guest Experience
The good news? Consumers are still going out. Even with economic uncertainty, spending on dining and hospitality remains steady.
Operators who capitalise on this won’t just focus on cutting costs. They’ll double down on guest experience. That means smarter upselling, stronger loyalty strategies, and well-trained teams who know how to boost check averages.
Jo Lynch connected the dots between employee engagement and customer experience.
“Motivated, engaged staff are brilliant at upselling. If an employee feels they have strong wellbeing support, 90% say that would improve customer experience and retention.”
If staffing cuts lead to worse service, guests will notice. The brands that win in 2025 will be the ones that invest in their teams and create an experience worth coming back for.
The Path Forward
Hospitality businesses have a choice: brace for impact or build for the future.
Some will pull back, cut benefits, and hope to survive. Others will invest in smarter scheduling, workforce engagement, and guest experience to drive profitability.
David Sheen put it plainly:
“We’ve heard the phrase ‘survive 25,’ but the best businesses will still be looking to grow.”
The ones that grow will be the ones that adapt. That means rethinking workforce strategies, embracing technology, and staying ahead of shifting regulations.
For hospitality, 2025 won’t be easy; but, for those who make the right moves, it will be a year of opportunity.
