Small hospitality businesses deal with constant change, like economic ups and downs, new rules, and evolving technology. From rising costs and tariffs to the impact of digital platforms, hotel owners face ongoing challenges. Yet, they’re adapting fast, using innovation to improve guest experiences and show that flexibility is key to their success.
Meeting Challenges with Technology
Inflation, economic uncertainty, and tariffs are major concerns among small hospitality businesses, where profits are tight, and customer loyalty can change quickly. These issues are stressors in hospitality, where margins are often thin, and customer loyalty can be fleeting.
Instead of just waiting for things to get better, hotel owners are taking action by using new technology and changing how they work. They’re investing in digital tools to help their businesses grow in the long term. Technology is now part of everything they do—from the front desk to marketing, housekeeping, and guest services. Tools like mobile check-in, contactless payments, and real-time room tracking have become essential, making operations smoother and improving the guest experience.
AI Leadership
When it comes to artificial intelligence, hospitality small businesses are leading the pack. According to the Chase for Business 2025 Midyear Business Leaders Outlook Survey, 7 percent are already using or testing AI, and another 13 percent are thinking about it. This means that nearly nine in ten small hotels, inns, and bed-and-breakfasts are moving toward AI in some capacity.
72 percent of hospitality businesses use AI to analyze customer data, which helps them better understand what guests want and what the market needs. With AI, small business owners can customize guest experiences, predict demand, and change prices quickly. As a result, they can compete with bigger chains, enabling personalized services and pricing that fit each customer—something that used to be much harder for smaller businesses.
65 percent of hospitality small businesses use AI for marketing and social media. AI enables traveler targeting based on behavior and preferences, and content creation that responds to changing traveler needs. For example, a hotel might use AI to send birthday deals to past guests or create social posts about travel trends. This leads to better marketing, more customer interest, and higher sales.
Cybersecurity Concerns: Protecting Guests and Businesses
One major challenge with integrating AI into operations is balancing innovation and speed with prudent risk management. Businesses need to invest in AI to grow and work more efficiently while also maintaining strong security. This means using layered security, carefully checking technology partners, picking AI tools that show real results, and keeping payment systems secure.
As hospitality businesses use more digital tools, cybersecurity is a bigger concern. The survey shows 54 percent of small and medium hospitality businesses worry about digital threats. Their top worries are payment fraud (24 percent) and data theft (21 percent). It’s easy to understand why; hotels handle a lot of credit card payments, store guest information, and use third-party booking sites—making them targets for cybercriminals.
Many small businesses are already taking steps to protect themselves and their guests. Nearly half (46 percent) use fraud prevention tools like payment encryption. Another 41 percent train their employees on cybersecurity, since human mistakes can lead to problems. And 38 percent have bought cyber insurance for extra protection. These actions show that trust is just as important as comfort—guests need to know their information is safe.
Optimism Despite Turbulence
Despite these challenges, hospitality business owners remain positive. The survey found that 76 percent are confident about their own business, and 70 percent feel good about the industry overall. Only 25 percent expect a recession, which is lower than any other small business industry. This optimism comes from being adaptable, planning ahead, and investing in the future.
Hospitality small businesses today are showing a playbook for leading amid uncertainty. These entrepreneurs are demonstrating that smart technology, a focus on trust, and steady optimism together create competitive advantages. As the industry continues to evolve, one thing remains clear: small businesses will continue to lead the way, setting new standards for innovation, security, and guest satisfaction.
