Payment trends and opportunities in the hospitality industry 2022-2026

Macro trends affecting hospitality

Market growth following the Covid pandemic

The Covid pandemic was the single greatest threat to the hospitality industry in living memory, and affected businesses in every part of the world. In 2020, the UK hospitality industry saw revenue drop by 54%, amounting to a loss of around £72 billion, while the industry’s workforce fell from 3.2 million to less than two million employees by the start of 2021.¹

Fortunately, many hospitality businesses proved resilient in the aftermath of pandemic lockdown restrictions – a characteristic that fuelled recovery in 2022 and beyond. Studies suggest that the average UK hotel occupancy rose to around 80% by June 2022, up 57% from 2021.² This was accompanied by increased investment in the industry, with over 30,000 new rooms added since 2020, and around 18,500 new rooms scheduled to open by the end of 2025.³

While moving at a slower pace than their hotel counterparts, UK bars and restaurants are also building momentum, with regional businesses benefitting from consistent growth since the first half of 2022.⁴ In 2023, industry analysis revealed that the UK’s top 100 restaurants had made a collective profit of £241.8 million between October 2021 and March 2022, twelve times the amount generated in the previous six months.⁵ Market research suggests that the UK’s eating-out market will grow by 4.6% in 2023, with profits boosted by an expected increase in consumer spending as the cost-of-living crisis eases.⁶

Hotels

Global travel:

Following the Covid pandemic drop, the global hotel industry is projected to grow significantly into 2026, with an increase in revenue of almost $70 billion from 2023.¹⁶ These global figures suggest that hotels in Europe, the US and China will drive the market’s growth, with higher hotel prices and an increase in travellers from emerging economies offsetting any shortfall from a decline in middle-income travellers. 

Online bookings:

An increasing proportion of hotel bookings and purchases are made online. In 2023, for example, global hotel revenue is estimated to reach $406.5 billion, with $307.1 billion of that amount generated online.¹⁷ By 2026, that amount is projected to reach $473.2 billion, with $376.8 billion generated online – representing 90% of all revenue. Our research revealed that a key driver of the revenue growth is integration across the hotel property, reducing opportunities for customers to pay directly by card.

UK leading:

The revenue projections for 2026 place the UK as the largest market in Europe, ahead of Germany, France, Italy and Spain. The UK’s hotel industry is expected to generate $22.3 billion in revenue in 2026 (an increase of 22% from 2017), followed by Germany with $18.8 billion.¹⁸

The strength of the UK market is based on three factors: 

• An increase in domestic UK travellers using hotels for business and leisure.  

• An increasing number of international customers. In 2023, the number of international customers rose to 86% of its 2019 level.¹⁹

• An overall increase in the price of hotel services. 

Germany remains an attractive market for hotels. However, since it has more overall hotel users (37.96 million), and lower average room prices, Germany’s hotel stays result in a lower average per user spend.²⁰

Spending increase:

The research suggests that average hotel spending will increase significantly by 2026.²¹ The UK will again lead the European market, with the average hotel user spending $628.1 in 2026 – compared to $559 in 2017 (representing a 12% rise).²² Beyond the UK, the four highest markets for higher hotel spends are Denmark, Norway, Belgium and Switzerland.

Our research suggests that a combination of higher hotel prices and an increased overall number of hotel stays are driving the increased spending trend.

Key hotel payment trends

Several key trends are impacting payments in the hotel industry:

• Online spend: by 2026, online spend will represent 80% of total hotel revenue. This means that, going forward, payment integration with hotels’ primary websites will be key to increased revenue. 

• Personalisation: travellers increasingly expect personalised travel experiences. Hotels should seek to leverage software tools to increase the personalisation of guest stays – and explore the potential to extend those experiences into payments. 

• Higher prices: European hotel prices are increasing in line with inflation. This is driving increased revenue, while promoting the growth of lower price-point hotels as customers trade down for affordability. 

• Direct bookings: by encouraging direct bookings, with perks such as discounted prices, inclusive meals and comfort quality, hotels can increase their profile with users and encourage repeat stays.

• Currency conversion: as the number of international travellers continues to rise, hoteliers can improve customer experience and encourage direct bookings by enabling customers to pay in their home currency – without the exchange fees.

"The Sheraton Lake Como processes around 10,000 transactions per year, 70% of which are card based. This percentage is increasing year on year, with the growing convenience of card payments and guests having the option now to pay in their home currency, using Dynamic Currency Conversion."

Sheraton Lake Como

Seated dining

The seated-dining category includes the subcategories ‘fast casual’ and ‘full service’. Market share is split between corporate chains (56%) and independent establishments (44%).²³

Slower growth: seated-dining restaurants are projected to grow more slowly than quick-service restaurants (QSR), pubs, bars and nightclubs. By 2026, seated dining will reach a market size of $114.1 billion – up from $107.2 billion in 2023.²⁴ The sector is projected to have a 21% compound annual growth rate (CAGR) between 2021 and 2026, and experience incremental growth of $6.8 billion in the same period.  

There are a number of important takeaways from these growth projections:

• Europe was the third-largest seated-dining market in 2022 and will hold that position in 2027. 

• As eating out grows in popularity in Europe, demand for restaurants will also grow. The trend is being driven by demand for healthy, nutritious on-the-go food, with the UK, Germany, France and Spain among the key market contributors. 

• A multitude of factors are also contributing to the growth of the eating-out market, including increasing urbanisation, changing lifestyles and diets, and a growing global employee population with less time for home cooking.

Key seated-dining payment trends 

The key payment trends affecting the seated dining market are:

• Higher prices: with higher prices at restaurants across Europe, many customers are choosing to eat at home in order to save money – a trend that has the potential to impact the total number of meals out. 

• New technologies: while technology adoption rates were already high amongst QSR, seated-dining restaurants are now adopting technological tools at increased rates. 

• Digital marketing: mid-to-large corporate seated-dining restaurants are increasingly engaging customers via 'big tech' digital channels – which could potentially expand to include payment processing functionality as part of the booking or review process.

“We switched to Elavon because we wanted a payment provider that offered better customer care. It’s not just a point-of--sale system: I can focus on the design, hiring the best staff, marketing and finances, because I know that the payments side of things is taken care of.”

Copper + Straw

Reducing no-shows: we asked more than 1,000 UK adults what, if anything, would encourage them to honour a meal booking. While 58% of respondents said they would always honour a booking or cancel in advance, using digital channels to take a deposit, or send reminders, may help encourage customers to show up. 

The rise of digital dining: which technology trends are here to stay?

Quick service

Four segments: quick-service restaurant revenue is split into the following four segments:

The estimated global QSR market share breaks down to around 65% corporate restaurants and 35% independent.

European growth: research suggests that QSRs in Europe will see strong growth in the coming years, with the market projected to reach a value of $92.5 billion by 2026 – from $80.9 billion in 2023.²⁵ Between 2021 and 2026, the QSR market’s CAGR will be around 3.18%, representing an incremental growth of $4.7 billion.  

• Europe was the third-largest QSR market in 2021, and is projected to hold that status until 2026. Its 3.18% CAGR is slightly slower than the global 3.7%. 

• Rather than competing on price, European QSR vendors are broadening their menus to attract different customer demographics as a way to maintain steady growth. European QSRs are also focusing on improving access for customers, opening in better locations and adapting to changing customer trends by improving their home delivery and takeaway services. 

• The increasing demand for healthy and nutritious on-the-go food is driving QSR growth in Europe, with the UK, Germany, France and Spain among the region’s key markets. 

UK forecast: The UK’s QSR market is projected to reach a value of $29.7 billion by 2026, from $25.4 billion in 2023. Those figures represent a CAGR of 4.56% between 2021 and 206, and an incremental growth of $2.1 billion. 

• The UK QSR market will generate growth every year between 2021 and 2026, with year-on-year growth varying between 2.77% and 6.4%. 

• These figures will make the UK one of the fastest growing QSR markets, and will contribute 5.53% to the global market between 2021 and 2026. 

• From 4.3% in 2021, the UK will contribute 4.5% to the global QSR market by 2026. 

Key quick-service payment trends

Three key trends are impacting QSR payments: 

• More locations: following the challenges of the pandemic, there has been a 3% increase in QSR restaurants opening in Europe in the past 12 months – which has, in turn, increased payment opportunities. 

• Healthy food: demand for healthy food at QSRs has increased, putting a premium on service and pushing up prices. 

• App orders: a significant increase in the use of food delivery apps, and in QSRs own pre-order apps, has contributed to a 'faster food' culture – which has created new integration opportunities, often with fees that can be passed on to customers.

Pubs, bars and clubs

Like other European hospitality sectors, pubs, bars and clubs will grow steadily in the coming years. By 2027, the sector is expected to grow to a value of $50.4 billion, from $39.4 billion in 2023.²⁶ In that same period, the sector’s CAGR is projected to be 6.05%, with incremental growth of $6.5 billion.  

Payments opportunities for businesses in the hospitality industry

Post-pandemic, hospitality businesses must seize every opportunity they can to boost revenue, especially as the market continues to grow and competitors find ways to distinguish their offerings. Let’s examine some of the specific payments opportunities to emerge from our hospitality trend analysis: 

Personalisation

“Elavon gives you the opportunity to customise your terminal – you can add apps tailored to fit your business, add different categories and identify your busiest times of day and best sellers. In one system, you can do everything.”

Café Diem and Mo’s Pizza

Strong customer experiences represent a valuable opportunity for hospitality businesses – especially hotels – to grow market share. Loyalty programmes, in particular, are a popular way of making hospitality experiences personal for customers and can be easily integrated into payments contexts. So how should businesses use personalisation as a means to create payments opportunities?

More ways to pay: first and foremost, hospitality businesses can personalise customer experiences by increasing the number of available payment methods, which might include integrating: 

• Open banking and payments via application programming interfaces (API)

• Digital wallets

• Mobile phone one-tap card payments

• Virtual world payments, for example, in the metaverse.

Prioritising customers: business owners should ask: what do customers want from their hospitality experience? Typically, the answer involves convenience, comfort and value – which means that businesses must find simple technology solutions that can be integrated into apps and other payment contexts, and which encourage loyalty and repeat visits.  

Personalisation software: there are a number of useful software tools that hospitality businesses can use to enhance customer experiences. These include, for example, apps that capture data on user spending data, or monitor guest preferences and behaviour.  

Positive experiences: by simply getting the fundamentals of customer service right, hospitality businesses can help to deliver memorable, personalised experiences for guests and encourage higher margin spending. 

Data and insights

“We use Elavon Connect and we find that to be an excellent reporting tool. It gives us confidence to ensure all our transactions are secure and we have next-day payment, which is fantastic for cashflow. It gives us a single view of all our sites."

Birds Bakery

In a time of rising costs and inflation, hospitality businesses can draw on data and insights from the market to gain a competitive edge. 

Customer spending: hospitality businesses should explore ways to use the data that customers give them when they stay or use their services. In practice, this means putting the infrastructure and human expertise in place to collect and analyse that data. 

New technology: hospitality firms can harness customer data by integrating new technology. Certain software, for example, enables restaurants to run in-market testing on kiosks and then analyse that data online. Similarly, food-service establishments may implement in-house delivery solutions that capture customer preferences in order to optimise service.

Researchers and advisors: while new technology generates a wealth of useful data, it can be challenging to extract meaningful insight from that data – especially when teams are busy running a business. With that in mind, it can be advantageous for hospitality businesses (especially independent or mid-corporate establishments) to hire researchers to interpret customer data, and provide insights that focus on increasing profitability. Many industry experts offer services as independent advisors, which businesses can leverage to support the integration of new technologies, or as they open new sales channels. 

Speed of service

Serving guests faster is a fundamental way to ensure more positive customer experiences and free staff time to keep on top of wider tasks. 

New technologies: as with data and analytics, there are a plethora of new technologies available to help hospitality businesses facilitate faster service – including pay-at-table solutions that integrate into point-of-sale (POS) and digital wallets. Shift-management systems also help business owners to coordinate employee time better and can be integrated into existing POS systems. 

Speedy onboarding: the easier it is for businesses to hire and manage new employees, the easier it is to manage increasing customer demand. With that in mind, businesses should seek to integrate full spectrum management software that facilitates speedy employee onboarding (and other critical employment processes). 

Reduced staff levels: as staffing shortages persist, hospitality businesses need to develop strategies for dealing with reduced staff levels. New hiring initiatives and adjustments to shift patterns may present solutions, but businesses should really seek to leverage technology wherever possible to automate manual processes and ease pressure. Staffing shortages are a significant challenge for the hospitality industry. Technology solutions that help speed up ordering and payment are no longer simply ‘nice to have’, but essential.

Cost reduction

As inflation puts pressure on products and services, hospitality businesses should seek ways to cut costs without sacrificing customer experiences. Fortunately, there are opportunities to reduce costs through payments. 

Service fees: businesses should focus on streamlining resource-intensive processes, such as regulatory checks and reconciliations, as a way to prioritise cost savings over service fees.

Tiered pricing: given the projected revenue rise across the UK and Europe, hospitality businesses are in a position to consider tiered pricing strategies. In practice, this means exploring opportunities to reduce fees on a percentage basis for customers with a higher total spend. 

Grow your business with an Elavon EPOS system

Electronic point-of-sale (EPOS) systems can help your business seize payment opportunities and supercharge revenue streams. From out of the box, service-ready systems to bespoke solutions, Elavon’s cutting-edge EPOS technology will save you time and resources, and help you give your customers the experiences they want. 

Spotlight on upcoming payments technology

To capitalise on payments trends, businesses must continually be looking ahead. Here are some of the most interesting US/Canada-based payments technologies that are shaping and influencing the global hospitality industry. 

Building on growth

It’s critical that the hospitality industry maintains a laser focus on post-pandemic growth, which means both identifying commercial opportunities and avoiding pitfalls. The challenge will require business owners to think carefully about how they move forward, but also to find new, innovative ways to coordinate with partners – especially payment providers – in order to boost revenue and attract new customers. 

Staff shortages and rising inflation are putting pressure on businesses to reduce costs wherever possible. To address that problem, business owners should embrace technologies that automate manual tasks, streamline operations, improve the speed of service and provide long-term cost savings. At the same time, it will be up to payments partners to reinforce these longer-term cost savings, shift attention away from service fees and explore tiered pricing opportunities to support businesses as they grow.

Following the Covid-19 crisis, and in the midst of rising costs, customers are also expecting more from their brand experiences. In order to meet that expectation, businesses must find new ways to harness data and insight – both to bring greater personalisation to their offerings and to enhance customer experiences. Meanwhile, payments partners should focus on the insights to be gained from payments systems and on the potential for integration with personalisation software. Partners may also be able to provide greater advisor support on new technologies and share whitepapers and wider industry insight.

Despite the adversity of the Covid years, the hospitality industry (hotels, seated, dining, quick service and pubs, bars and clubs) can look forward to impressive forecasted growth – which should be a huge cause for optimism. It’s clear that technology will be a key driver of that growth: from centralising tasks and cutting costs to improving personalisation, hospitality businesses must embrace new technologies to not only remain competitive, but also to tap into massive growth potential. Payments partners will play a key role in that process – by advising on solutions and helping to implement them quickly, and by providing insights and long-term cost savings that help drive revenue well into the future.

1. https://view.publitas.com/ukh/restarting-hospitality-2021/page/1

2. https://lichfields.uk/blog/2022/nov/30/uk-hotels-market-after-covid-19-an-uneven-recovery

3. https://www.hospitality-net.org/news/4113848.html

4. https://www.technavio.com/report/pubs-bars-and-nightclubs-market-industry-analysis

5. https://www.restaurant-online.co.uk/Article/2023/08/07/uk-s-top-100-restaurant-groups-see-profits-increase-twelvefold

6. https://www.restaurant-online.co.uk/Article/2023/06/05/uk-eating-out-market-poised-for-4.6-value-growth-in-2023-according-to-lumina-intelligence-data

7. https://www.the-guardian.com/food/2022/dec/04/staff-shortages-see-uk-restaurants-struggle-to-cope-with-christmas-season

8. https://www.restaurant-online.co.uk/Article/2022/09/14/more-than-80-of-operators-struggling-with-recruitment-and-retention-staffing-challenges

9. https://www.hospitality-and-cateringnews.com/2022/10/inflation-driving-one-third-of-hospitality-businesses-toward-failure

10. https://www.bbc.co.uk/news/business-64152695

11. https://travel-weekly.co.uk/news/air/cost-of-living-to-impact-almost-half-of-peoples-holiday-plans

12. https://www.the-grocer.co.uk/health/consumers-are-struggling-to-get-healthier-heres-how-the-industry-can-help/663223.article

13. https://www.distill-ventures.com/insights-and-trends/no-low-consumers-understanding-the-opportunity

14. https://blog.hubspot.com/service/stateof-service-report

15. https://www.coveo.com/en/company/news-releases/2022/coveo-research-finds-customers-have-lost-all-patience-for-poor-service

16. https://www.statista.com/outlook/mmo/travel-tourism/hotels/worldwide

17. https://www.statista.com/outlook/mmo/travel-tourism/hotels/worldwide

18. https://www.statista.com/outlook/mmo/travel-tourism/hotels/united-kingdom

19. https://www.statista.com/stats/287133/annual-number-of-overseas-visits-to-the-united-kingdom-uk

20. https://www.statista.com/outlook/mmo/travel-tourism/hotels/germany

21. https://www.statista.com/outlook/mmo/travel-tourism/hotels/europe

22. https://www.statista.com/forecasts/516575/in-the-hotels-market-in-the-united-kingdom

23. https://www.future-market-insights.com/reports/food-service-industry

24. https://www.technavio.com/report/dining-out-market-industry-analysis

25. https://www.technavio.com/report/quick-service-restaurants-market-industry-analysis

26. https://www.technavio.com/report/pubs-bars-and-nightclubs-market-industry-analysis