In recent years, the hospitality business has experienced significant global growth, driven by the resurgence of international tourism following the slowdown caused by the pandemic.
In 2023, according to the World Travel & Tourism Council (WTTC), the tourism sector contributed more than $9.5 trillion to the global economy, nearing pre-pandemic levels.
With such promising figures, many aspiring entrepreneurs are looking to enter this sector, attracted by its growth potential and profit margins.
However, running a hospitality business is far from easy—it requires specific skills, thorough planning, and continuous effort to remain competitive.
Lanfranco Pescante, a successful entrepreneur with international experience in the hospitality industry, has identified the key mistakes that can jeopardize a business in this sector. Here’s what they are and how to avoid them.
1. Underestimating industry competition
One of the most common mistakes is believing that starting and managing a hospitality business is easy. In reality, it is one of the most competitive industries in the world.
According to the National Restaurant Association, in the United States, around 60% of restaurants close within their first year of operation, and 80% fail within five years.
Pescante emphasizes that gaining hands-on experience is essential to succeed.
“Many people think that having a good idea and a venue is enough for success. But without a deep understanding of the industry, the chances of failure are extremely high.”
For this reason, he advises working for at least a year in various industry roles to fully grasp business dynamics before launching an independent venture.
2. Lacking guidance from an industry expert
Another critical mistake is starting a business without the guidance of a mentor or industry expert. In a highly competitive environment, advice from someone who has already navigated the market’s challenges can make the difference between success and failure.
“A good mentor not only provides practical advice but also helps avoid costly mistakes,” says Pescante. “Learning from the successes and failures of others is one of the smartest strategies for fast growth in the sector.”
Seeking guidance from experienced industry professionals, consultants, or successful entrepreneurs can provide invaluable insights and prevent rookie mistakes.
3. Inadequate staff training
In the hospitality industry, quality service is a key factor for success. A single negative experience can damage a business’s reputation, especially in the digital age, where online reviews heavily influence customer choices.
According to TripAdvisor, 81% of travelers read reviews before booking a restaurant or hotel, and 52% avoid places with ratings below four stars.
Many business owners underestimate the importance of training their staff.
“A well-trained team is the key to delivering high-quality service and building customer loyalty,” says Pescante.
This is why investing in continuous training programs is essential to maintaining high service standards and ensuring a positive guest experience.
4. Expecting immediate success
The idea of making high profits in a short time is a dangerous illusion. The hospitality industry requires time to build a loyal clientele and achieve financial stability.
Pescante warns:
“Many new entrepreneurs get discouraged when they don’t see immediate profits. This is a sector where hard work, patience, and reputation-building are essential for long-term success.”
According to an IBISWorld analysis, the average time for a new restaurant to break even is about two years.
Having a long-term vision and careful financial planning is crucial to surviving the initial years of business.
5. Lacking a long-term growth strategy
Many entrepreneurs focus only on daily operations, without a clear long-term strategy.
“Running a business without a long-term plan is like sailing without a compass,” explains Pescante.
A winning strategy should include:
Growth objectives
Marketing strategies
Targeted investments
Expansion plans
For example, according to a Statista report, the hospitality industry is seeing a surge in technological adoption, including online booking services and AI-powered personalized experiences.
Integrating these innovations into a business can provide a significant competitive advantage and ensure future growth.
6. Neglecting the customer experience
A fatal mistake in hospitality is underestimating the importance of the guest experience.
Success in hospitality is not just about offering good food or comfortable rooms—it’s about creating a unique and memorable atmosphere.
According to a Deloitte survey, 60% of consumers are willing to pay more for a superior experience.
Pescante emphasizes:
“Every customer should feel special. Excellent service, attention to detail, and a welcoming atmosphere make the difference between a thriving business and one that is doomed to fail.”
Businesses that prioritize customer satisfaction, personalized experiences, and high service standards can boost customer loyalty and enhance brand reputation.
Final thoughts: how to succeed in hospitality
The hospitality business is a highly rewarding yet challenging industry. While it offers immense opportunities for growth, it is also filled with obstacles.
Avoiding these six common mistakes can be the difference between a thriving business and one that fails within a few years.
As Lanfranco Pescante highlights, success in hospitality requires:
Dedication
A well-defined strategy
A commitment to continuously improving service quality
By staying adaptable, investing in customer experience, and planning for long-term success, entrepreneurs can build sustainable and profitable businesses in the hospitality industry.
