When it comes to pandemic-induced disruption, not many sectors were hit harder than the hospitality industry. Dubbed the Great Resignation, the World Travel and Tourism Council (WTTC) reports that hospitality businesses experienced a workforce drop of more than 18 percent or 62 million jobs worldwide. In the US, Statista reports that hotels lost more than $46 billion, while 4.8 million hospitality and leisure jobs were lost.

It’s been a long road, but as we kick off 2025, it’s safe to say that the hospitality industry has largely recovered. According to an STR report, global room demand was strong in 2024, with projections calling for a 2.5 percent increase, elevating it to an all-time high. While undoubtedly excellent news for the industry, it hasn’t been an easy road back. There were significant challenges to overcome along the way, most notably worker shortages, which still exist today.

The American Hotel & Lodging Association (AHLA) reported earlier this year that 76 percent of hotels are still experiencing staffing shortages. As a result, name brands like Wyndham, Hilton, and MGM have turned to third-party services to help fill the gap while creating greater levels of efficiency and enhancing customer experiences. This includes digital tools like booking engines, customer review systems, and analytics platforms. Here are some ways these tools are transforming hospitality businesses right now.

  • Hotels are integrating third-party booking platforms to reach a broader audience of potential guests, which can lead to higher occupancy rates. According to Skift's research, online travel agencies accounted for $266 billion in hotel gross bookings in 2024.
  • Restaurants are dramatically increasing their visibility by using solutions like OpenTable and Resy, which list their seating inventory, exposing them to an untapped community of consumers looking for a night out.
  • Travel agencies are using Online Travel Agencies (OTAs) to gain access to a variety of travel products and services, including flights, hotels, car rentals, and activities.

Third-party services clearly benefit hospitality businesses, but whether your company has already begun this journey or has yet to dive in, it’s essential to understand the full ramifications of these investments, starting with data. What fuels these third-party solutions is mountains of data, including information about your business and its customers. Here are some examples:

  • User Behavior: Pages visited, time spent on each page, and actions taken, such as form submissions or clicks.
  • Demographic Details: Age, gender, location, and language preferences.
  • Device and Browser Information: Details about the user’s hardware and software, including IP addresses.
  • Purchase History: Transaction data, such as items purchased, amounts spent, and payment methods used.

While third-party tags like those mentioned earlier deliver new levels of customer personalization, greater operational efficiencies, and more, it is vital to know that they also have major downsides that can expose businesses to significant risks. For one, they often operate with minimal transparency and collect extensive data about users beyond the original parameters set by a business. Making matters worse, many companies are not aware that this is happening.

According to a recent Jscrambler study, 97 percent of respondents know that third-party tags regularly collect sensitive or private information, but only 13 percent are confident they understand what information they collect. But that’s not all.

  • 49 percent admitted that in the previous 12 months, these tags collected data they were not supposed to, including site traffic, website form data, login, order, social media information, customer account details, and more.
  • 26 percent of respondents know that tags leaked their private user data to other organizations.

This lack of awareness isn’t the only issue. Third-party tags create opportunities for data breaches, as sensitive customer information may be improperly stored, transmitted, or accessed. Cybercriminals are lurking and waiting to exploit vulnerabilities in third-party scripts to steal data or disrupt operations.

These third-party tags also create significant compliance challenges with regulations such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act), which are becoming increasingly more stringent. Considering some of the figures above, it’s clear that companies do not possess the necessary line of site into this data. This includes precisely what data is being collected, how it’s being used, and what is being leaked. With regulations looming large, those businesses that don’t take the necessary steps to ensure that their data collection practices are aligned with legal requirements could face hefty fines and, in turn, an erosion of customer trust.

Hospitality businesses must adopt robust data management and security practices to reap the benefits while eliminating the risk of third-party tools. Start by conducting regulatory audits, including a thorough review of all third-party tags used on their websites. This exercise can help businesses gain a complete understanding of what data is being collected and how it is being used. As part of the process, verify that all tags comply with relevant privacy laws and internal policies.

Next, companies should employ an automated tag approval process. This is critical given the amount of updates taking place for each vendor tag which makes it impossible to keep up manually. Implementing strong security protocols is also key. This includes encryption, tokenization, and regular vulnerability assessments, which can also help protect data collected through third-party tags.

A final focus area must be connecting with two key audiences: your employees and your customers. For the former, education is essential, especially for those in IT and marketing. Put in place a training program that ensures everyone fully understands the risks associated with third-party services and what steps must be taken to mitigate them.

As for customers, don’t keep them in the dark. Customers demand transparency and will reward those who deliver with their loyalty—A study from Label Insight reports that 94 percent of consumers are more likely to remain loyal to a brand that is completely transparent about its practices. Invest in sharing the company’s data collection practices while obtaining informed consent from each customer. These steps can go a long way to building trust and reducing the risk of regulatory penalties.

Looking Ahead

The hospitality industry will continue its digital transformation. Take hotels, for example. According to a Skift report, 30 percent of hotel IT budgets will be allocated to new implementations, and 86 percent of hoteliers plan to increase their investment in tech.

As this transformation continues to include third-party tools, businesses must be proactive in addressing the risks associated with them. By adopting comprehensive security measures, complying with evolving regulations, and prioritizing transparency, companies can realize the benefits of digital innovation without jeopardizing their customers or reputations.