In today’s travel and hospitality industry, the customer acquisition engine is sputtering. Between 2022 and 2025, the cost to acquire new customers surged over 35%, while customer lifetime value inched up a mere 4.5%. For brands operating on thin margins in experience-led markets, that’s a recipe for unsustainable growth.

But the real challenge is not just rising costs, it's weakening connections.

The loyalty gap is driving profitability off course.

Modern travelers are less loyal and more discerning than ever. On average, guests switch brands after just 2.4 negative experiences. One missed upgrade, a flight delay without acknowledgment, or an app that’s difficult to navigate can send them packing for good.

Meanwhile, brands that embed AI-powered service recovery and proactive communication are seeing up to 63% higher retention, which translates into clear, long-term economic gains.

Yet many brands still operate in outdated ways:

• Around 77% are retargeting existing loyalty members with paid ads, wasting media dollars.
• Only 9% have integrated their paid and owned media, leaving customer journeys disjointed.
• As many as 82% lack a generational strategy and are missing out on the Gen Z audience entirely, despite their rising influence in travel planning.

Identity confusion is costing you more than you think.

When brands can’t properly identify their customers, the consequences go far beyond messy data. Poor identity resolution directly impacts the bottom line. Roughly 27% of digital media budgets go toward targeting customers you already have in your database. With a robust identity strategy, customer acquisition cost (CAC) could be reduced by up to 23%, saving as much as $14 per customer.

In the travel sector, this inefficiency gets amplified. Disconnected booking systems and inconsistent CRM entries across loyalty programs, call centers, and mobile apps contribute to a fractured view of the guest. This not only impacts targeting but limits the brand’s ability to deliver the kind of personalization travelers now expect.

The fix? A unified identity framework that stitches together behavior, preferences, and context across every touchpoint, from the app to the front desk.

Gen Z: The loyalty opportunity hiding in plain sight.

Gen Z travelers are mobile-first, hyper-connected, and value-driven. But they’re woefully underrepresented in loyalty programs, making up just 14% of members. This isn’t due to apathy. Rather, it signals they’re not being reached in the right way.

Brands that resonate with Gen Z aren’t louder—they’re more authentic.

To win over Gen Z customers, you must:

• Deliver frictionless, mobile-first booking and support
• Incorporate influencer marketing and gamified loyalty tied to their digital lifestyles
• Align with causes that matter to them, such as sustainability, authenticity, and social impact

AI isn’t just about efficiency, it’s about empathy.

In travel and hospitality, service disruptions are inevitable. But how brands respond can turn forgettable experiences into lasting impressions. AI isn’t just for automation, it’s a tool for real-time empathy.

Done well, AI-driven service recovery can turn a frustrating delay into a loyalty-building moment. Yet only 6% of brands are using AI to personalize service recovery workflows.

Imagine anticipating a delay and automatically offering rebooking options, a meal voucher, and personalized messaging—all before the traveler asks. That’s how loyalty is earned in the age of immediacy.

From vanity metrics to real business impact.

Clicks and impressions no longer cut it. With margins tightening, marketing must prove its value across the full guest lifecycle.

That means:

• Moving from channel performance to incremental revenue impact
• Using AI to predict and optimize media outcomes
• Leveraging cookie-less partnerships and clean room technologies to bridge data gaps and build scalable, privacy-first strategies

3 principles for sustainable growth in travel and hospitality.

1. Make it sustainable: Don’t chase viral moments. Treat customer acquisition like a portfolio strategy. Invest in media mix modeling, long-term ROI tracking, and repeatable frameworks that reduce waste and enable agility.

2. Make it flexible: Evolve your KPIs and creative in real time. Build test-and-learn loops that your finance team can support. Ensure teams can speak the language of incrementality — and connect campaign lift to revenue.

3. Put the guest at the center: Whether they’re planning a luxury getaway or a last-minute city stay, today’s guests want experiences that feel seamless, tailored, and respectful of their time. Prioritize moments that matter, and ensure your tech stack is built to respond, recover, and remember.

Final thought.

In an imperfect world, the brands that thrive won’t be the ones with the biggest budgets — they’ll be the ones with the strongest connections. It’s time to shift from transactional to transformational. To make the leap, build loyalty through intelligence, identity, and intentional experiences — and watch sustainable growth follow.

Click here to download the research report: Customer Acquisition and Retention in an Imperfect World.

Julie Hoffmann is an entrepreneurial executive with over 25 years of experience driving strategy, category creation, and transformative growth for Fortune 500 brands across Travel, Hospitality, Retail, and CPG. Her leadership is rooted in data-driven insight, bold innovation, and a relentless focus on customer impact.

In 2013, Julie pioneered one of the earliest microservices architectures, championing a headless delivery model that redefined how services are deployed to customers—accelerating speed to market, improving operational efficiency, and unlocking scalable automation.

Since 2016, she has served as a global executive advisor for Adobe, partnering with C-level leaders and boards across the Travel, Hospitality & Dining sectors. Her strategic counsel helps shape digital transformation agendas worldwide—delivering thought leadership that inspires, aligns, and empowers brands to modernize and grow in an increasingly experience-led economy.

https://business.adobe.com/fragments/resources/cards/thank-you-collections/travel-hospitality