Impact of Digital Transformation on the Business Environment in the Hospitality Industry ()
1. Introduction and Background
The hospitality industry has been the largest in the United States over the past few years. However, the growth of this industry decreased suddenly during the COVID-19 pandemic because of the unavailability of digital technologies (García-Gómez et al., 2021). Digital transformation in hospitality encompasses the adoption of tools such as AI-based chatbots for real-time customer support and IoT-enabled room management systems, which deliver personalized guest experiences (Bulchand-Gidumal et al., 2024). These innovations improve operational efficiency (faster check-ins), enhance customer satisfaction (tailored room settings), and create competitive advantages by offering unique value propositions (Bulchand-Gidumal et al., 2024). In the U.S., most hospitality organizational leaders have long adopted digital technology; therefore, they often struggle to utilize or implement newer technologies in their business. Therefore, newer digital technologies have had both positive and negative impacts on this industry, and their effects are visible in the overall business environment of organizations (Iranmanesh et al., 2022). However, the use of digital technologies enhances the business performance of the hospitality industry, primarily by improving customer experience and satisfaction, which is essential for the development of the hospitality industry in the U.S.
This study is crucial for understanding the significant impact of digital transformation on the U.S. hospitality industry’s business environment. Additionally, this study is important for understanding both the negative and positive impacts of digitalization in the hospitality sector. The study primarily reflected on how digitalization has affected the business environment of the U.S. hospitality sector over the past few years. Additionally, this study is important for understanding how the hospitality sector can enhance its business environment by leveraging digital technology more effectively.
Digital Transformation significantly impacts a company’s value stream, with studies showing that it is more of a transformation process than just a technological issue (Bencsik et al., 2022). Digital transformation and the seamless exchange of data within the value chain and between systems can improve various aspects of the company, reduce service times, and provide managers with greater oversight and control, provided it is implemented correctly (Björkdahl, 2020). The digital implementation necessitates a company-wide shift to digital strategies, workflows, and the dynamics of customer service agents (Bencsik et al., 2022). Considering its potential, digital transformation has become a key factor in driving market competitiveness. However, obstacles exist to overcome when transforming an established industry (Nikmehr et al., 2021).
Recent estimates indicate that the failure rate of digital transformation projects ranges from 66% to 84%, which is a significant percentage considering the financial and non-financial costs associated with implementing such programs (Correani et al., 2020). Although many leaders in the hospitality industry have developed a path forward for digital implementation, many still struggle to move forward (Correani et al., 2020). Leaders must ensure careful execution to make sure they execute digital implementation using a planned approach (Correani et al., 2020). Inadequate planning, lack of leadership guidance and support, failure to address service agents’ requests, not considering the customer’s point of view, and poor communications all contribute to improper implementation (Molin & Norman Brandt, 2023). Competitiveness in the hospitality industry has a significant impact on the service providers and market (Mirzaei et al., 2022). Leaders in the industry should extend better service while maintaining a competitive advantage (Mirzaei et al., 2022). The hospitality industry needs to provide prompt, high-quality service at a price that can compete in the industry. Utilizing digitalization methods in these services has the potential to reduce costs and enhance efficiency. Customer service is a primary requirement for operating in the hospitality industry, and digital technology is a proven tool essential in helping employees address customer needs (Åström et al., 2022). The Six Sigma-driven approach helped to detect the mechanism that ultimately promotes innovation and value within the hospitality industry (Troisi et al., 2023).
While Mirzaei et al. (2022) explored the impact of digital transformation on large-scale enterprises, researchers have given little attention to how leaders of small and medium enterprises (SMEs) adopt these technologies under resource constraints. Similarly, Torkunova and Khabrieva (2021) primarily examined the effects of digitalization on profitability but did not explore customer experience metrics specific to SMEs. Addressing these gaps, I aimed to provide insights into the leadership challenges and opportunities for SMEs navigating digital transformation in the Southeastern U.S. hospitality sector. Previous researchers’ research mainly focused on larger enterprises and their challenges in digital transformation. Most studies were primarily focused on strategic planning and manufacturing, with limited applications to the tourism and hospitality industry (Tortorella et al., 2023). The findings of this study can help fill the gap in the literature by utilizing the Six Sigma methodology to identify leadership challenges and competitiveness, thereby enhancing customer satisfaction and improving profitability. This study is divided into three sections. The first section includes the abstract, background, significance of the study, assumptions, limitations, and delimitations. The second section includes a review of academic literature. The third section comprises methodology, findings, and conclusions.
1.1. Purpose Statement
The purpose of this flexible design single case study was to explore the impact of digital transformation on the hospitality industry’s business environment, to address issues of reduced positive customer experience and decreased profitability. As stated by Bi et al. (2020), the qualitative approach revolves around interviewing people who work in the industry and the customers affected by the industry. The goal of the study was to identify the challenges leaders face during digital implementation. Analyzing the digitalization strategy and its impact on the hospitality industry in the Southeastern United States provides a broader perspective on digital implementation within the industry.
1.2. Research Questions
The research questions guided the study and participants to examine the concepts and aspects of the problem, broadening their perspective to enable advanced insight and innovation. RQ1 depicts the overall significance of digital transformation. The advent of modern technology created opportunities for leaders to adopt digital transformation. According to Zhang et al. (2021), the implementation of digital transformation can create new and improved value for employees, customers, and shareholders. RQ2 explored the impact of digital implementation on the industry, examining how it affects customer expectations and potential temporary job losses resulting from technological change. These changes may have a negative impact initially, but they would eventually become necessary to maintain competitiveness (Masoud & Basahel, 2023). However, the process of adopting and implementing would have some impact, which the research question was able to help explore further. RQ 3 focused on the opportunities for digital transformation within the hospitality industry in the Southeastern United States. The research questions served as a guide for me in identifying risk mitigation strategies and the opportunities presented by digital transformation. Strong leadership through digital transformation can help enhance the organization’s productivity and functionality (Nadkarni & Prügl, 2020). Technology influences organizational structure: a clear structure provides opportunities for the hospital industry to excel. These research questions helped analyze opportunities for improvement in leadership within the hospitality industry.
RQ1: What factors drive digital transformation in the hospitality industry?
RQ 1a. How much of an impact does digital transformation have on the profitability of the hospitality industry?
RQ 1b. How do organizational leadership factors influence digital transformation?
RQ2: How has digital transformation impacted the revenue and customer satisfaction of businesses in the Southeastern United States hospitality industry?
RQ3: What are the opportunities provided by digital transformation that can benefit the hospitality industry?
1.3. Significance of the Study
This study holds significance and importance because it reflects on understanding the key impacts of digital transformation on the business environment of the U.S. hospitality industry. Conducting the study was important because it would help in understanding the business environmental challenges that hospitality organizations have encountered in the digital transformation process, as well as the current state of the industry. The study included examining the technologies adopted in the hospitality industry and an investigation into how current innovations impact customer experience and operational efficiency (Limna, 2023). I expected that conducting this study would provide a detailed understanding of the role of digital technology in hotel organizations, particularly in enhancing the industry’s overall success prospects. Additionally, the findings in this study are important because I focused on providing an understanding of the impact of limited digital transformation on the market share, profits, and customer experiences of small and medium enterprises. The study also includes a discussion of how multinational corporations improved their customer base by using the latest digital technology. In essence, this study is important for gaining knowledge and understanding of the use of digital technology in the U.S. hospitality industry.
1.4. Assumptions, Limitations, and Delimitations
Assumptions are statements researchers make that they believe are true (Nkwake, 2020). Assumptions relate directly to the underpinning theoretical framework, the phenomenon under investigation, and the methodology (Nkwake). The first assumption in this study was that digital transformation has both positive and negative impacts on the hospitality industry. I assumed that positive impacts may include enhanced operational efficiency, improved customer experience through data-driven decision-making, and increased competitiveness through the adoption of advanced technologies. However, the negative impacts could manifest through increased operational complexity, initial high costs, and potential loss of human jobs resulting from automation (Pencarelli, 2020). This assumption was important as it frames the research’s inquiry into the balanced nature of digital transformation in both operational efficiency and its broader implications for employment and customer satisfaction. The second assumption was that the selected change management and RBT provided this study with a theoretical underpinning. I anticipated that applying concepts from change management and RBT would allow the interpretation of the study results in the context of established and proven rationales. A third assumption was that only recruiting respondents with sufficient knowledge and experience related to the topic would serve as participants. The recruitment of knowledgeable participants on the topic was expected to foster adequate data collection, thereby answering the research questions.
Every study includes its own theoretical, empirical, methodological, analytical, and ethical limitations, which the researchers cannot control (Ross & Bibler, 2019). This study has methodological and empirical limitations. The main methodological limitation of this study was the use of non-probabilistic sampling techniques, specifically convenience and snowball sampling. These methods, although practical for exploratory research, introduced the risk of selection bias, where participants may not accurately represent the broader population (Stratton, 2023). An example of this idea is that the recruited hospitality managers might come from a digitally advanced or larger organization, which could skew the data toward a more favorable outcome for digital transformation.
Another methodological bias was that the interviewed participants might respond to the research questions in a manner consistent with social desirability, resulting in bias (Bergen & Labonte, 2020). The participants’ fear can significantly influence the social desirability fear of providing any information that could result in consumers perceiving the hospitality industry negatively (Bergen & Labonte, 2020). Researcher bias may emerge during data analysis, as the individual conducting the process may introduce it. The empirical limitation was a limited understanding of the application of the latest digital technology in transforming the hospitality industry. The limited empirical information could limit the scope and breadth of the literature review (Florczak, 2022).
Delimitations help identify the factors not addressed in a study (Coker, 2022). The scope of this study includes limitations to hospitality managers and leaders with at least two years of experience overseeing digital transformation within their organizations. This delimitation ensured that the participants had adequate exposure to the benefits and challenges of digital transformation, providing a rich, experience-based perspective (Coker, 2022). Additionally, the study reflected on the hospitality industry within the United States, which may limit the generalizability of the findings to regions where digital adoption may occur at different stages, such as developing countries or more technologically advanced markets.
Another delimitation was that I would assess the application of digital transformation in the hospitality industry. The focus on the technologies implemented in the hospitality industry, in general, would limit understanding of the specific innovations used to transform the sector. The delimitation occurred because of the numerous innovations and their dynamic nature. These delimitations exclude employees who are not in management or operational roles, even though they may offer insight into the day-to-day impact of digital transformation.
2. Review of the Academic Literature
Business Practices
The COVID-19 pandemic negatively impacted the hospitality industry’s business environment, which is currently the newest sector in the U.S.A. The hospitality industry in the U.S.A. has been grappling with significant business environmental issues for a considerable amount of time. The business environmental issues primarily stem from low customer satisfaction and experience, as well as reduced profitability. Negative customer experiences associated with limited implementation of digital technology are a significant issue in the U.S.A. hospitality industry (Khan et al., 2021; Shabani & Munir, 2020).
The hospitality industry has experienced a significant decline in growth because of the reduced benefits. Additionally, the industry’s profitability has also declined significantly because of the gradual reduction in customers (Khan et al., 2021). During the COVID-19 pandemic, leaders faced challenges in engaging customers, and many small and medium-sized hotels in the U.S. exited the hospitality industry because of high maintenance costs and low profitability. Business leaders exited the market because they could not implement digital technology in their hotels (Khan et al., 2021). These issues negatively impacted the overall growth of the U.S. hospitality industry. However, the industry began to improve after 2022, when leaders of large hospitality organizations started implementing digital technology to enhance their business environments (Ndaguba & Zyl, 2023).
Digital transformation evolved as a crucial trend in the U.S. enterprise sector. The hospitality industry has adopted digital technology, re-shaping how resorts and related services function and engage with customers (D’Souza & D’Souza, 2023). The major digital practices employed in the hospitality industry include online reservation systems, mobile applications for check-in and check-out, digital payment solutions, customer support chatbots, robotics, and AI to personalize guest experiences (Adekuajo et al., 2024; D’Souza & D’Souza, 2023; Zhu et al., 2024). Digitalization is further influenced by the need to satisfy the expectations of the contemporary customer, who demands instant, fast, and differentiated delivery. Larger hospitality brands, such as Marriott and Hilton, are leading the way in leveraging advanced digital tools, including AI-driven concierge services, Internet of Things (IoT) technology for customized room settings, and data analytics for tracking customer preferences (Štilić et al., 2023). For these hospitality companies, the digital transformation route is a means to build brand loyalty, enhance operational efficiency, and compete effectively in this rapidly changing market.
Small and medium-sized hotel leaders often struggle to afford digital adoption, have limited exposure, and lack expertise, resulting in restricted access to innovative technological resources (Manigandan & Raghuram, 2024). These constraints may limit the capacity of smaller chain leaders to provide the seamless, tech-savvy services offered by larger chains, resulting in a competitive gap within the industry. To maintain a competitive edge in the hospitality industry, hotel leaders must effectively integrate digital technology into their business operations. The COVID-19 pandemic altered customer expectations regarding hygiene, contactless communication, and convenience. As a result, the COVID-19 pandemic created an environment where survival necessitated compliance from hospitality enterprises (Pillai et al., 2021).
Digital transformation offers various potential advantages for the hospitality industry. The primary impact of digital practices in hospitality is the enhancement of customer satisfaction through personalized services and reduced wait times (Mercan et al., 2021). For example, using a mobile application, a guest may reserve and even check out without being present. With IoT, guests can control their room’s climate and lighting using their devices for maximum comfort and satisfaction (Mercan et al., 2021). Data analytics enables hotel personnel to collect customer data, explore guests’ needs, and, with this knowledge, provide them with relevant services or promotions. The personalized focus correlates with increased customer loyalty, as individuals are more likely to return to a hotel that can offer them a tailored experience tailored to their preferences (Mercan et al., 2021).
However, the implementation of digital technologies is not without challenges. A significant obstacle is the cost of technology adoption, especially for SMEs, which mostly have limited budgets and cannot afford large-scale digital investments (Shahadat et al., 2023). This process includes the initial cost of technology and ongoing expenses for software maintenance, cybersecurity, and staff training. The costs may not balance out with the potential returns for small hotels. Additionally, the high rate of technological advancement creates a short shelf life for adopted systems, requiring further investments to keep pace with competitors. Another challenge is the lack of skills and knowledge regarding digital tools among workers in the hospitality industry. For hotels to benefit from digital tools, Carlisle et al. (2021) suggested that a skilled workforce would help with operations and optimization. At the same time, increased digitalization raises central cybersecurity and data breach concerns as hotels collect and store vast amounts of customer information (Shabani & Munir, 2020). The increased risk of data breaches and cyberattacks may lead to loss of customer confidence, financial penalties, and legal liabilities, making digital transformation costly and complex.
Impact of Digitalization on Service Quality. According to Kádárová et al. (2023), the integration of digital technology is crucial for promoting digitalization in SMEs, resulting in improved performance and service quality. Likewise, Elshaer et al. (2022) noted that digital transformation is crucial for enhancing service quality throughout the customer journey. The use of digital technology helped improve the reputation and brand value of businesses in the U.S. hospitality sector (Jayawardena et al., 2023). Zhu et al. (2024) argued that the use of digital technology in the hospitality industry correlates with enhanced service quality and improved customer experiences. In a manner comparable to Zhu et al. (2024), Anh and Huy (2021) expressed the view that the adoption of digital technology can assist leaders within the hospitality industry in streamlining their operations, enhancing response times to customer inquiries, and augmenting their problem-solving capabilities, thereby contributing to increased customer satisfaction. Leaders use various digital technologies in the hospitality industry, including AI, data-driven machine learning, robotics, virtual reality, and augmented reality (AR) (Åström et al., 2022; Zhu et al., 2024). Additionally, the use of digital technology can lead to inevitable negative consequences, including the potential loss of client interaction information, data security risks, and technology addiction or over-reliance (United Nations [UN], 2024).
Impact of Digitalization on Competitive Advantage. Digitalization enables effective business performance and, consequently, a competitive advantage in the market (Kádárová et al., 2023). According to D’Souza and D’Souza (2023), hotel leaders can adopt digital technology to retain existing customers and attract new ones. Troisi et al. (2023) stated that an enhanced competitive advantage is crucial for promoting the profitability of businesses in the hospitality industry. Digitalization enabled the adoption of diverse marketing tools, promoting competitive advantage over rivals. Enterprise leaders who utilize digital marketing gain an enhanced competitive advantage over those who use only traditional marketing tools (Nadanyiova et al., 2021). Hotel industry leaders in the United Kingdom increased their profitability and customer base through digitalization, leading to a greater reliance on their services (Ezzaouia & Bulchand-Gidumal, 2023).
The adoption of digital technology also enables leaders to effectively overcome obstacles that previously hindered the hospitality industry’s growth and anticipates further advancements in this sector. Ratna et al. (2024) found that the use of digital technology significantly enhanced the competitive advantage of SMEs. In addition, digitalization helped enhance the customer base of SMEs by offering high-end technology in the hotels (Ratna et al., 2024). Large organizational leaders have also refined their use of digital technology, ensuring that it aligns with customer expectations and needs. Large organizational leaders integrated digital technology into every aspect of their business to enhance customer experiences during their stay, significantly contributing to their U.S.A. market profitability (Åström et al., 2022; D’Souza & D’Souza, 2023; Zhu et al., 2024).
Six Sigma-Driven Innovation. The Six Sigma-driven approach facilitates the identification of mechanisms that promote innovation and value within the tourism and hospitality industry (Msilu, 2023; Troisi et al., 2023). The concept correlates with the study, as most companies operating within the hospitality industry experience changes within their business resulting from digitalization. Digital technologies are crucial in creating and reinforcing disruptions that occur in society and industry (Åström et al., 2022).
The framework is crucial as it promotes the identification of customer needs, which are vital components for hospitality firms in the nation (Rahimian et al., 2021). Mitigating customer complaints can enhance business performance. However, the significant challenges associated with the COVID-19 pandemic caused small and medium-sized hotel leaders in the U.S.A. to face challenges in maintaining customers, leading to a significant number of organizational owners closing their businesses. In contrast, larger corporation leaders consistently demonstrate potential in managing client expectations and strive to enhance customer experience by implementing various digital technologies (Åström et al., 2022).
Theories
Change management and RBT guided the theoretical framework for this study. These theories were crucial in exploring and addressing the potential challenges encountered in implementing digital technology within the hospitality industry (Chigara, 2021; Mukhlis & Tyas, 2024). This section includes discussions on change management and RBT and their application to the current study.
Theory 1: Change Management Theory. Change management theory explores the processes, challenges, and strategies involved in modifying existing organizational systems, structures, and behaviors. Seminal works by Kurt Lewin and John Kotter are foundational for understanding change processes. Lewin’s (1948) three-step model of unfreezing, changing, and refreezing highlights the necessity of preparing individuals for change, implementing new behaviors, and reinforcing them within the organizational culture (Lewin, 1948). Before unfreezing, identifying the need for change is the first step. Change involves introducing a new habit, intervention, or process. Refreezing involves stabilizing and evaluating the change. Kurt Lewin’s change management theory universally applies in various industries, including hospitality, to guide the implementation of organizational change. Previous researchers of the hospitality sector have demonstrated the utility of this theory in overcoming resistance to change and achieving successful transformation. For instance, studies have highlighted how the unfreezing stage helps to challenge the current situation and foster a sense of urgency for adopting innovative practices, such as integrating digital technology. Research also highlights the significance of the change stage in identifying barriers specific to leadership and workforce adaptability within the hospitality sector. Additionally, the refreezing stage is crucial for sustaining change by embedding new processes through ongoing training and monitoring. Kurt Lewin’s change management theory assisted the leadership in the implementation of digital technology, as it helps identify the main issues or challenges limiting modifications and resistance to change. For instance, Zambrano Cancañón et al. (2022) proposed using Lewin’s change model to enhance operation processes and mitigate resistance to change.
Kotter’s (1996) eight-step process further delineates the essential steps for achieving successful change, including establishing urgency, forming a powerful coalition, creating and communicating a vision, and embedding changes into the culture (Kotter, 1996). Previous research has demonstrated the importance of structured approaches to implementing organizational change, particularly in the context of the hospitality industry (Muwandeniya & Eranda, 2021; Prasanna, 2023). Researchers applying change management theory emphasize the crucial role of creating urgency for change, such as educating staff about the benefits of adopting digital technologies to enhance efficiency and customer satisfaction (Chaudhuri et al., 2022; Chigara, 2021; Mukhlis & Tyas, 2024; Zambrano Cancañón et al., 2022).
Researchers further emphasize the need for strong leadership and support, identifying key organizational leaders as catalysts for change (Molin & Norman Brandt, 2023; Nadkarni & Prügl, 2020; Noor et al., 2023; Vial, 2021). Establishing a clear vision is another essential step, as demonstrated by studies that showed hospitality organizations have successfully aligned their strategic goals with technological advancements (Muwandeniya & Eranda, 2021). Effective communication of this vision by leaders has been found to foster widespread acceptance of change among staff (Phillips & Klein, 2023). Ultimately, literature emphasizes the importance of identifying and removing obstacles to change, thereby ensuring a smooth transition during the adoption of digital technology. These findings provide a valuable framework for understanding how change management strategies can apply to digital transformation in the hospitality sector. For example, Muwandeniya and Eranda (2021) examined how Kotter’s eight-step process facilitated the implementation of virtual reality in the Sri Lankan hospitality sector. The researchers emphasized creating a sense of urgency and mobilizing the change champions using Kotter’s second and third steps. In addition, the researchers emphasized that developing and implementing a compelling vision was crucial for aligning organizational goals and technological needs (Muwandeniya & Eranda, 2021).
Change, as a dynamic process, often encounters resistance and requires various competencies to manage effectively. For example, the leadership and communication roles emphasized by Kotter and Lewin are crucial in mitigating resistance and fostering positive behaviors (Kotter, 1996; Lewin, 1947). Therefore, contemporary perspectives on change, like those of Mukhlis and Tyas (2024) and Phillips and Klein (2023), build upon these seminal frameworks by acknowledging the behavioral and systemic adjustments required to address challenges such as resistance and conflict.
According to Phillips and Klein (2023), change is a dynamic process that requires adjustments in behavior and typically results in conflict and resistance. However, change can foster positive behaviors and attitudes, leading to improved organizational outcomes and employee performance. Problems identified in current knowledge, skills, processes, technology, management, or leadership can necessitate modifications to established business practices. Various sources, such as data on risk management, quality improvement statistics, employee performance evaluations, and accreditation survey findings, reveal problems (Phillips & Klein, 2023).
Each level of change necessitates a different behavior on the part of the individuals concerned. First-level changes do not challenge an organization’s overall context and systems (Mukhlis & Tyas, 2024). First-level changes are gradual and entail modifications to policies, task requirements, individual needs, and skills. Second-level changes involve modifications of fundamental assumptions about reality, shifts in beliefs, attitudes, values, vision, culture, and core processes (Mukhlis & Tyas, 2024). The ability to bring about change requires various skills, including leadership, management, political acumen, analytical, interpersonal, systems, and business skills, as well as communication abilities (Phillips & Klein, 2023).
Effective change management involves ensuring that individuals accept change willingly and adapt to the new environment smoothly (Mukhlis & Tyas, 2024). The change management process is systematic and structured, involving the establishment and implementation of strategies to help organizations transition from their current to their desired state. The goal of change management is to improve an organization’s performance capabilities by effectively responding to or anticipating modifications in internal and external environments (Mukhlis & Tyas, 2024).
Theory 2: Resource-Based Theory. Resource-based theory (RBT), introduced by Penrose (1959) and later developed by Barney (1991), emphasizes the strategic value of an organization’s resources in creating competitive advantage. Barney (1991) suggested that resources perceived as valuable, rare, inimitable, and non-substitutable may contribute to long-term competitive advantages. This study explored how these attributes manifest in the context of digital transformation within the hospitality industry. Penrose’s foundational work emphasized that a firm’s unique resources are critical to its growth and ability to compete (Penrose, 1959).
The RBT theory supports the concept of digital transformation, which the hospitality industry may consider (Nikopoulou et al., 2022). The Lean Sigma framework outlines relevant issues and strategies that align with the RBT. RBT reflects on facilitating the use of diverse resources within the hospitality sector. The theory was relevant in this study as it advocates for implementing digital techniques and transformations that hospitality industry leaders can adopt to achieve success through effective resource management. Resource management can promote effective digital transformation, which is essential for addressing customer-related challenges such as delayed bookings and enhancing profitability (Pérez et al., 2021). The practical application of the RBT theory helps promote productivity, efficiency, and a competitive advantage for hospitality firms (Freeman et al., 2021). Advancement in technological infrastructure is a tangible resource (Bag, 2023). However, brand reputation and customer loyalty are the most important intangible resources through which an organization can gain a competitive advantage in the digital environment.
Based on RBT, hospitality organizational leaders can assess and utilize their resources to achieve and maintain a competitive advantage. Digital technologies, such as AI-driven personalization, data analytics, and IoT, enhance the responsiveness and personalization of services, thus adding value to the customer experience (Alexander, 2024). If these resources are rare and unique, competitors are less likely to replicate them. For example, by utilizing data-driven insights into customer preferences, hotel leaders can design their offerings in a manner that their competitors cannot easily replicate (Dang & Nguyen, 2023). Additionally, adequate resource allocation and deployment are also crucial. According to Alexander (2024), a proper organizational structure and processes ensure that investments in technology are strategically aligned with customer service goals, thereby preventing operational inefficiencies. RBV is particularly insightful for SMEs, as it helps them understand how to creatively use limited resources to maintain a competitive edge with larger firms (Lukovszki et al., 2020).
Applying theoretical frameworks such as Kotter’s change model, Lewin’s change theory, and RBT provides a strong foundation for analyzing digital transformation. However, gaps remain in their practical application to smaller organizations and non-Western cultural contexts. For example, Kotter’s model emphasizes the role of leadership, but its linear structure may not accommodate the iterative nature of digital adoption in SMEs. Similarly, RBT highlights the importance of leveraging organizational resources but provides limited guidance on resource acquisition in low-budget settings. Addressing these theoretical gaps requires a hybrid approach that incorporates agile methodologies to align with the dynamic nature of digital transformation.
Constructs & Variables
Performance improvement, motivation enhancement, improved job satisfaction, and reduced stress levels are essential in the hospitality industry (Mekoth et al., 2022; Roy & Pagaldiviti, 2023; Shu & Chianata, 2024). The constructs promote operational efficiency, job performance, and customer satisfaction, while also reducing stress levels among hospitality workers (Elshaer et al., 2022; Mekoth et al., 2022; Roy & Pagaldiviti, 2023). Included in the sub-section are constructs of performance improvement, motivation enhancement, job satisfaction, and stress levels.
Construct 1: Performance Improvement. Performance improvement is the most critical construct in the hospitality industry as it directly and significantly influences guest satisfaction, operational efficiency, and overall profitability (Roy & Pagaldiviti, 2023). Hospitality organizational leaders can improve their performance by implementing digital technology. Digital platforms, such as customer relationship management (CRM) systems and employee management tools, offer valuable and actionable insights that enable hotel leaders to optimize service delivery and allocate resources effectively.
The advantages of adopting digital technology within the hospitality industry include improved guest experience and increased productivity (Zhang, 2022; Wynn & Jones, 2022). For example, Marriott International is the leader in digital transformation, with elements such as mobile check-in, digital room keys, and AI-based customer service (Zhang, 2022). The innovations have maximized operational management efficiency and contributed to improved guest satisfaction by making it easier for clients to interact and receive personalized services (Boukhaoua & Habbache, 2024). In addition, data analytics enabled Marriott’s leaders to better understand customer preferences regarding targeted marketing and loyalty programs, which further stimulates customer engagement and satisfaction.
Other advantages of utilizing digital technology in the hospitality industry include reduced wait times and improved operational efficiency (Zhang et al., 2021). Digital transformation also enhances collaboration within the hospitality industry by facilitating communication between employers and employees during performance evaluations. Employers used digital platforms and channels to communicate their expectations, recognition, and feedback more frequently and effectively (Zhang et al., 2021). Digital technology also mitigates risk within organizations (Cebul & Grewal, 2022). Improving customer service enhances performance in the hospitality industry, which can occur using digital technology (Dziuba et al., 2020). The hospitality sector strives to engage customers by offering various benefits through the implementation of digital technology, thereby improving its overall stability (Dziuba et al., 2020).
Digitalization also fosters customer loyalty. The existing literature suggests that hotels offering personalized features, such as room preferences or service recommendations, tend to result in higher repeat business. For instance, according to Anwar et al. (2024), customers were loyal and had a better perception of the brand when the hotels invested in digital tools for personalization. However, hotel leaders who failed to adopt the new technological standards were unfavorably compared by customers with competitors that were more digitally advanced.
Digital transformation through real-time tracking of performance and analytics facilitates the culture of continuous improvement (Rane et al., 2023). For example, IoT devices help to monitor energy usage and guest preferences, allowing the hotel personnel to adjust their services, improve client satisfaction, and reduce costs. Tools used for collecting automated feedback facilitate faster responses to guest concerns, resulting in improved service quality and increased loyalty (Rane et al., 2023). Thus, digital transformation is a strong facilitator of long-term performance improvement.
Construct 2: Motivation Enhancement. Another important construct in the hospitality industry was motivation enhancement. Motivation is essential for achieving higher business performance and enhancing customer satisfaction (Elshaer et al., 2022). This study investigated the role of leaders and supervisors in influencing employee motivation and its potential impact on enhancing customer experiences within the hospitality sector. Managing customer expectations primarily necessitates workplace motivation. According to Shu and Chianata (2024), work motivation is a crucial catalyst for the success of the hospitality industry. Therefore, leaders within the hospitality industry motivated their employees to use new digital technologies (Krehl & Büttgen, 2022). This process enhanced business operations within the hospitality industry. Leaders who invest in training programs that help employees become confident in new technologies significantly improve morale and job satisfaction. Once the employees gain adequate skills and knowledge regarding digital tools, they can offer more customized and responsive services, thereby improving the guest experience.
Rewarding individuals who effectively adopt digital changes may reinforce a culture of innovativeness and adaptability. Motivational bonuses, reward programs, or career-building opportunities for employees who embrace positive digital practices can help encourage a proactive attitude toward continuous learning (LaGree et al., 2024). Hospitality organizations can include establishing motivated workforces capable of meeting industry demands by fostering an environment where employees feel valued and supported. Therefore, digital technology can enhance employee motivation by reducing workload (Elshaer et al., 2022). The hospitality industry in the U.S.A. includes motivating its employees and promoting optimal performance by implementing digital technologies (Krehl & Büttgen, 2022).
Construct 3: Job Satisfaction and Stress Levels. Stress level and job satisfaction are additional constructs that primarily depend on the organization’s leadership and supervisors (Mekoth et al., 2022). However, with low-stress levels, employees tend to have higher levels of satisfaction and performance (Mekoth et al., 2022). Hence, hospitality firm leaders must ensure that every employee feels happy and satisfied by offering a range of benefits to enhance their performance and services (Gu et al., 2022). High job satisfaction is essential for employees to meet organizational needs effectively (Rachman, 2021). During the pandemic, employees struggled to stay motivated, which hindered their ability to effectively interact with customers (Heimerl et al., 2020; Jamis & Dael, 2024).
Offering flexibility through digital transformation changed how the hospitality industry leaders utilize remote work to enhance employee satisfaction and increase productivity (Puspitawati & Atmaja, 2021). Digitalization promotes employees’ ability to perform their work easily and efficiently, regardless of location. The hospitality industry requires effective management of stress levels and job dissatisfaction, as burnout is prevalent because of the high demands of the service industry. Therefore, the automation of constant repetitive tasks allowed employees to concentrate on more value-added and creative work, lowering their stress levels and improving their job satisfaction (Puspitawati & Atmaja, 2021). In addition, teams utilized digital tools to troubleshoot and overcome challenging and stressful situations.
Digital tools, such as workforce management software, may also help balance work with other personal commitments through flexible scheduling (Kossek & Kelliher, 2021). Flexible scheduling enhances employee engagement and satisfaction. Technology enables team members to communicate and resolve issues in real-time, thereby reducing isolation and stress. Digital technologies help streamline workflow, reduce stress, promote job satisfaction, and deliver an enhanced guest experience (Puspitawati & Atmaja, 2021).
3. Research Methodology
Researchers employ different research methods, including quantitative, qualitative, and mixed methods, to achieve various purposes. Qualitative methodology, which involves the use of non-numeric data to analyze participants’ experiences, behaviors, and perceptions regarding a specific research phenomenon, was suitable for this study to achieve its identified purpose. Data collection in qualitative studies includes observation, semi-structured interviews, and focus groups. A qualitative case study employed a flexible design that allowed me to adapt data collection methods in response to emerging needs. A single-case study design was appropriate for gaining contextual insights into the impacts of digital transformation on the business environment of the United States’ hospitality industry. Triangulation occurred by combining semi-structured interviews and focus groups to collect data.
3.1. Population and Sampling
In a qualitative study, selecting participants is crucial because it significantly influences data collection and the quality of the data collected. The population refers to an entire group of interests under study, while a sample is a subset of the population that researchers select for the study. The population of this study included hospitality industry employees in the United States. I used purposive sampling to recruit approximately 15 participants or more. The inclusion criteria in this study were 1) employees in the hospitality sector, 2) more than three years of experience in the hotel sector, and 3) at least 25 years old. Participants were recruited using various strategies, including social media platforms.
3.2. Data Collection
I employed a structured and methodologically sound approach to data collection, combining semi-structured interviews and focus groups to gain individual and group-level insights. These methods were well-suited for exploring complex phenomena, such as digital transformation in the hospitality industry, as they allowed participants to provide rich, detailed responses. Member checking enhanced the accuracy and trustworthiness of the data by ensuring I authentically captured the participants’ perspectives. Using both primary data collection methods and participant verification strengthened the credibility of the findings and aligned with best practices in qualitative case study research.
3.3. Data Analysis
The study included a six-step thematic analysis to systematically analyse interview and focus group data, ensuring alignment with the research questions on digital transformation. The process involves data familiarization, generating initial codes, searching for themes, reviewing themes, defining and naming themes, and generating a report (Byrne, 2022). I imported interview and focus group transcripts into MAXQDA to facilitate structured coding, categorization, and pattern recognition, enhancing the validity and consistency of findings (Woolf & Silver, 2018). I refined the themes to ensure clarity and direct relevance to the research objectives, culminating in a final report that supported evidence on the impact of digital transformation in the hospitality industry. Additionally, I triangulated focus group data with interview findings to confirm existing themes or identify new patterns, strengthening the study’s rigor and reliability.
3.4. Presentations of the Findings
This section presents insights derived from qualitative interviews and focus groups, based on 15 individual interviews (comprising nine customers, four employees, and two leaders) and a focus group with six participants, all of whom were representatives from the hospitality industry. Alphanumeric codes concealed participants’ identities. I designated customers as C1 to C9, employees as E1 to E4, leaders as L1 and L2, and focus group participants as G1 to G6. An interview guide, focus group questions, and a focus group interview using a 5-point Likert scale guided the data collection.
I audio-recorded and transcribed qualitative data into Microsoft Word documents and analyzed them using a six-step thematic analysis process, including 1) data familiarization, 2) generating initial codes, 3) searching for themes, 4) reviewing themes, 5) defining and naming themes, and 6) generating a report (Byrne, 2022). I achieved data familiarization by repeatedly reading transcripts to identify patterns related to digital transformation challenges and opportunities. I imported the transcripts into MAXQDA to support systematic coding. Initial codes are based on recurring ideas related to research questions, such as factors influencing digital transformation, profitability, and customer satisfaction. I grouped the codes into broader themes aligned with the research questions. I reviewed the themes for relevance against the original data, refined them, and explicitly linked them to the study’s objectives during the defining and naming phase. After identifying the themes, I summarized the collected data from the focus group using descriptive statistics, including frequencies and percentages. These findings supported the qualitative themes and helped reinforce patterns observed in participant interviews and focus groups.
The overall aim of the analyses was to gain insights into the existing effects, issues, opportunities, and practices related to the adoption and implementation of digital transformation. The results relate to the following central thematic areas: perceived possibilities of digital transformation, external and internal pressures that lead to adopting the concept, the effects on profitability and customer satisfaction, and the impact of enablers and impediments to implementation. The common themes that emerged from participants who utilize SAP Concur as a digital expense management solution, as well as the broader adoption of digital booking, customer engagement, and operational efficiency platforms, are industry-wide trends observed globally (Sangwan et al., 2021). Many respondents reported that digital transformation improved customer experience, making it increasingly personalized, faster, and more convenient. In contrast, participants highlighted cost savings, data-driven decision-making, and automation as essential benefits within the organization.
The results also highlight that leadership support, technology preparedness, and employee training are key factors in achieving success through digital transformation. On the contrary, several challenges still exist, such as resistance to change, the problem of integrating with legacy systems, and the cost of investing in digital infrastructure, particularly in companies ranging from small to mid-sized enterprises. Recent studies have highlighted the importance of change management, digital skills, and their alignment during the change process (Noor et al., 2023; Vial, 2021).
The increasing reliance on systems such as SAP Concur, which leaders utilize in internal processes, contributes to enhanced customer experiences through streamlined backend operations. Leaders use SAP Concur in internal processes, and it serves as a secondary contributor to enhancing customer experience through streamlined backend operations. The system, designed for internal processes, also serves as a secondary contributor to Concur and could enhance customer experience through streamlined backend operations. The combined pressure from customer expectations, competitive forces, and the regulatory environment has heightened the necessity for hospitality organization leaders to quickly and efficiently adopt digital solutions. The pressure from customer expectations, competitive forces, and the regulatory environment has increased the necessity for hospitality leaders to quickly and efficiently adopt digital solutions.
The existing body of literature presented digital transformation as both an agent of disruption and a strategic necessity in response to changing market environments (Busulwa et al., 2022; Rodrigues & Franco, 2021). The results align with those of other studies, indicating that digital transformation disrupts traditional practices and is crucial for adapting to changing market conditions (Busulwa et al., 2022; Rodrigues & Franco, 2021). According to Busulwa et al. (2022), as diners and travelers increasingly adopted technology, the hospitality sector kept pace to meet customer expectations. Consequently, Busulwa et al. (2022) argued that digital transformation has been crucial to meet these evolving demands (Busulwa et al., 2022). According to Balar & Mokhtari (2025), cloud-based technologies enabled hotels to streamline guest communication and enhance collaboration with business partners, optimizing the customer journey and empowering staff to deliver superior services. Similarly, Troisi et al. (2023) noted that digitalization significantly boosted operational efficiency, supported sustainability initiatives, and improved personalized services in the hospitality sector. The synthesis of both empirical experience from industry experts and the latest academic findings provides a detailed picture of the situation regarding the digital revolution in the hospitality industry, paving the way for further analysis of the issue in the following passages.
Relationship of Findings to Research Questions. All the research questions formulated in this study were precisely answered through interviews and focus groups. Research Question 1 (RQ1) was: What are the factors fostering digital transformation in the hospitality industry? The sample indicated that a few interconnected drivers, such as the COVID-19 pandemic, growing customer demands and expectations, industry competitiveness, and regulatory requirements, were the most consistent. For example, Focus Group Participant FG01 mentioned the need to abandon hard copies because of productivity and policy requirements. Focus Group Participant FG06 explained that SAP Concur enables compliance with the rules of various operations in the hospitality industry and provides real-time visibility. Descriptive data collection supported the qualitative results, as evidenced by the focus group results, which indicated that 78 percent of the respondents strongly agreed that external market pressures and internal demands play a vital role in the adoption of digital technologies. This process suggests that digital transformation in hospitality is a response to technological advancements and is influenced by external forces and internal motivations.
Relationship of Findings to Research Framework. The last three themes, including 1) leadership and organizational influence, 2) barriers to adoption, and 3) opportunities for improvement, represent the internal dynamic of the transformation process. The data indicate that digital transformation cannot entirely succeed without the support of strong leadership, a central point in the theoretical frameworks used in the studies presented in this study, including the change management model developed by Lewin and the resource-based view (RBV). The data from the interviews and focus groups strongly supported this view. For example, the people interviewed, such as Focus Group Participants FG05 and FG06, explained that leadership support and communication played a significant role in initiating (unfreezing) digital transformation, particularly in the transition to automating manual activities. I observed the stage of change in the efforts to educate staff members, modify processes, and introduce new systems, such as SAP Concur.
Nevertheless, numerous participants expressed the need for resistance, as many staff members remained unfamiliar with new systems because of the fear of using them or a lack of planned change management strategies. Focus Group Participant FG02 noted this reluctance among some colleagues: some people fear anything related to artificial intelligence. Lastly, the refreezing stage, in which digital transformation can be embedded in an organizational culture, was determined to be partly attained. Although the participants reported that they experienced significantly improved performance and satisfaction once the training and support ended, many cited the need for further training and support as a permanent change strategy. This notion reinstates the applicability of a theory proposed by Lewin in managing organizational transformation and highlights the importance of support systems in sustaining change (Sangwan et al., 2021).
The resource-based view (RBV) is another prominent framework in research, positing that internal resources and capabilities, such as technology infrastructure, staff expertise, and strategic leadership, are essential sources of competitive advantage. The results of both qualitative and quantitative studies provide strong support for this. Leaders continuously emphasized the importance of a competent workforce that can operate effectively in the digitalized world and the competitive edge of utilizing technology, such as SAP Concur. According to Focus Group Participant FG06, real-time visibility into spending enabled organizations to streamline cost control and policy adherence. Similarly, customers and employees appreciated the fact that an intuitive digital tool would translate into quicker service delivery, increased customer satisfaction, and brand loyalty. Another point emphasized by the RBV framework is that intangible resources, such as employee training programs and organizational culture, make a valuable contribution to digital success (Rodrigues & Franco, 2021). This framework is reflected in the various mentions of training, change resistance, and leadership communication. Therefore, the RBV helps explain why specific organizations can capitalize more effectively on digital opportunities compared to others in the hospitality industry, as they are endowed with in-house capabilities that enable them to capture and adopt technological change proficiently.
Ultimately, the results related to the digital transformation process model, which encompasses key facets such as strategy formulation, technology implementation, capability development, and value creation. This process is evident in the data. The responses from the focus groups indicated that the strategy creation stages begin with identifying customer needs and then connecting them with the implementation of tools that meet these needs, which can include mobile check-ins, digital feedback systems, and automated expense platforms. The most referred capability building was training and stakeholder engagement. For example, Focus Group Participant FG01 noted that continuous publicity and training are requirements to facilitate the use of digital technology. Value creation, the final stage, reflects increased customer satisfaction, efficiency, and profitability, as outlined by both customers and employees. These findings align with the existing literature, which indicates that digital transformation is an ongoing and iterative process that necessitates continuous improvement to adapt to evolving market and organizational conditions (Noor et al., 2023). Overall, the study provides a robust foundation for understanding digital transformation in the hospitality industry and how various organizational, technological, and strategic elements can interrelate to form a basis for success.
Relationship of Findings to the Problem. The specific problem addressed was the potential challenges some leaders face in implementing digital technology within the Southeastern United States hospitality industry, which may result in organizations’ inability to enhance consumer satisfaction and profitability. The research results affirmed that, as benefits of digital tools and platforms, including SAP Concur, mobile check-in, and automated booking systems are significant, so are the complexities introduced by change management, integrating technology, and personnel adjustments. The interviews and focus group discussions revealed that digital transformation is no longer a possibility, but a necessity, particularly considering the upheavals caused by the COVID-19 pandemic. This notion is because we would not have to collect hard copies, as Focus Group Participant FG01 wrote, “It will be much more efficient.” This notion indicates the sector’s inclination toward efficiency and security because of digitalization. These sources address the issue, as mentioned in the research proposal, of the mismatch between the rapid development of digital technologies and the reluctance of hospitality organizations to implement these changes and manage them effectively. Leadership, as exemplified by Focus Group Participant FG06, has affirmed that digital tools involved in both financial discipline and policy compliance, corroborate the argument that transformation is a technological change, and a business strategy.
Additionally, the study’s results highlight the dual nature of digital transformation. Digital transformation can enhance customer satisfaction and streamline operations, but it also introduces challenges, such as resistance, training needs, and staff anxiety. Some participants expressed unease with automation and AI, emphasizing the emotional and human dimensions of organizational change. Focus Group Participant FG02 described this hesitancy, noting that some colleagues were fearful of anything related to artificial intelligence. These findings underscore that digital transformation is as much about cultural and psychological readiness as it is about infrastructure or investment. The resource-based view framework (RBV) further supports this notion, emphasizing the value of intangible resources such as organizational culture, employee adaptability, and leadership participation. Focus group responses also reinforced the importance of leadership engagement in driving successful digital implementation.
Finally, the results revealed that, despite the digitalization of the hospitality industry, significant gaps remain in awareness, readiness, and preparation, as well as integration, thereby supporting the proposed initial research problem. The lack of themes such as sustainability and cybersecurity concerns related to digital transformation, which were only briefly addressed by participants, suggests that organizations have not yet achieved a comprehensive understanding of the overall effects of digital transformation. Although most company leaders have purchased tools such as SAP Concur and digital applications for booking, the process has been less comprehensive in terms of policy congruity, system compatibility, and employee education. The existence of such gaps solidifies the initial issue: digital transformation initiatives have limited proactiveness, being strikingly piecemeal and inconsistent throughout the hospitality industry. The study’s insights highlight the importance of a more strategic approach to digital transformation. Leaders should choose human-centered digital initiatives and involve the entire organization, allowing them to go beyond just adopting new technology and instead focus on lasting, value-driven changes (Leachman & Scheibenreif, 2023).
3.5. Application to Professional Practice
Research findings are prolific in generating valuable knowledge for developing innovative strategies to promote business performance and profitability in a competitive sector (Idrees et al., 2023). In this single case study, the results of 15 individual interviews and six focus groups consistently showed that the adoption and implementation of digital technologies in the hospitality sector have effectively streamlined operations, minimized costs, and facilitated data-driven decision-making. This strategy is crucial to enhancing customer experience, increasing profitability, and attaining a competitive advantage. The results also highlighted several issues that impede the successful and sustainable adoption of digital solutions, including staff resistance, high implementation costs, a lack of leadership support, and data privacy. These findings have crucial implications for professional business practices in the hospitality sector and beyond. This section includes discussions on improving general business practice, potential implementation strategies, recommendations for further study, reflections, and a summary.
3.6. Improving General Business Practice
The study findings provided crucial evidence to support decision-making in facilitating successful digital transformation in hospitality SMEs. For instance, the results indicated that tools such as SAP Concur improve operations by automating booking systems, reducing manual tasks, and minimizing errors. Therefore, business leaders in hospitality organizations can integrate these technological tools to enhance operations and promote efficiency.
The application is supported by Wynn and Jones (2022), who found that mobile applications such as the Oracle OPERA system enable hotel staff to reduce waiting times, minimize workloads, and enhance customer satisfaction through remote check-ins, real-time updates, and task coordination. Limna (2023) also noted that technologies such as Point of Sales (POS) systems and Customer Relationship Management (CRM) solutions streamlined bookings, inventory, and customer service operations by automating services and simplifying communications. Additionally, Balar & Mokhtari (2025) found that integrating cloud-based tools facilitated personalized and real-time interactions, thereby improving customer communication and enhancing engagement with business partners.
The second application is the promotion of leadership development and change management within general business practices. The study findings indicated that leadership management was critical to ensuring the successful implementation and adoption of digital solutions. The reason is that leaders align organizational goals with digital initiatives and influence resource allocation and staff acceptance of change initiatives (Musaigwa, 2023). These findings also provided a framework that enables individuals to understand change management strategies and apply them to digital transformation, using models such as Lewin’s theory and Kotter’s eight-step process (Kotter, 1996; Lewin, 1948). For instance, organizational leaders can apply Kotter’s change model to manage innovative projects through a structured process involving establishing urgency, creating and communicating a vision, and incorporating changes into the organizational culture (Muwandeniya & Eranda, 2021).
The third application of the findings is the use of analytical-based strategies, such as Six Sigma, to develop innovative practices for enhancing business performance in a competitive industry. The study outcomes demonstrated that the Six Sigma approach is crucial in identifying mechanisms that foster innovation and value within a business. The approach is also utilized to detect inefficiencies in a process, reduce variations, and improve quality. Similarly, organizational leaders can apply the Six-Sigma methodology to analyze digital opportunities for improving performance and then identify issues, inefficiencies, or variations that can impede successful outcomes during implementation (Prasanna, 2023).
For instance, in the hospitality sector, leaders can select IoT-enabled systems such as keyless entry and automated check-ins to streamline operations, enhance customer satisfaction, and promote a brand reputation in a dynamic and competitive market (Štilić et al., 2023). Leaders can implement the Six-Sigma methodology, which involves analyzing real-time data to identify specific issues in these monitoring systems. This strategy includes frequent device malfunctions, data privacy concerns, and cybersecurity threats, which can disrupt operations (Štilić et al., 2023). After identifying the issues, leaders can develop mitigation strategies to improve performance and ensure better customer service (Alexander, 2024).
3.7. Potential Implementation Strategies
The study revealed diverse challenges leaders face when implementing digital technology, leading to an organization’s inability to streamline operations, enhance customer satisfaction, and increase profitability. These challenges include resistance to change, digital failures, ineffective leadership systems, high investment costs, training gaps, and a lack of system integration. The findings also showed several strategies organizations can utilize to address these issues and improve digital transformation in the hospitality industry, particularly among SMEs. The first strategy is to implement staff training programs that enhance employee readiness for digital transformation and improve their skills in operating technological tools. Adequate training is a crucial factor in ensuring successful digital transformation related to staff confidence, morale, and job satisfaction (Qiao et al., 2024). The approach is also crucial for minimizing change resistance, which can lead to customer dissatisfaction because of low adoption and utilization of the implemented tools (Phillips & Klein, 2023).
The second improvement strategy involves utilizing change management methodologies, such as Lewin’s theory and Kotter’s 8-Step model, to address issues like infrastructure incompatibility, staff resistance, and technical failures. Digital transformation is a complex, multifaceted process that necessitates substantial organizational changes, including the adoption of technology, cultural shifts, and business model innovation (Kakungulu, 2024). Change management methodologies offer a systematic approach to addressing technical and artistic barriers during digital transformation, encompassing adequate preparation, clear communication, stakeholder engagement, and change reinforcement (Kakungulu, 2024). For instance, implementing systems like CRM and IoT-enabled devices without adequate risk management could lead to data breaches, financial penalties, legal liabilities, and customer dissatisfaction. Applying change management processes can enable organizational leaders to anticipate such risks and collaborate to develop mitigation strategies.
The third potential improvement strategy is prioritizing cybersecurity and data privacy measures. The study findings highlighted data breaches and cybersecurity threats as significant threats to digital adoption. For example, technologies such as automated check-ins or check-out systems increase an organization’s vulnerability to cyberattacks, which can lead to privacy breaches, loss of customer confidence, and financial costs (Karadayi-Usta, 2024). Therefore, organizational leaders should consider investing in cybersecurity technologies and data compliance practices to minimize exposure to threats, protect assets, and maintain a reputable image in a competitive industry (Li & Liu, 2021).
The fourth strategy involves aligning the adopted technology with the organization’s culture, workflow processes, and customer satisfaction. Digital transformation encompasses a range of factors, including technological tools, financial costs, business strategies, and process optimization, which collectively impact an organization’s workflow and practices, ultimately leading to a cultural shift (Cao et al., 2025). The shift can harm performance and customer satisfaction. For instance, introducing automated check-in systems in an SME whose staff and customers are used to personalized services can lead to decreased human interaction, increased reliance on employee support for technical issues, and reduced satisfaction (Abidemi, 2024). Therefore, such changes necessitate adequate preparation to ensure smooth workflow, better customer experience, and a positive brand image. The alignment is also crucial to prevent instability and disruptions that cause staff and customer dissatisfaction (Anubala & Philosophers, 2021).
3.8. Recommendations for Further Study
The findings of this single-case study provide crucial insights into the necessity of digital transformation to enhance operations and experiences in the hospitality industry, as well as the need to address challenges that hinder its consistent adoption in the sector. However, several theoretical, methodological, and analytical limitations, such as researcher bias and time constraints, may have impacted the scope and generalizability of the findings. Therefore, a need exists for recommendations for further study based upon the findings of this research. The first recommendation is that researchers should conduct qualitative longitudinal research to explore the long-term impact of digital tools on performance and guest satisfaction in the hospitality sector. The reason is that this research was a single case study, limited to examining digital challenges over a short duration.
The second recommendation is that researchers should conduct further studies on the impact of emotional resistance among hospitality employees on digital transformation. The findings of this study showed that emotional resistance was a barrier to digital transformation. However, I did not explore the underlying psychological factors. The underlying factors included disruption of established routine and poor communication, contributing to this barrier (Khaw et al., 2023). The third recommendation is the need for further studies on cybersecurity and data privacy strategies that leaders can adopt to facilitate digital transformation. In this study, I examined cybersecurity and data privacy as underrepresented themes. Contrary to these issues identified in the diverse literature sources as critical threats to digital adoption (Karadayi-Usta, 2024; Li & Liu, 2021; Verma, 2023). The fourth recommendation is the need for further research to compare the impact of digital transformation on the hospitality business environment with other geographical and cultural contexts. The comparison would prove crucial for understanding and addressing the various barriers to the adoption of digital tools in business environments beyond the Southeastern United States (Iranifard & Latifnejad Roudsari, 2022). Despite the advantages associated with the adoption of digital technology in the hospitality industry, I sufficiently addressed the economic and infrastructural factors influencing the use of digital tools, necessitating localized research. Therefore, the fifth recommendation is for future researchers to examine the financial returns and long-term sustainability of digital technologies, addressing a key gap identified in the literature.
A further exploration of data privacy and security concerns associated with the adoption of digital technology is crucial. Limited insight exists into effective training strategies for employees to promote the use of digital technologies and how this change influences employee satisfaction, staff satisfaction, and potential employee layoffs. Hence, filling these gaps would provide a clearer understanding of the significance and implications of digital technology adoption in the hospitality industry, leading to the increased application of integrated and sustainable tools.
3.9. Summary and Conclusions
The purpose of this study was to investigate the impact of digital transformation on the hospitality industry, with a focus on customer satisfaction, leadership strategy, organizational readiness, and profitability. I collected data from purposefully selected hospitality employees through interviews and focus groups and analyzed them using a six-step thematic process in MAXQDA. I analyzed the collected data using Byrne’s (2022) six-step thematic analysis process: data familiarization, generating initial codes, searching for themes, reviewing themes, defining and naming themes, and generating a report. The analysis of quantitative data on performance metrics was descriptive and cross-referenced with qualitative themes to identify trends related to digital transformation. Based on qualitative data collected from 15 interviews, six focus group participants, and survey responses, the findings revealed six major themes. The themes included: 1) efficiency and operational process enhancement, 2) drivers and necessity of transformation, 3) effects on customer satisfaction and profitability, 4) the role of leadership, 5) adoption barriers, and 6) strategic opportunities.
Key influencers of digital adoption included the COVID-19 pandemic, changing customer expectations, competition, and regulatory pressures. Participants linked digital tools to improved profitability through automation and service efficiency, while also emphasizing the importance of leadership in reducing resistance and aligning strategic goals. Personalized, faster, and more convenient services enabled by digital solutions enhanced customer satisfaction. Despite these benefits, persistent challenges existed, including employee resistance, integration issues with legacy systems, high implementation costs, and cybersecurity concerns. Opportunities for future innovation included the integration of AI-driven personalization and predictive analytics. The findings of this study underscore the pivotal role of leadership, training, and technological preparedness in achieving a successful digital transformation. Digital transformation has a significant impact on enhancing efficiency, customer satisfaction, and profitability in the hospitality industry. I recommend further research, with a focus on the long-term impacts of digital solutions, emotional resistance, cybersecurity, and cross-cultural adoption in hospitality contexts.