PurposeThis study aims to analyse how talent management practices in family-owned hotels contribute to their employees' fulfilment of their psychological contract.Design/methodology/approachSemi-structured interviews were conducted with 30 employees working at three different family business hotels in Sharm El-Sheikh, Egypt. Moreover, thematic analysis was undertaken on the collected data resulting in four major themes.FindingsThe findings revealed that stimulating employees to fulfil their psychological contract towards their family-owned hotels leads to several benefits. First, it leads to talent management practices that support crisis management, sustainability and resilience. Second, it contributes to empathy towards or at least a deep concern for the future of work in the hospitality sector. Third, to fulfil their psychological contract, employees, particularly non-family members, require inclusive talent management and ongoing training programmes tailored to prepare them to meet current and future challenges in the hospitality sector.Originality/valueTo the best of the authors' knowledge, the present study is the first study to empirically investigate the relationship between talent management practices and the psychological contract of employees in family-owned hotels, especially in developing economy context of Egypt. Also, it is one of the pioneering studies to unpack these dynamics for family as well as non-family employees.