Purpose Augmented reality (AR) is revolutionizing the tourism and hospitality industry by offering immersive experiences as well as creating more engaging, informative and accessible travel experiences that attract tourists from around the globe. From virtual tours and immersive historical site recreations to navigation assistance and cultural education, AR technology is transforming the way we explore and interact with the destinations. This study aims to identify benefits, risks, tools and techniques of AR in the tourism and hospitality literature. Design/methodology/approach The authors conducted a systematic literature review to answer six research questions. The authors also identified 33 primary studies, dated from January 2010 to February 2024 and coded them via a thematic analysis. Related studies were obtained through searching in Web of Science and Scopus. Findings The results identified nine themes for benefits, eight themes for risks/disadvantages and four tools and applications-related themes. Through the thematic analysis, the major benefits of AR in the tourism and hospitality were found to be differentiated travel experiences, improved performance of tourism value chain, more effective marketing efforts of tourism businesses, enhanced tourists’ engagement, enhanced performance of tourism destinations, stimulated behavioral intentions, tourist empowerment and providing more value, interactivity and integrity. Furthermore, eight risks were identified: physical, privacy and security, social, service failure, technical, psychological, managerial, information and knowledge gaps. The authors also recognized four tools and applications-related themes, namely, AR-enabled tools, AR applications, AR-enabled apps and AR-based techniques. Originality/value To the best of the authors’ knowledge, this review provides the first systematic exploration of the existing literature on usage of AR in the context of tourism and hospitality value chain.