Major Regional Milestones in Hospitality Expansion

Listen to the article 17 minutes This audio is auto-generated. Please let us know if you have feedback. Following a year of broad economic uncertainty that stifled growth for hotels, hospitality market leaders are looking toward 2026 with cautious optimism. Increasing operational costs are slated to challenge owners this year and lower-tier sections could have a hard time amidst a growing wealth bifurcation.

And through everything, hotel companies are anticipated to strengthen their portfolios with brand-new brand name offerings and collaborations. As the year gets underway, Hotel Dive spoke to hospitality leaders from varying corners of the market about their 2026 predictions. Below are the top trends expected to impact hotel operations, performance, net system growth and more this year.

Total incomes, salaries and benefits paid by U.S. hotels increased to $127 billion in 2025, according to data from the American Hotel & Lodging Association, shown Hotel Dive. In 2026, that figure is forecasted to climb to $131 billion, representing a roughly 3% year-over-year boost, per AHLA. For hotel owners, increasing labor costs posture an obstacle to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

Can Hospitality Franchises Remain Lucrative in 2026?

Increasing labor expenses have been a challenge for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. Overall, hotel labor expenses have actually increased 15.3% from 2019 to 2025, surpassing the 12.8% development in total operating profits, according to AHLA.

3, 2024 in San Francisco, California. Justin Sullivan via Getty Images In 2026, Davis noted, union negotiations will be "front and center" in New York City, where the New York City Hotel and Video gaming Trades Council's union agreement with the Hotel Association of New York City City is set to end in July.

Last year, the union backed New york city City's recently chosen Mayor Zorhan Mamdani, who ran on a guarantee to raise New York City's base pay to $30 per hour by 2030. Hotel industry associations, consisting of AHLA, have knocked comparable legislation throughout the nation, including the recently passed $30 wage regulation in Los Angeles. "Demand has actually not kept up with this pace," she said. Salaries, wages and payroll-related costs paid by hotels now account for more than 32% of overall earnings, according to AHLA.

Evaluating Top Investment Models for 2026

As more hotel visitors turn to artificial intelligence to enhance their travel experience, reserving hotels directly through large language designs (LLMs) might be next, hospitality specialists stated. Agentic commerce a process by which self-governing AI agents act upon behalf of a customer to find, compare and finish purchases is a pattern that has actually accelerated across markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials stated they're most likely to use AI for travel suggestions. A smaller portion (57%) stated they 'd be likely to use it for scheduling travel. But that number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. "The variety of customers that are searching [through LLMs] for products and services in travel has swollen in the last 12 months and is accelerating every day," Kletzel stated, including that inevitably, hotels will "take a difficult take a look at how they can enable commerce and deals through agentic [AI]"" [Brands] can build on the trust they currently have if they do a great task with how they deal with AI in 2026." Michael Klein Head of retail, travel and hospitality product marketing at Talkdesk To remain competitive with direct booking, larger multibrand hotel business will "embed LLMs into their own brand sites and mobile apps, and alter the way the customer searches," Kletzel stated.

"If you are not visible in an LLM search results page which many brands aren't, and this is the big panic that they're all going through right now customers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality product marketing at AI customer experience platform Talkdesk, similarly told Hotel Dive that hospitality gamers require to ensure their property information is being indexed by LLMs to appear in traveler questions.