Can Hospitality Investments Be Profitable in 2026?

, hospitality industry leaders are looking toward 2026 with cautious optimism. Increasing functional costs are slated to challenge owners this year and lower-tier sections could have a hard time amidst a growing wealth bifurcation.

And through all of it, hotel companies are expected to strengthen their portfolios with new brand name offerings and partnerships. As the year gets underway, Hotel Dive consulted with hospitality leaders from differing corners of the market about their 2026 forecasts. Below are the top trends expected to impact hotel operations, efficiency, net unit growth and more this year.

Total wages, earnings and advantages paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Accommodations Association, shared with Hotel Dive. In 2026, that figure is forecasted to climb up to $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, rising labor costs present a challenge to net operating earnings development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an absolute issue." Rising labor expenses have been a challenge for hoteliers for several years, Davis said, particularly following the COVID-19 pandemic. Overall, hotel labor expenses have increased 15.3% from 2019 to 2025, surpassing the 12.8% growth in overall operating revenue, according to AHLA. Recently, countless union hotel employees have gone on strike requiring higher wages in order to stay up to date with the increasing cost of living in places such as California, Hawaii and Las Vegas.

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

"Need has not stayed up to date with this rate," she said. "We're likewise seeing these challenges compounded by legislation that targets hotel operations, such as extreme labor and licensing policies like the New York City Safe Hotels Act. When need is falling and expenses are skyrocketing, the math just does not add up." Wages, salaries and payroll-related costs paid by hotels now represent more than 32% of total revenue, according to AHLA.

Key Regional Milestones in Brand Development

As more hotel guests turn to expert system to improve their travel experience, scheduling hotels straight through large language models (LLMs) might be next, hospitality experts said. Agentic commerce a procedure by which self-governing AI representatives act on behalf of a customer to find, compare and finish purchases is a pattern that has actually sped up across markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials said they're most likely to use AI for travel recommendations. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct reservation, bigger multibrand hotel companies will "embed LLMs into their own brand name sites and mobile apps, and alter the method the customer searches," Kletzel said.

"If you are not visible in an LLM search results page which lots of brands aren't, and this is the huge panic that they're all going through today consumers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality item marketing at AI consumer experience platform Talkdesk, similarly told Hotel Dive that hospitality gamers require to ensure their residential or commercial property information is being indexed by LLMs to appear in tourist inquiries.