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, hospitality market leaders are looking toward 2026 with careful optimism. Increasing functional expenses are slated to challenge owners this year and lower-tier segments might struggle amid a growing wealth bifurcation.

And through it all, hotel business are expected to fortify their portfolios with new brand offerings and partnerships. As the year gets underway, Hotel Dive consulted with hospitality leaders from varying corners of the industry about their 2026 forecasts. Below are the leading patterns expected to impact hotel operations, performance, net system growth and more this year.

Overall incomes, earnings and benefits paid by U.S. hotels increased to $127 billion in 2025, according to information from the American Hotel & Lodging Association, shared with Hotel Dive. In 2026, that figure is forecasted to reach $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, rising labor expenses position an obstacle to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an outright concern." Increasing labor expenses have actually been a challenge for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. In general, hotel labor costs have increased 15.3% from 2019 to 2025, exceeding the 12.8% development in overall operating earnings, according to AHLA. Recently, countless union hotel employees have actually gone on strike requiring higher wages in order to stay up to date with the increasing cost of living in locations 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 Hotel and Video gaming Trades Council's union agreement with the Hotel Association of New York City City is set to end in July.

"Need has not kept up with this pace," she stated. Wages, salaries and payroll-related expenses paid by hotels now account for more than 32% of overall profits, according to AHLA.

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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 professionals stated. Agentic commerce a process by which self-governing AI agents act on behalf of a consumer to discover, compare and finish purchases is a trend that has actually accelerated across industries like retail.

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

"If you are not discoverable in an LLM search engine result which many brand names aren't, and this is the huge panic that they're all going through right now consumers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality product marketing at AI client experience platform Talkdesk, similarly told Hotel Dive that hospitality gamers need to guarantee their residential or commercial property info is being indexed by LLMs to appear in tourist queries.