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Listen to the short article 17 minutes This audio is auto-generated. Please let us understand if you have feedback. Following a year of broad economic unpredictability that suppressed growth for hotels, hospitality market leaders are looking toward 2026 with careful optimism. Increasing functional costs are slated to challenge owners this year and lower-tier sections might struggle amidst a growing wealth bifurcation.

And through it all, 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 varying corners of the market about their 2026 predictions. Below are the leading trends expected to effect hotel operations, efficiency, net unit growth and more this year.

Overall incomes, salaries and advantages 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 projected to reach $131 billion, representing a roughly 3% year-over-year boost, per AHLA. For hotel owners, rising labor costs pose 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 absolute concern." Increasing labor costs have actually been a challenge for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. Overall, hotel labor costs have actually increased 15.3% from 2019 to 2025, outmatching the 12.8% growth in overall operating profits, according to AHLA. In current years, thousands of union hotel employees have actually gone on strike demanding greater salaries in order to keep up with the increasing cost of living in places such as California, Hawaii and Las Vegas.

3, 2024 in San Francisco, California. Justin Sullivan by means of 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 Gaming Trades Council's union agreement with the Hotel Association of New York City is set to end in July.

"Demand has not kept up with this pace," she stated. Salaries, earnings and payroll-related costs paid by hotels now account for more than 32% of overall income, according to AHLA.

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As more hotel guests turn to expert system to boost their travel experience, booking hotels straight through large language designs (LLMs) may be next, hospitality specialists stated. Agentic commerce a procedure by which self-governing AI representatives act upon behalf of a consumer to find, compare and finish purchases is a pattern that has sped up throughout markets like retail.

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According to PwC's 2025 Vacation Outlook report, 76% of millennials said they're likely to utilize AI for travel recommendations. A smaller sized portion (57%) said they 'd be most likely to use it for scheduling travel. That number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. "The variety of customers that are searching [by means of LLMs] for products and services in travel has actually swollen in the last 12 months and is speeding up every day," Kletzel stated, adding that undoubtedly, hotels will "take a difficult take a look at how they can make it possible for commerce and deals through agentic [AI]"" [Brands] can construct 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 reservation, larger multibrand hotel companies will "embed LLMs into their own brand name websites and mobile apps, and change the way the customer searches," Kletzel said.

"If you are not visible in an LLM search results page which numerous brand names aren't, and this is the big panic that they're all going through right now customers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality item marketing at AI client experience platform Talkdesk, similarly told Hotel Dive that hospitality players need to ensure their residential or commercial property details is being indexed by LLMs to appear in traveler inquiries.