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

And through everything, hotel business are anticipated to fortify their portfolios with brand-new brand offerings and collaborations. As the year gets underway, Hotel Dive talked with hospitality leaders from differing corners of the industry about their 2026 forecasts. Below are the top patterns expected to impact hotel operations, performance, net unit development and more this year.

Overall salaries, earnings and benefits 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 projected to climb to $131 billion, representing a roughly 3% year-over-year increase, per AHLA. For hotel owners, rising labor costs pose a difficulty 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." Increasing labor costs have been a challenge for hoteliers for years, Davis stated, especially following the COVID-19 pandemic. Overall, hotel labor expenses have actually increased 15.3% from 2019 to 2025, outpacing the 12.8% development in total operating income, 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 rising expense 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 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 expire in July.

"Demand has actually 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 severe labor and licensing policies like the New York City Safe Hotels Act. When demand is falling and expenses are skyrocketing, the mathematics just doesn't build up." Salaries, wages and payroll-related costs paid by hotels now account for more than 32% of overall earnings, according to AHLA.

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As more hotel guests turn to expert system to enhance their travel experience, scheduling hotels directly through large language models (LLMs) might be next, hospitality experts said. Agentic commerce a process by which self-governing AI representatives act upon behalf of a customer 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 stated they're likely to utilize AI for travel recommendations. A smaller sized portion (57%) stated they 'd be most likely to use it for booking travel. That number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, told Hotel Dive. "The number of consumers that are searching [by means of LLMs] for product or services in travel has actually ballooned in the last 12 months and is accelerating every day," Kletzel stated, including that undoubtedly, hotels will "take a difficult look at how they can enable commerce and transactions through agentic [AI]"" [Brands] can build on the trust they already have if they do a terrific task with how they deal with AI in 2026." Michael Klein Head of retail, travel and hospitality product marketing at Talkdesk To stay competitive with direct reservation, bigger multibrand hotel companies will "embed LLMs into their own brand websites and mobile apps, and change the way the customer searches," Kletzel stated.

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