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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 sections might struggle amidst a growing wealth bifurcation.

And through all of it, hotel business are expected to strengthen their portfolios with brand-new brand name offerings and partnerships. As the year gets underway, Hotel Dive spoke to hospitality leaders from differing corners of the industry about their 2026 forecasts. Below are the leading trends expected to effect hotel operations, performance, net system growth and more this year.

Overall wages, earnings and advantages paid by U.S. hotels rose to $127 billion in 2025, according to information from the American Hotel & Accommodations Association, shared with Hotel Dive. In 2026, that figure is predicted to reach $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, increasing labor costs posture a difficulty to net operating earnings growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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"It is an absolute issue." Increasing labor expenses have been a challenge for hoteliers for several years, Davis said, especially following the COVID-19 pandemic. Overall, hotel labor costs have actually increased 15.3% from 2019 to 2025, outpacing the 12.8% development in overall operating income, according to AHLA. In the last few years, thousands of union hotel employees have gone on strike requiring greater incomes in order to keep up with the increasing 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 kept in mind, union negotiations will be "front and center" in New york city 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.

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

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As more hotel guests turn to artificial intelligence to improve their travel experience, scheduling hotels directly through big language designs (LLMs) may be next, hospitality professionals said. Agentic commerce a procedure by which autonomous AI agents act on behalf of a consumer to discover, compare and complete purchases is a pattern that has accelerated throughout 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 suggestions. A smaller sized portion (57%) stated they 'd be most likely to utilize it for reserving travel. But that number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. "The variety of consumers that are browsing [by means of LLMs] for items and services in travel has ballooned in the last 12 months and is accelerating every day," Kletzel stated, including that inevitably, hotels will "take a tough appearance at how they can enable 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 item marketing at Talkdesk To remain competitive with direct reservation, larger multibrand hotel companies will "embed LLMs into their own brand websites and mobile apps, and alter the way the consumer searches," Kletzel stated.

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