Will Hospitality Investments Be Lucrative in 2026?

Listen to the article 17 min 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 cautious optimism. Increasing operational costs are slated to challenge owners this year and lower-tier sections could struggle in the middle of a growing wealth bifurcation.

And through all of it, hotel companies are anticipated 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 market about their 2026 forecasts. Below are the top trends anticipated to impact hotel operations, performance, net unit development and more this year.

Total salaries, wages and benefits paid by U.S. hotels increased to $127 billion in 2025, according to data from the American Hotel & Accommodations Association, shown Hotel Dive. In 2026, that figure is projected to climb up to $131 billion, representing a roughly 3% year-over-year boost, per AHLA. For hotel owners, rising labor expenses present an obstacle to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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Increasing labor expenses have actually been an obstacle for hoteliers for years, Davis stated, especially following the COVID-19 pandemic. Overall, hotel labor expenses have increased 15.3% from 2019 to 2025, outpacing the 12.8% development in overall operating income, according to AHLA.

3, 2024 in San Francisco, California. Justin Sullivan by means of Getty Images In 2026, Davis noted, union settlements 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 end in July.

Last year, the union backed New York City's newly chosen Mayor Zorhan Mamdani, who worked on a pledge to raise New York City's base pay to $30 per hour by 2030. Hotel market associations, consisting of AHLA, have actually knocked comparable legislation throughout the nation, consisting of the just recently passed $30 wage regulation in Los Angeles. "Need has actually not kept up with this rate," she stated. Incomes, earnings and payroll-related costs paid by hotels now account for more than 32% of total profits, according to AHLA.

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As more hotel guests turn to expert system to enhance their travel experience, booking hotels straight through large language designs (LLMs) may be next, hospitality experts stated. Agentic commerce a procedure by which self-governing AI agents act on behalf of a consumer to discover, compare and complete 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 stated they're likely to use AI for travel recommendations. A smaller percentage (57%) stated they 'd be most likely to utilize it for reserving travel. That number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. "The number of consumers that are browsing [via LLMs] for product or services in travel has swollen in the last 12 months and is accelerating every day," Kletzel said, including 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 already have if they do a great job with how they manage AI in 2026." Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To remain competitive with direct reservation, larger multibrand hotel business will "embed LLMs into their own brand name websites and mobile apps, and change the way the consumer searches," Kletzel stated.

"If you are not visible in an LLM search result which lots of brands 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 product marketing at AI customer experience platform Talkdesk, similarly told Hotel Dive that hospitality gamers need to guarantee their property details is being indexed by LLMs to appear in tourist questions.