Targeting Profitable Business Investments in 2026

, hospitality industry leaders are looking toward 2026 with careful optimism. Increasing functional expenses are slated to challenge owners this year and lower-tier segments could have a hard time amidst a growing wealth bifurcation.

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

Overall incomes, salaries and benefits paid by U.S. hotels rose to $127 billion in 2025, according to data 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 increase, per AHLA. For hotel owners, increasing labor costs present a challenge to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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Rising labor expenses have actually been a difficulty for hoteliers for years, Davis said, especially following the COVID-19 pandemic. Overall, hotel labor expenses have actually increased 15.3% from 2019 to 2025, surpassing the 12.8% growth in overall operating revenue, according to AHLA.

3, 2024 in San Francisco, California. Justin Sullivan through Getty Images In 2026, Davis kept in mind, union settlements 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 actually not kept up with this pace," she said. Salaries, wages and payroll-related expenditures paid by hotels now account for more than 32% of total revenue, according to AHLA.

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As more hotel guests turn to expert system to boost their travel experience, booking hotels directly through large language designs (LLMs) may be next, hospitality professionals stated. Agentic commerce a procedure by which autonomous AI representatives act upon behalf of a customer to discover, compare and finish purchases is a trend that has actually accelerated across markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials said they're likely to utilize AI for travel recommendations. A smaller portion (57%) stated they 'd be likely to utilize it for reserving travel. However that number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, told Hotel Dive. "The number of customers that are browsing [by means of LLMs] for items and services in travel has swollen in the last 12 months and is speeding up every day," Kletzel said, adding that undoubtedly, hotels will "take a tough appearance at how they can make it possible for commerce and transactions through agentic [AI]"" [Brands] can build on the trust they currently have if they do an excellent task with how they handle 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 websites and mobile apps, and alter the way the consumer searches," Kletzel said.

"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 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, likewise told Hotel Dive that hospitality gamers require to ensure their home information is being indexed by LLMs to appear in traveler inquiries.