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Listen to the post 17 min This audio is auto-generated. Please let us know if you have feedback. Following a year of broad economic unpredictability that suppressed growth for hotels, hospitality industry leaders are looking towards 2026 with cautious optimism. Increasing functional expenses are slated to challenge owners this year and lower-tier segments could struggle amidst a growing wealth bifurcation.

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

Overall salaries, incomes 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 reach $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, increasing labor expenses pose a challenge to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an absolute issue." Rising labor costs have actually been a challenge for hoteliers for years, Davis stated, particularly following the COVID-19 pandemic. Overall, hotel labor expenses have actually increased 15.3% from 2019 to 2025, outmatching the 12.8% growth in total operating revenue, according to AHLA. Recently, thousands of union hotel employees have actually gone on strike demanding higher wages in order to keep up with the rising expense of living in locations such as California, Hawaii and Las Vegas.

3, 2024 in San Francisco, California. Justin Sullivan via Getty Images In 2026, Davis noted, union negotiations will be "front and center" in New york city City, where the New York Hotel and Video gaming Trades Council's union agreement with the Hotel Association of New York City City is set to expire in July.

In 2015, the union backed New York City's recently chosen Mayor Zorhan Mamdani, who worked on a pledge to raise New york city City's minimum wage to $30 per hour by 2030. Hotel market associations, consisting of AHLA, have actually denounced similar legislation throughout the nation, consisting of the recently passed $30 wage ordinance in Los Angeles. "Demand has actually not stayed up to date with this speed," she stated. "We're also seeing these challenges intensified by legislation that targets hotel operations, such as severe labor and licensing policies like the New York City Safe Hotels Act. When need is falling and costs are soaring, the math merely doesn't build up." Incomes, incomes and payroll-related expenditures paid by hotels now represent more than 32% of total revenue, according to AHLA.

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As more hotel visitors turn to synthetic intelligence to improve their travel experience, scheduling hotels directly through large language designs (LLMs) might be next, hospitality experts said. Agentic commerce a procedure by which self-governing AI representatives act on behalf of a customer 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 stated they're most likely to use AI for travel recommendations. A smaller percentage (57%) stated they 'd be likely to utilize it for reserving travel. 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 actually swollen in the last 12 months and is speeding up every day," Kletzel said, including that inevitably, hotels will "take a difficult appearance at how they can make it possible for commerce and transactions through agentic [AI]"" [Brands] can construct on the trust they currently have if they do an excellent task 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 sites and mobile apps, and alter the method the customer searches," Kletzel stated.

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