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Listen to the short article 17 min This audio is auto-generated. Please let us understand if you have feedback. Following a year of broad financial unpredictability that suppressed development for hotels, hospitality industry leaders are looking towards 2026 with careful optimism. Rising operational expenses are slated to challenge owners this year and lower-tier sections could struggle in the middle of a growing wealth bifurcation.

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

Total wages, earnings and advantages paid by U.S. hotels increased to $127 billion in 2025, according to data from the American Hotel & Accommodations Association, shared with Hotel Dive. In 2026, that figure is predicted to climb to $131 billion, representing an approximately 3% year-over-year boost, per AHLA. For hotel owners, rising labor expenses pose a challenge to net operating earnings growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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Increasing labor expenses have been a challenge for hoteliers for years, Davis said, especially following the COVID-19 pandemic. In general, hotel labor costs have increased 15.3% from 2019 to 2025, outmatching the 12.8% growth in total operating profits, according to AHLA.

3, 2024 in San Francisco, California. Justin Sullivan by means of Getty Images In 2026, Davis kept in mind, union negotiations will be "front and center" in New York 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 newly chosen Mayor Zorhan Mamdani, who operated on a pledge to raise New york city City's minimum wage to $30 per hour by 2030. Hotel industry associations, consisting of AHLA, have actually denounced comparable legislation throughout the country, including the recently passed $30 wage ordinance in Los Angeles. "Demand has actually not stayed up to date with this speed," 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 soaring, the math just doesn't add up." Incomes, earnings and payroll-related costs paid by hotels now account for more than 32% of total revenue, according to AHLA.

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As more hotel visitors turn to expert system to boost their travel experience, booking hotels straight through large language designs (LLMs) might be next, hospitality experts said. Agentic commerce a procedure by which self-governing AI representatives act upon behalf of a customer to find, compare and finish purchases is a pattern that has 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 use AI for travel recommendations. That number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct reservation, bigger multibrand hotel companies will "embed LLMs into their own brand name websites and mobile apps, and alter the way the customer searches," Kletzel said.

"If you are not discoverable in an LLM search engine result which numerous brand names aren't, and this is the huge panic that they're all going through right now consumers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality product marketing at AI client experience platform Talkdesk, likewise informed Hotel Dive that hospitality players require to ensure their home details is being indexed by LLMs to appear in traveler queries.