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Listen to the post 17 minutes This audio is auto-generated. Please let us understand if you have feedback. Following a year of broad economic unpredictability that stifled development for hotels, hospitality market leaders are looking towards 2026 with cautious optimism. Rising functional expenses are slated to challenge owners this year and lower-tier segments might have a hard time amidst a growing wealth bifurcation.

And through everything, hotel companies are expected to fortify their portfolios with new brand offerings and partnerships. As the year gets underway, Hotel Dive spoke to hospitality leaders from varying corners of the industry about their 2026 predictions. Below are the leading patterns expected to impact hotel operations, performance, net unit growth and more this year.

Total salaries, incomes and advantages paid by U.S. hotels increased to $127 billion in 2025, according to information from the American Hotel & Accommodations Association, shown Hotel Dive. In 2026, that figure is projected to climb to $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, increasing labor costs position an obstacle to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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Rising labor expenses have been a difficulty for hoteliers for years, Davis stated, particularly following the COVID-19 pandemic. In general, hotel labor expenses have actually increased 15.3% from 2019 to 2025, outpacing the 12.8% growth in total operating revenue, according to AHLA.

3, 2024 in San Francisco, California. Justin Sullivan by means of Getty Images In 2026, Davis kept in mind, union settlements will be "front and center" in New york city 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.

"Need has actually not stayed up to date with this rate," she said. "We're likewise seeing these difficulties intensified by legislation that targets hotel operations, such as extreme labor and licensing policies like the New York City Safe Hotels Act. When demand is falling and costs are soaring, the math merely does not build up." Salaries, incomes and payroll-related expenses paid by hotels now account for more than 32% of overall profits, according to AHLA.

Modern Hospitality Market Innovations Fueling Future Success

As more hotel guests turn to artificial intelligence to boost their travel experience, scheduling hotels straight through big language models (LLMs) might be next, hospitality specialists said. Agentic commerce a procedure by which autonomous AI agents act on behalf of a customer to find, compare and finish purchases is a pattern that has sped up across industries 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. 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 remain competitive with direct reservation, bigger multibrand hotel business will "embed LLMs into their own brand sites and mobile apps, and alter the method the customer searches," Kletzel said.

"If you are not visible in an LLM search engine result which lots of brand names aren't, and this is the big 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 need to guarantee their residential or commercial property info is being indexed by LLMs to appear in tourist inquiries.