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Listen to the short article 17 minutes This audio is auto-generated. Please let us know if you have feedback. Following a year of broad economic uncertainty that stifled growth for hotels, hospitality market leaders are looking toward 2026 with cautious optimism. Rising functional costs are slated to challenge owners this year and lower-tier sections could struggle amid a growing wealth bifurcation.

And through all of it, hotel business are anticipated to strengthen their portfolios with new brand offerings and partnerships. As the year gets underway, Hotel Dive consulted with hospitality leaders from differing corners of the market about their 2026 predictions. Below are the leading trends expected to impact hotel operations, efficiency, net system development and more this year.

Total salaries, salaries and benefits paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Lodging Association, shown Hotel Dive. In 2026, that figure is forecasted to reach $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, increasing labor costs present a difficulty to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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"It is an absolute issue." Increasing labor expenses have been a challenge for hoteliers for years, Davis said, 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 overall operating earnings, according to AHLA. Recently, thousands of union hotel employees have gone on strike requiring greater wages in order to stay up to date with the rising expense of living in locations such as California, Hawaii and Las Vegas.

3, 2024 in San Francisco, California. Justin Sullivan by means of Getty Images In 2026, Davis noted, union negotiations will be "front and center" in New york city City, where the New York City Hotel and Video gaming Trades Council's union contract 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 obstacles compounded by legislation that targets hotel operations, such as severe labor and licensing policies like the New York City City Safe Hotels Act. When need is falling and expenses are soaring, the math merely does not build up." Wages, incomes and payroll-related costs paid by hotels now represent more than 32% of total income, according to AHLA.

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As more hotel visitors turn to expert system to boost their travel experience, scheduling hotels straight through large language designs (LLMs) may be next, hospitality experts said. Agentic commerce a procedure by which self-governing AI representatives act on behalf of a consumer to find, compare and finish purchases is a pattern that has sped up throughout industries like retail.

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According to PwC's 2025 Vacation Outlook report, 76% of millennials said they're likely to utilize AI for travel suggestions. 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, larger multibrand hotel business 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 visible in an LLM search results page which many 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 customer experience platform Talkdesk, similarly informed Hotel Dive that hospitality players need to guarantee their property info is being indexed by LLMs to appear in traveler queries.