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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 financial uncertainty that suppressed development for hotels, hospitality market leaders are looking towards 2026 with cautious optimism. Rising functional costs are slated to challenge owners this year and lower-tier sections might struggle amidst a growing wealth bifurcation.

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

Overall wages, salaries 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 forecasted to reach $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, rising labor costs position a difficulty to net operating earnings development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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

3, 2024 in San Francisco, California. Justin Sullivan through 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 is set to expire in July.

"Demand has actually not kept up with this rate," she said. "We're likewise seeing these difficulties intensified 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 skyrocketing, the math just doesn't add up." Incomes, salaries and payroll-related expenses paid by hotels now account for more than 32% of overall revenue, according to AHLA.

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As more hotel guests turn to expert system to improve their travel experience, scheduling hotels directly through big language models (LLMs) may be next, hospitality specialists said. Agentic commerce a procedure by which self-governing AI agents act on behalf of a consumer to find, compare and finish purchases is a pattern that has actually accelerated across markets like retail.

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According to PwC's 2025 Vacation Outlook report, 76% of millennials stated they're most likely to utilize AI for travel suggestions. That number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, told Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To remain competitive with direct booking, bigger multibrand hotel companies will "embed LLMs into their own brand sites and mobile apps, and change the way the customer searches," Kletzel stated.

"If you are not discoverable in an LLM search 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 item marketing at AI consumer experience platform Talkdesk, likewise told Hotel Dive that hospitality players require to ensure their property information is being indexed by LLMs to appear in traveler queries.