Targeting Profitable Hospitality Investments in 2026

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 stifled development for hotels, hospitality market leaders are looking toward 2026 with cautious optimism. Increasing functional expenses are slated to challenge owners this year and lower-tier sections might struggle amid a growing wealth bifurcation.

And through it all, hotel business are expected 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 industry about their 2026 predictions. Below are the leading trends expected to effect hotel operations, efficiency, net system development and more this year.

Overall salaries, wages and benefits paid by U.S. hotels increased to $127 billion in 2025, according to information from the American Hotel & Lodging Association, shown Hotel Dive. In 2026, that figure is projected to reach $131 billion, representing an approximately 3% year-over-year boost, per AHLA. For hotel owners, increasing labor expenses present a difficulty to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an outright concern." Increasing labor expenses have actually been a challenge for hoteliers for many years, Davis stated, especially following the COVID-19 pandemic. In general, hotel labor expenses have increased 15.3% from 2019 to 2025, outmatching the 12.8% growth in total operating income, according to AHLA. Over the last few years, thousands of union hotel workers have actually gone on strike requiring greater salaries in order to stay up to date with the increasing cost of living in locations such as California, Hawaii and Las Vegas.

3, 2024 in San Francisco, California. Justin Sullivan through Getty Images In 2026, Davis kept in mind, union settlements will be "front and center" in New York City, where the New York Hotel and Video gaming Trades Council's union contract with the Hotel Association of New York City is set to end in July.

"Demand has actually not kept up with this speed," she stated. Wages, incomes and payroll-related expenditures paid by hotels now account for more than 32% of total profits, according to AHLA.

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As more hotel guests turn to expert system to improve their travel experience, scheduling hotels straight through large language models (LLMs) might be next, hospitality professionals said. Agentic commerce a procedure by which autonomous AI agents act upon behalf of a consumer to discover, compare and complete purchases is a pattern that has actually sped up across markets like retail.

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According to PwC's 2025 Vacation Outlook report, 76% of millennials said they're most likely to use AI for travel recommendations. A smaller sized percentage (57%) said they 'd be most likely to use it for booking travel. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, informed Hotel Dive. "The variety of consumers that are searching [via LLMs] for items and services in travel has swollen in the last 12 months and is accelerating every day," Kletzel said, adding that inevitably, hotels will "take a tough appearance at how they can make it possible for commerce and deals through agentic [AI]"" [Brands] can develop on the trust they currently have if they do a great job with how they handle AI in 2026." Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct reservation, larger multibrand hotel business will "embed LLMs into their own brand sites and mobile apps, and change the way the customer searches," Kletzel said.

"If you are not discoverable in an LLM search results page which numerous 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 product marketing at AI customer experience platform Talkdesk, similarly told Hotel Dive that hospitality gamers need to guarantee their residential or commercial property details is being indexed by LLMs to appear in traveler inquiries.