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

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

Overall incomes, incomes and benefits paid by U.S. hotels increased 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 expenses present a difficulty to net operating earnings development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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"It is an outright issue." Increasing labor costs have actually been a difficulty for hoteliers for several years, Davis stated, especially following the COVID-19 pandemic. In general, hotel labor expenses have actually increased 15.3% from 2019 to 2025, outmatching the 12.8% development in overall operating income, according to AHLA. Recently, thousands of union hotel employees have gone on strike demanding higher earnings in order to stay up to date with the rising expense of living in places 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, where the New York City 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. Wages, earnings and payroll-related expenses paid by hotels now account for more than 32% of overall profits, according to AHLA.

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As more hotel visitors turn to artificial intelligence to improve their travel experience, reserving hotels straight through large language models (LLMs) may be next, hospitality professionals said. Agentic commerce a process by which autonomous AI representatives act upon behalf of a customer to find, compare and complete purchases is a trend that has accelerated throughout 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. A smaller percentage (57%) stated they 'd be likely to use it for scheduling travel. But that number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, told Hotel Dive. "The variety of customers that are browsing [through LLMs] for product or services in travel has swollen in the last 12 months and is accelerating every day," Kletzel stated, including that undoubtedly, hotels will "take a difficult look at how they can enable 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 product marketing at Talkdesk To remain competitive with direct reservation, larger multibrand hotel companies will "embed LLMs into their own brand websites and mobile apps, and alter the way the customer searches," Kletzel said.

"If you are not discoverable in an LLM search result which many brand names aren't, and this is the big panic that they're all going through today consumers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality item marketing at AI consumer experience platform Talkdesk, similarly told Hotel Dive that hospitality gamers require to guarantee their residential or commercial property information is being indexed by LLMs to appear in traveler queries.