Identifying Profitable Hospitality Ventures in 2026

Listen to the post 17 min 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 toward 2026 with mindful optimism. Rising functional expenses are slated to challenge owners this year and lower-tier sectors could have a hard time amidst a growing wealth bifurcation.

And through everything, hotel business are anticipated to strengthen their portfolios with brand-new brand offerings and collaborations. As the year gets underway, Hotel Dive spoke to hospitality leaders from differing corners of the market about their 2026 forecasts. Below are the top patterns expected to effect hotel operations, performance, net system growth and more this year.

Overall salaries, wages and advantages paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Lodging Association, shared with Hotel Dive. In 2026, that figure is projected 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 income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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Increasing labor costs have actually been an obstacle for hoteliers for years, Davis said, especially following the COVID-19 pandemic. Overall, hotel labor costs have actually increased 15.3% from 2019 to 2025, surpassing the 12.8% development in total operating profits, 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 Hotel and Gaming Trades Council's union agreement with the Hotel Association of New York City City is set to end in July.

In 2015, the union backed New york city City's newly chosen Mayor Zorhan Mamdani, who ran on a guarantee to raise New york city City's minimum wage to $30 per hour by 2030. Hotel industry associations, including AHLA, have knocked similar legislation throughout the country, including the just recently passed $30 wage regulation in Los Angeles. "Demand has not stayed up to date with this speed," she stated. "We're also seeing these challenges intensified 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 skyrocketing, the math simply doesn't add up." Incomes, 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 guests turn to artificial intelligence to improve their travel experience, scheduling hotels straight through big language designs (LLMs) may be next, hospitality experts said. Agentic commerce a procedure by which autonomous AI agents act on behalf of a consumer to discover, compare and finish purchases is a trend that has actually accelerated across markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials stated they're likely to use AI for travel recommendations. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. Michael Klein Head of retail, travel and hospitality product marketing at Talkdesk To stay competitive with direct booking, larger multibrand hotel business will "embed LLMs into their own brand websites and mobile apps, and change the way the consumer searches," Kletzel stated.

"If you are not discoverable in an LLM search results page which numerous brands aren't, and this is the huge 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 product marketing at AI client experience platform Talkdesk, likewise told Hotel Dive that hospitality players require to ensure their residential or commercial property info is being indexed by LLMs to appear in traveler inquiries.