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Listen to the article 17 minutes This audio is auto-generated. Please let us understand if you have feedback. Following a year of broad financial unpredictability that suppressed growth for hotels, hospitality market leaders are looking toward 2026 with careful optimism. Increasing functional costs are slated to challenge owners this year and lower-tier segments might struggle in the middle of a growing wealth bifurcation.

And through it all, hotel business are expected to fortify their portfolios with brand-new brand name offerings and collaborations. As the year gets underway, Hotel Dive talked to hospitality leaders from varying corners of the market about their 2026 forecasts. Below are the top trends expected to impact hotel operations, efficiency, net unit development and more this year.

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

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"It is an outright issue." Rising labor expenses 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, exceeding the 12.8% growth in total operating revenue, according to AHLA. In recent years, countless union hotel employees have actually gone on strike requiring greater wages in order to keep up 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 Gaming Trades Council's union agreement with the Hotel Association of New York City is set to expire in July.

Last year, the union backed New York City's freshly elected Mayor Zorhan Mamdani, who operated on a promise to raise New York City's base pay to $30 per hour by 2030. Hotel industry associations, consisting of AHLA, have knocked similar legislation throughout the nation, including the just recently passed $30 wage ordinance in Los Angeles. "Demand has not kept up with this rate," she stated. "We're likewise seeing these difficulties compounded by legislation that targets hotel operations, such as extreme labor and licensing policies like the New York City Safe Hotels Act. When demand is falling and costs are soaring, the mathematics merely does not build up." Incomes, earnings and payroll-related expenses paid by hotels now represent more than 32% of total revenue, according to AHLA.

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As more hotel visitors turn to expert system to boost their travel experience, booking hotels directly through large language models (LLMs) might be next, hospitality professionals said. Agentic commerce a procedure by which self-governing AI agents act upon behalf of a consumer to discover, compare and finish purchases is a pattern 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 suggestions. A smaller sized portion (57%) said they 'd be likely to utilize it for scheduling travel. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, informed Hotel Dive. "The variety of customers that are browsing [by means of LLMs] for services and products in travel has actually ballooned in the last 12 months and is accelerating every day," Kletzel said, including that undoubtedly, hotels will "take a difficult appearance at how they can enable commerce and deals through agentic [AI]"" [Brands] can build on the trust they already have if they do a great job with how they deal with AI in 2026." Michael Klein Head of retail, travel and hospitality product marketing at Talkdesk To stay competitive with direct booking, larger multibrand hotel companies will "embed LLMs into their own brand name sites and mobile apps, and change the method the customer searches," Kletzel said.

"If you are not visible in an LLM search result which lots of brands aren't, and this is the big 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 consumer experience platform Talkdesk, similarly informed Hotel Dive that hospitality gamers require to ensure their home details is being indexed by LLMs to appear in traveler queries.