Will Hospitality Investments Remain Profitable in 2026?

, hospitality market leaders are looking towards 2026 with careful optimism. Rising functional expenses are slated to challenge owners this year and lower-tier segments might struggle amid a growing wealth bifurcation.

And through all of it, hotel companies are anticipated to strengthen their portfolios with brand-new brand name offerings and partnerships. As the year gets underway, Hotel Dive spoke to hospitality leaders from varying corners of the market about their 2026 forecasts. Below are the leading trends anticipated to impact hotel operations, performance, net unit development and more this year.

Overall salaries, wages and benefits paid by U.S. hotels increased to $127 billion in 2025, according to data from the American Hotel & Accommodations Association, shown Hotel Dive. In 2026, that figure is forecasted to reach $131 billion, representing a roughly 3% year-over-year boost, per AHLA. For hotel owners, rising labor costs present a difficulty to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

Key Regional Shifts in Brand Expansion

Rising labor costs have actually been an obstacle for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. Overall, hotel labor costs have increased 15.3% from 2019 to 2025, surpassing the 12.8% growth 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 negotiations will be "front and center" in New york city City, where the New York Hotel and Gaming Trades Council's union contract with the Hotel Association of New York City is set to end in July.

In 2015, the union backed New York City's recently chosen Mayor Zorhan Mamdani, who worked on a pledge to raise New york city City's base pay to $30 per hour by 2030. Hotel market associations, including AHLA, have knocked similar legislation across the nation, consisting of 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 intensified 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 doesn't build up." Incomes, incomes and payroll-related expenditures paid by hotels now account for more than 32% of overall income, according to AHLA.

Expert Ways to Boost Brand Share via Expansion

As more hotel visitors turn to expert system to improve their travel experience, reserving hotels straight through big language models (LLMs) might be next, hospitality professionals stated. Agentic commerce a process by which autonomous AI agents act on behalf of a consumer to find, compare and finish purchases is a pattern that has sped up across industries 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 suggestions. A smaller sized percentage (57%) said they 'd be most likely to use it for reserving travel. But that number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, told Hotel Dive. "The number of customers that are browsing [through LLMs] for services and products in travel has swollen in the last 12 months and is accelerating every day," Kletzel said, adding that undoubtedly, hotels will "take a difficult take a look at how they can enable commerce and transactions through agentic [AI]"" [Brands] can develop on the trust they already have if they do an excellent task 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 reservation, larger multibrand hotel companies will "embed LLMs into their own brand sites and mobile apps, and alter the method the customer searches," Kletzel stated.

"If you are not visible in an LLM search engine result which lots of brand names aren't, and this is the huge panic that they're all going through right now customers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality product marketing at AI client experience platform Talkdesk, similarly told Hotel Dive that hospitality players require to guarantee their property details is being indexed by LLMs to appear in tourist questions.