Can Hospitality Investments Remain Lucrative in 2026?

, hospitality market leaders are looking toward 2026 with careful optimism. Rising operational expenses are slated to challenge owners this year and lower-tier sectors could struggle amidst a growing wealth bifurcation.

And through it all, hotel companies 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 market about their 2026 forecasts. Below are the leading patterns anticipated to effect hotel operations, efficiency, net unit growth and more this year.

Total salaries, incomes and benefits paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Lodging Association, shown Hotel Dive. In 2026, that figure is predicted to reach $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, rising labor expenses pose 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 absolute issue." Increasing labor expenses have actually been an obstacle for hoteliers for several years, Davis said, especially following the COVID-19 pandemic. Overall, hotel labor expenses have increased 15.3% from 2019 to 2025, outmatching the 12.8% development in total operating revenue, according to AHLA. In the last few years, countless union hotel workers have actually gone on strike demanding greater wages in order to keep up with the rising expense of living in places such as California, Hawaii and Las Vegas.

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

"Need has not stayed up to date with this pace," she stated. "We're likewise seeing these obstacles compounded by legislation that targets hotel operations, such as severe labor and licensing policies like the New York City Safe Hotels Act. When need is falling and expenses are soaring, the mathematics merely does not include up." Salaries, incomes and payroll-related expenses paid by hotels now account for more than 32% of total earnings, according to AHLA.

Targeting Profitable Hospitality Ventures in 2026

As more hotel guests turn to expert system to enhance their travel experience, reserving hotels directly 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 find, compare and finish purchases is a pattern that has actually accelerated throughout industries like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials stated they're most likely to use AI for travel suggestions. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To remain competitive with direct booking, bigger 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 discoverable in an LLM search engine result which numerous brands aren't, and this is the huge panic that they're all going through today customers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality item marketing at AI client experience platform Talkdesk, likewise informed Hotel Dive that hospitality gamers require to ensure their property details is being indexed by LLMs to appear in traveler inquiries.