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, hospitality market leaders are looking toward 2026 with careful optimism. Increasing functional costs are slated to challenge owners this year and lower-tier sectors could struggle amid a growing wealth bifurcation.

And through all of it, hotel companies are expected to strengthen their portfolios with new brand offerings and collaborations. As the year gets underway, Hotel Dive talked to hospitality leaders from differing corners of the industry about their 2026 predictions. Below are the top patterns expected to effect hotel operations, efficiency, net system development and more this year.

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

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"It is an absolute issue." Rising labor costs have been a difficulty for hoteliers for many years, Davis stated, particularly following the COVID-19 pandemic. In general, hotel labor expenses have actually increased 15.3% from 2019 to 2025, exceeding the 12.8% development in total operating revenue, according to AHLA. Over the last few years, thousands of union hotel employees have gone on strike requiring greater wages in order to stay up to date with the rising cost 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 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.

In 2015, the union backed New york city City's freshly chosen Mayor Zorhan Mamdani, who worked on a promise to raise New york city City's minimum wage to $30 per hour by 2030. Hotel industry associations, including AHLA, have knocked comparable legislation throughout the nation, consisting of the just recently passed $30 wage ordinance in Los Angeles. "Demand has not stayed up to date with this rate," she stated. "We're also seeing these obstacles intensified 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 costs are soaring, the mathematics just doesn't accumulate." Wages, wages and payroll-related expenditures paid by hotels now account for more than 32% of total earnings, according to AHLA.

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As more hotel visitors turn to artificial intelligence to enhance their travel experience, reserving hotels straight through large language models (LLMs) might be next, hospitality experts stated. Agentic commerce a procedure by which autonomous AI representatives act on behalf of a consumer 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 use AI for travel recommendations. A smaller percentage (57%) said they 'd be likely to use it for scheduling travel. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. "The variety of consumers that are browsing [via LLMs] for services and products in travel has swollen in the last 12 months and is accelerating every day," Kletzel stated, adding that undoubtedly, hotels will "take a hard look at how they can make it possible for 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 item 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 change the method the customer searches," Kletzel stated.

"If you are not visible in an LLM search results page 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 stated. Michael Klein, head of retail, travel and hospitality item marketing at AI customer experience platform Talkdesk, likewise told Hotel Dive that hospitality gamers need to ensure their home information is being indexed by LLMs to appear in tourist inquiries.