Why Hospitality Market Share Will Be Rising

Listen to the article 17 min This audio is auto-generated. Please let us understand if you have feedback. Following a year of broad financial unpredictability that stifled development for hotels, hospitality industry leaders are looking towards 2026 with cautious optimism. Increasing 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 business are expected to fortify their portfolios with brand-new brand name offerings and collaborations. As the year gets underway, Hotel Dive consulted with hospitality leaders from varying corners of the industry about their 2026 forecasts. Below are the leading trends expected to effect hotel operations, efficiency, net system growth and more this year.

Total incomes, earnings and advantages paid by U.S. hotels rose to $127 billion in 2025, according to information from the American Hotel & Lodging Association, shared with Hotel Dive. In 2026, that figure is projected to reach $131 billion, representing a roughly 3% year-over-year increase, per AHLA. For hotel owners, rising labor expenses present a challenge to net operating earnings growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

Key Global Milestones in Hospitality Development

"It is an outright concern." Increasing labor costs have been an obstacle for hoteliers for several years, Davis stated, especially following the COVID-19 pandemic. In general, hotel labor expenses have increased 15.3% from 2019 to 2025, outpacing the 12.8% development in total operating profits, according to AHLA. Over the last few years, countless union hotel employees have gone on strike requiring higher incomes in order to keep up 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 noted, union settlements will be "front and center" in New York City, where the New York Hotel and Gaming Trades Council's union contract with the Hotel Association of New York City City is set to expire in July.

Last year, the union backed New york city City's recently chosen Mayor Zorhan Mamdani, who operated on a promise to raise New york city City's base pay to $30 per hour by 2030. Hotel industry associations, consisting of AHLA, have actually denounced similar legislation throughout the nation, consisting of the just recently passed $30 wage regulation in Los Angeles. "Demand has not kept up with this pace," she said. Wages, earnings and payroll-related expenses paid by hotels now account for more than 32% of overall revenue, according to AHLA.

Evaluating Top Investment Models for Growth

As more hotel guests turn to synthetic intelligence to improve their travel experience, booking hotels directly through large language models (LLMs) may be next, hospitality experts said. Agentic commerce a procedure by which autonomous AI agents act upon behalf of a consumer to find, compare and finish purchases is a trend that has sped up across markets like retail.

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According to PwC's 2025 Vacation Outlook report, 76% of millennials stated they're likely to utilize AI for travel suggestions. That number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, told Hotel Dive. Michael Klein Head of retail, travel and hospitality product marketing at Talkdesk To remain competitive with direct booking, bigger multibrand hotel companies will "embed LLMs into their own brand websites and mobile apps, and alter the method the consumer searches," Kletzel said.

"If you are not discoverable in an LLM search results page which many brand names aren't, and this is the big panic that they're all going through right now customers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality item marketing at AI client experience platform Talkdesk, likewise informed Hotel Dive that hospitality gamers need to guarantee their residential or commercial property information is being indexed by LLMs to appear in traveler inquiries.