Why Hospitality Market Share Will Be Surging

Listen to the post 17 min This audio is auto-generated. Please let us know if you have feedback. Following a year of broad economic unpredictability that stifled growth for hotels, hospitality industry leaders are looking toward 2026 with cautious optimism. Increasing operational expenses are slated to challenge owners this year and lower-tier sections might have a hard time amidst a growing wealth bifurcation.

And through it all, hotel business are anticipated to strengthen their portfolios with new brand name offerings and collaborations. As the year gets underway, Hotel Dive spoke with hospitality leaders from varying corners of the industry about their 2026 predictions. Below are the top patterns expected to impact hotel operations, performance, net system growth and more this year.

Overall salaries, incomes 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 climb up to $131 billion, representing a roughly 3% year-over-year boost, per AHLA. For hotel owners, rising labor costs pose a difficulty to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an absolute concern." Increasing labor expenses have actually been a challenge for hoteliers for many years, Davis stated, particularly following the COVID-19 pandemic. Overall, hotel labor expenses have actually increased 15.3% from 2019 to 2025, outpacing the 12.8% development in overall operating income, according to AHLA. Over the last few years, countless union hotel employees have actually gone on strike demanding higher earnings in order to stay up to date with the increasing cost of living in places such as California, Hawaii and Las Vegas.

3, 2024 in San Francisco, California. Justin Sullivan by means of Getty Images In 2026, Davis noted, 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 contract with the Hotel Association of New York City City is set to expire in July.

"Demand has not kept up with this speed," she stated. Wages, salaries and payroll-related costs paid by hotels now account for more than 32% of overall profits, according to AHLA.

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As more hotel visitors turn to synthetic intelligence to boost their travel experience, reserving hotels directly through large language models (LLMs) may be next, hospitality professionals said. Agentic commerce a procedure by which autonomous AI representatives act on behalf of a customer 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 said they're most likely to use AI for travel recommendations. A smaller sized percentage (57%) said they 'd be likely to utilize it for scheduling travel. But that number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. "The variety of customers that are searching [by means of LLMs] for services and products in travel has actually ballooned in the last 12 months and is speeding up every day," Kletzel stated, including that inevitably, hotels will "take a tough look at how they can make it possible for commerce and transactions through agentic [AI]"" [Brands] can build on the trust they already have if they do an excellent job with how they manage AI in 2026." Michael Klein Head of retail, travel and hospitality product marketing at Talkdesk To stay competitive with direct booking, bigger multibrand hotel companies will "embed LLMs into their own brand sites and mobile apps, and change the method the consumer searches," Kletzel stated.

"If you are not visible in an LLM search engine result which numerous 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 consumer experience platform Talkdesk, likewise told Hotel Dive that hospitality gamers require to ensure their property details is being indexed by LLMs to appear in traveler questions.