Why Hospitality Market Share Is Surging

Listen to the post 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 market leaders are looking towards 2026 with careful optimism. Rising operational costs are slated to challenge owners this year and lower-tier sectors might have a hard time amid a growing wealth bifurcation.

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

Overall salaries, wages and benefits paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Accommodations Association, shown Hotel Dive. In 2026, that figure is projected to climb up to $131 billion, representing an approximately 3% year-over-year increase, per AHLA. For hotel owners, rising labor expenses pose a difficulty to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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"It is an absolute concern." Increasing labor expenses have actually been an obstacle for hoteliers for many years, Davis stated, particularly following the COVID-19 pandemic. In general, hotel labor expenses have increased 15.3% from 2019 to 2025, outmatching the 12.8% development in overall operating earnings, according to AHLA. Recently, thousands of union hotel employees have actually gone on strike demanding higher 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 through 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 Gaming Trades Council's union agreement with the Hotel Association of New York City is set to end in July.

In 2015, the union backed New york city City's newly chosen Mayor Zorhan Mamdani, who operated on a guarantee to raise New York City's minimum wage to $30 per hour by 2030. Hotel industry associations, consisting of AHLA, have actually knocked similar legislation throughout the country, consisting of the recently passed $30 wage regulation in Los Angeles. "Demand has not kept up with this rate," she said. "We're also seeing these difficulties compounded by legislation that targets hotel operations, such as severe labor and licensing policies like the New York City City Safe Hotels Act. When need is falling and costs are skyrocketing, the mathematics just doesn't build up." Salaries, wages and payroll-related expenses paid by hotels now represent more than 32% of total revenue, according to AHLA.

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As more hotel visitors turn to artificial intelligence to enhance their travel experience, booking hotels straight through big language models (LLMs) may be next, hospitality experts stated. Agentic commerce a process by which self-governing AI representatives act on behalf of a consumer to discover, compare and complete purchases is a trend that has actually sped up throughout markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials said they're most likely to utilize 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 stay competitive with direct reservation, bigger multibrand hotel business will "embed LLMs into their own brand websites and mobile apps, and change the method the customer searches," Kletzel stated.

"If you are not discoverable in an LLM search results page which lots of brands aren't, and this is the huge panic that they're all going through today consumers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality item marketing at AI customer experience platform Talkdesk, similarly informed Hotel Dive that hospitality gamers need to guarantee their property details is being indexed by LLMs to appear in traveler questions.