Expert Ways to Increase Market Presence via Expansion

Listen to the short article 17 min This audio is auto-generated. Please let us know if you have feedback. Following a year of broad financial unpredictability that stifled growth for hotels, hospitality market leaders are looking toward 2026 with mindful optimism. Increasing functional costs are slated to challenge owners this year and lower-tier sectors could have a hard time in the middle of a growing wealth bifurcation.

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

Total salaries, earnings and benefits paid by U.S. hotels increased to $127 billion in 2025, according to information from the American Hotel & Lodging Association, shown 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, rising labor expenses position an obstacle to net operating earnings growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

Major Global Shifts in Hospitality Expansion

"It is an absolute concern." Rising labor expenses have been a challenge for hoteliers for many years, Davis said, especially following the COVID-19 pandemic. Overall, hotel labor expenses have increased 15.3% from 2019 to 2025, exceeding the 12.8% growth in overall operating income, according to AHLA. Recently, thousands of union hotel workers have gone on strike requiring greater 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 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 Gaming Trades Council's union contract with the Hotel Association of New York City City is set to end in July.

In 2015, the union backed New york city City's recently chosen Mayor Zorhan Mamdani, who ran on a promise to raise New york city City's base pay to $30 per hour by 2030. Hotel market associations, consisting of AHLA, have denounced comparable legislation throughout the nation, consisting of the just recently passed $30 wage regulation in Los Angeles. "Demand 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 City Safe Hotels Act. When demand is falling and costs are soaring, the math simply does not accumulate." Incomes, incomes and payroll-related costs paid by hotels now represent more than 32% of overall profits, according to AHLA.

Expert Ways to Increase Brand Presence via Expansion

As more hotel guests turn to artificial intelligence to boost their travel experience, scheduling hotels straight through large language models (LLMs) may be next, hospitality specialists said. Agentic commerce a procedure by which self-governing AI representatives act on behalf of a customer to find, compare and complete purchases is a trend that has sped up across industries like retail.

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According to PwC's 2025 Vacation Outlook report, 76% of millennials said they're most likely to utilize AI for travel suggestions. A smaller percentage (57%) said they 'd be likely to use it for scheduling travel. But that number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, informed Hotel Dive. "The number of consumers that are searching [by means of LLMs] for product or services in travel has actually swollen in the last 12 months and is speeding up every day," Kletzel said, adding that inevitably, hotels will "take a difficult look at how they can enable commerce and deals through agentic [AI]"" [Brands] can construct on the trust they already have if they do a great 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, larger multibrand hotel business will "embed LLMs into their own brand name websites and mobile apps, and change the method the consumer searches," Kletzel said.

"If you are not visible in an LLM search results page which lots of brand names aren't, and this is the huge panic that they're all going through right now customers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality product marketing at AI client experience platform Talkdesk, similarly told Hotel Dive that hospitality players require to guarantee their property details is being indexed by LLMs to appear in traveler inquiries.