Strategic Steps for Hospitality Brand Expansion

, hospitality market leaders are looking towards 2026 with cautious optimism. Rising functional expenses are slated to challenge owners this year and lower-tier sectors might struggle amidst a growing wealth bifurcation.

And through all of it, hotel companies are expected to fortify their portfolios with new brand name offerings and collaborations. As the year gets underway, Hotel Dive talked with hospitality leaders from differing corners of the industry about their 2026 predictions. Below are the top trends anticipated to impact hotel operations, performance, net unit growth and more this year.

Total salaries, earnings and advantages paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Lodging Association, shown Hotel Dive. In 2026, that figure is forecasted to reach $131 billion, representing an approximately 3% year-over-year boost, per AHLA. For hotel owners, increasing labor costs present 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 issue." Rising labor expenses have actually been a challenge for hoteliers for several years, Davis stated, especially following the COVID-19 pandemic. In general, hotel labor costs have increased 15.3% from 2019 to 2025, outpacing the 12.8% development in overall operating income, according to AHLA. In the last few years, thousands of union hotel employees have actually gone on strike requiring greater earnings in order to stay up to date with the rising cost of living in locations 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 negotiations 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 end in July.

"Need has not kept up with this speed," she stated. "We're also seeing these challenges compounded by legislation that targets hotel operations, such as extreme labor and licensing policies like the New York City City Safe Hotels Act. When need is falling and expenses are skyrocketing, the math just does not add up." Salaries, salaries and payroll-related expenditures paid by hotels now represent more than 32% of overall profits, according to AHLA.

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As more hotel visitors turn to artificial intelligence to improve their travel experience, scheduling hotels directly through large language models (LLMs) might be next, hospitality professionals stated. Agentic commerce a process by which self-governing AI agents act upon behalf of a customer to discover, compare and finish purchases is a pattern that has actually sped up across markets 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 recommendations. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, informed Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To remain competitive with direct booking, bigger multibrand hotel business will "embed LLMs into their own brand websites and mobile apps, and change the way the consumer searches," Kletzel stated.

"If you are not discoverable in an LLM search result which lots of 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 stated. Michael Klein, head of retail, travel and hospitality product marketing at AI client experience platform Talkdesk, likewise informed Hotel Dive that hospitality players require to ensure their home info is being indexed by LLMs to appear in traveler questions.