Why Hospitality Market Share Is Rising

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

And through all of it, hotel companies are anticipated to fortify their portfolios with new brand offerings and collaborations. As the year gets underway, Hotel Dive talked with hospitality leaders from varying corners of the market about their 2026 forecasts. Below are the top patterns anticipated to effect hotel operations, efficiency, net system development and more this year.

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

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"It is an absolute concern." Rising labor costs have been a difficulty for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. In general, hotel labor costs have actually increased 15.3% from 2019 to 2025, outmatching the 12.8% growth in total operating earnings, according to AHLA. In current years, countless union hotel workers have actually gone on strike demanding higher earnings in order to stay up to date with the increasing expense 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 kept in mind, union settlements will be "front and center" in New york city City, where the New York Hotel and Video gaming Trades Council's union contract with the Hotel Association of New York City is set to expire in July.

Last year, 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 minimum wage to $30 per hour by 2030. Hotel market associations, including AHLA, have knocked comparable legislation throughout the country, consisting of the just recently passed $30 wage regulation in Los Angeles. "Demand has actually not kept up with this rate," she said. Salaries, wages and payroll-related expenses paid by hotels now account for more than 32% of overall profits, according to AHLA.

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As more hotel guests turn to artificial intelligence to improve their travel experience, booking hotels directly through big language models (LLMs) might be next, hospitality experts stated. Agentic commerce a process by which self-governing AI agents act upon behalf of a customer to find, compare and complete purchases is a pattern that has actually accelerated across markets like retail.

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According to PwC's 2025 Vacation Outlook report, 76% of millennials stated they're likely to use AI for travel recommendations. 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 stay competitive with direct booking, larger multibrand hotel companies will "embed LLMs into their own brand name sites and mobile apps, and change the way the customer searches," Kletzel stated.

"If you are not visible in an LLM search engine result which many brand names 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 product marketing at AI consumer experience platform Talkdesk, likewise informed Hotel Dive that hospitality gamers need to ensure their home info is being indexed by LLMs to appear in tourist inquiries.