Forecasters warn US hotel performance could be turbulent in 2026
LOS ANGELES — U.S. hoteliers should expect to see rate growth in 2026, but cost pressures will continue to challenge profitability.
During "The Numbers: What to Expect in 2026 and Beyond" panel at the 2026 Americas Lodging Investment Summit, hotel industry forecasters laid out their companies' expectations for the year.
The full-year 2026 forecast from STR and Tourism Economics expects 0.6% revenue-per-available-room growth for U.S. hotels. The most important piece to look at is the average-daily-rate side, which projects 1% growth for the year, said Isaac Collazo, senior director of analytics at STR. The rate of inflation is expected to be 2.4%.
“It’s going to be pressures on the margins, as we’ve seen in the past year, year and a half, because we’re not seeing that rate growth,” he said.
When looking at the forecast by hotel chain scale, it’s not just bifurcation of demand but trifurcation, Collazo said. There’s growth in the higher-end segments, negative trajectory at the bottom and flat in the middle.
“We still believe it’s going to be a better year than 2025 but not a stellar year,” he said. He added that World Cup matches, though only in 10 of the top 25 U.S. cities, will be the main demand drivers.
“If you just eliminate those 10 markets, it's a 90-basis-point difference,” Collazo said. “So, without those 10 top 25 markets, you would see negative U.S. RevPAR in 2026.”
One of the main issues with U.S. hotel rates is not that the average rate has been flat but that the discount categories, such as online travel agencies and government, were down enough to counter growth in corporate and group, said Cindy Estis Green, CEO of Kalibri Labs. Kalibri projects U.S. hotel RevPAR to end 2026 in the range of -1.5% to +1%.
“It really has to do with the exchange,” she said. “You just have more volume at the lower end.”
Within the distribution channels, the horse race is back between the Brand.com and OTA booking channels while property direct and voice channels continue their 10-year-long decline, she said. With the World Cup games coming up, Estis Green expects more of a bump in OTA bookings because of the international inbound demand.
Kalibri expects government-related hotel demand to increase this year because so much was cut last year, she said. If the defense spending bill passes, that will help demand return as well, but even so, that 13% drop from last year won’t fully come back.
In some other categories, such as AAA and AARP, advanced-purchase forms and other discount categories, there’s been healthy growth, Estis Green said. From a profitability point of view, that business is more profitable than some of the third-party business.
Corporate demand will be a bit flat overall to possibly a bit down, she said. Even though global distribution systems may grow, that’s more of the Fortune 500, high end of the market. Following the pandemic, there were a lot of small- and medium-sized companies that started growing.
“Now with some of the tariff and other economic turbulence, that has come down some,” she said.
When reviewing how many U.S. hotels grew RevPAR above the rate of inflation in 2025, Collazo said he found that roughly 30% of them achieved this feat. Luxury hotels had a higher probability of growing RevPAR that much, but they weren’t the only ones that did.
“It shows there is still growth out there,” he said. “You cannot become myopic.”
STR doesn’t expect inflation to abate much in 2026, dropping from 2.7% to 2.4%, so there will continue to be cost pressures that will push margins down but not as much as last year, he said. It’s the most difficult forecasting environment in decades because every day something new and unexpected happens, including the decoupling of the trajectory of hotel demand and gross domestic product.
Because the U.S. hospitality industry is so profit-challenged by rising expenses and muted demand, it’s important for hoteliers to understand all the opportunities in their markets, Estis Green said. The legacy view has been to have primary and secondary competitive sets, but those don’t reflect all the opportunities in a market and cause near-sightedness.
Having the ability to cast a wider net and use the tools available, including AI, to find those opportunities by rate categories can translate to having a competitive set for each rate category, she said. Some of the narrowly focused competitive sets worked when there were 20 hotels in a market to let them look at five or 10, but now there are hundreds.
“We have to operate differently,” she said.
It’s about understanding the opportunity and then being able to see not just top-line revenue but net revenue for what actually flows through, Estis Green said. To pile up top-line revenue without anything flowing through leads to “you start chasing your tail,” she added.
Collazo agreed that having a wide net is necessary. Hoteliers need to look outside just hotels, because the cruise industry is taking demand as are short-term rentals.
“If you look at just hotel demand and short-term rentals demand this year, in 2025 together, total accommodations were up, about 6 million room nights, but hotel demand was down,” he said. “That means the entire gain in total accommodations was short-term rentals.”
Taking a broader look will create a better understanding of what’s happening in the total travel industry, Collazo said. People are traveling, but they didn’t stay in hotels as much in 2025 as they did in years before.
A look at overall demand in the U.S. hotel industry shows it fell among the lower hotel tiers, he said.
“You can tie that back to economics,” Collazo said. “It’s the higher cost of living that may be actually pushing folks to short-term rentals because, again, middle- and lower-income individuals have a higher cost of living. They don’t have that discretionary funds that they once had before.”
There’s no one data set to turn to, he said. It takes looking at multiple sources of information and different parts of the overall travel picture to see it within context.
The U.S. is projected to have a compound annual growth rate in hotel bookings of about 4% through 2028, said Mitra Sorrells, senior vice president of content at Phocuswright/Phocuswire by Northstar. India and Latin America are expected to see growth of 10% while the Middle East will be 8%. The U.S. is still the largest market among these, the other growth markets are meaningful in scale.
The Middle East is projected to reach about $136 billion in gross bookings in 2028, she added.
“The result is that these markets are not just growing, they are accelerating faster than the mature markets, and they are increasingly shaping where the next wave of travel demand comes from,” she said
Artificial intelligence is rapidly becoming a mainstream trip-planning tool, stealing share from traditional search engines, namely Google, Sorrells said.
“That trend is only going to continue,” she said.
The shift started to grow in early 2025 when the usage for traditional searches dropped sharply when generative AI tools, namely ChatGPT and Google Gemini, showed a meaningful jump over a short period, Sorrells said. It’s not just the youngest travelers driving this change as millennials are using AI because it helps them save time and cut through information overload.
Travelers using AI tend to also be wealthier and more frequent travelers who spend significantly more for hotels, she said.
“The implication is clear: You are not just competing for visibility on Google,” Sorrells said. “You are competing to be recommended by AI, and that means your content, your reviews, your value proposition, really have to be easy for these tools to understand.”
MADRID — Among the thorniest issues of hotel ownership is bringing on brands and operating companies as partners and negotiating the hotel management agreement.
At this month's Atlantic Ocean Hotel Investors’ Summit, a panel of hoteliers from each of those industry stakeholders weighed whether hotel management agreements are becoming more transparent.
These agreements are becoming more owner-friendly, but this evolution needs to continue, panelists said. Hotel owners are seeking more control and assurances in regard to performance-linked fees, operational flexibility, supply-chain logistics and costs, and reduced contract timelines with clearer exit paths.
Alignment is critical, and hotel owners are seeking creativity around fees, linking them to performance improvements, and pushing back against the use of side letters, documents outside the main hotel management agreement but still an integral part of it.
Such friction points make conversations between hotel owners, operators and brands more strained, panelists said.
“Side letters make exits more difficult,” said Christian Hribar, head of development at Arabella Hospitality SE.
The best strategy in hotel management agreements is to be clear upfront on all aspects of the agreement so all parties understand what they are getting into, said Niall Kelly, Aimbridge Hospitality's head of business development for Europe, the Middle East and Africa. Then it is largely about communication, including how unforeseen challenges will be addressed, he added.
“If I can be mischievous, [a disclosure document] is not fun reading, but there is no doubt it is a document of full transparency. … Guide owners through which pieces pertain to them,” Kelly said. “We work with 85 different brands, and we have a view on all of them. We are there to help the brands work, too.”
Friction
Procurement, distribution and loyalty are all potential friction points in hotel management agreements, panelists said. Hotel owners, operators and brands can all work on being better aligned.
“A lot of [procurement] programs are optional, and the brand should be giving you a good deal. Where it becomes more challenging is with detachable and tangible items,” said Lionel Schauder, vice president of asset management at Propreal Capital Partners.
On occasion, hotel owners have been told which suppliers they should be working with, and sometimes those recommendations reveal established business links between the brand or operator and those preferred suppliers, panelists said.
Paul Rosenberg-Grosjean, Accor's regional vice president development for luxury in France, Southern Europe and North Africa, said as long as all parties are focused on value creation, discussions around alignment should not be difficult ones.
Real-time, key performance indicator-driven technology is available as an excellent source to provide further transparency on costs, Hribar said.
Plus, hotel owners still gain valuable advantages from distribution and loyalty programs, Rosenberg-Grosjean said.
“We do not want a cookie-cutter approach, and I hope I never see a GM being pushed down the throat of an owner,” he said.
Point redemption through a hotel brand's loyalty program is another sore spot for property owners, Schauder said.
“An owner wants to see the net value of those [redemption] bookings,” Schauder said.
He added that this value would also take into account such redemption perks as free breakfast and late checkout.
It's critical for hoteliers to fully understand loyalty redemption and how to revenue manage it, Kelly said. He added brands’ ability to generate higher occupancies and average daily rates are key to owners' and operators' revenue strategy.
Hospitality has always been about how people feel, but over the last decade, the industry tried to improve that feeling through structure alone. Better systems. Better standards. Better efficiency. The assumption was that if everything worked smoothly enough, the emotional experience would naturally follow. What we are seeing now suggests the opposite.
Guests are not responding more strongly to smoother operations; they are responding to presence, to experiences that feel grounded, intentional and, most importantly, human in a world that increasingly does not.
Presence over process
This shift has occurred because the environment guests are arriving from has changed. People arrive tired, not just physically, but mentally and emotionally drained. They are overstimulated, over-scheduled and increasingly wary of interactions that feel transactional. Within moments of entering a hotel lobby or sitting down in a restaurant, they are already assessing something quietly but decisively: whether the experience will hold them or simply move them along. That judgment is rarely verbalized, but it is deeply felt.
I have come to believe that the arrival experience determines whether the rest of the experience is given a fair chance. Long before service begins, the guest is already deciding whether they are open to what follows or whether the operation will be working to recover from the start. From a leadership standpoint, the host or guest service agent is not a logistical function. It is the emotional gatekeeper of the experience. It sets the tone, establishes trust and signals whether the operation is present or simply efficient.
When arrivals are treated as transactions, even well-executed service later in the experience has to work uphill. I have coached teams where nothing was technically broken, yet the experience consistently felt emotionally flat. The common thread was always the same: arrivals were rushed, overly procedural, or handled without awareness of context. The moment a guest feels unseen at the door, they arrive at the table or front desk guarded. Service starts immediately from deficit.
Hence, the arrival is not where service begins; it is where permission is granted.
When leaders prioritize the arrival moment, the effect is immediate. Teams slow down just enough to acknowledge the human before the process. The experience earns goodwill before anything is delivered. Guests become more patient and more receptive because trust has already been established. Arrival needs intention. When the first interaction is handled with awareness, the rest of the experience unfolds with far less friction.
Service has always played a central role in hospitality, but not in the way that it once did. Politeness alone no longer creates reassurance. Precision on its own no longer builds trust. Guests can tell when service is delivered correctly, but without awareness—when questions are asked because they are required rather than because they matter, when interactions follow protocol but ignore context.
Then they encounter something different. A place where the pace adjusts naturally. Where silence is allowed to exist. Where conversation emerges rather than being imposed. Where a team member senses whether engagement is welcome or whether space is needed. Nothing overt happens, yet the experience feels calmer, more grounded, more human. This difference has nothing to do with friendliness and everything to do with emotionally intelligent hospitality.
Presence cannot be scripted or reduced to a checklist. It requires confidence, awareness and trust—trust from teams that they are supported when they adapt rather than punished for deviating from rigid protocol. This is where hospitality organizations need to recalibrate. Training is shifting from what to say toward how to observe, how to listen, how to read subtle cues and respond instead of performing. Presence is becoming a practiced skill, and guests are responding to it immediately.
Hospitality has never been overstaffed. Labor shortages are not new. What has changed is the margin for dysfunction inside lean operations. Smaller teams expose everything: weak communication, inconsistent leadership, cultural misalignment. Lean teams cannot survive in environments that are overly performance-driven or emotionally unsafe. When culture deteriorates, absenteeism rises, callouts increase, and disengagement spreads. What begins as a staffing challenge quickly becomes an operational one.
When culture leads, lean teams become remarkably effective. Expectations are clear. Communication is steady. Accountability feels shared rather than imposed. Guests feel the difference not in headcount, but in how confidently problems are handled.
I have seen this repeatedly. In one hotel I worked with, leadership believed service inconsistency was caused by understaffing. Time spent inside the operation revealed something else. Supervisors led differently from shift to shift. Expectations changed without explanation. The team was not overwhelmed by workload, but by uncertainty. Instead of hiring aggressively, leadership focused on alignment. Roles were clarified. Leaders were coached to absorb pressure rather than transmit it. Within weeks, callouts dropped and guest feedback improved—not because there were more people on the floor, but because the people who were there felt supported.
This grounding is also what many visually driven hospitality concepts lack. Too many restaurants and hotels are designed primarily to be photographed, prioritizing perception over structure. When an experience is built to be seen rather than repeated, consistency becomes difficult to sustain. The first visit may impress; the second often disappoints. Guests are learning to distinguish between concepts built on solid operational foundations and those built primarily on image. Craft will hold; gimmicks will not.
Consistency is emotional, not mechanical
Consistency only matters if we are clear about what we are trying to keep consistent. Guests are not looking for sameness. They are looking for a familiar emotional landscape. Presence allows that feeling to carry from one visit to the next. Where things fracture is when presence fades—when a place feels grounded one evening and rushed the next. Nothing is overtly wrong, yet the experience no longer holds.
This instability changes how guests move through an experience. They become more alert, less forgiving, less willing to surrender to the flow. Rules and repetition alone cannot enforce consistency. It requires people who are paying attention to the moment. Guests return to places where presence is reliable and quietly disengage from places where each visit feels like a different interpretation of the same idea.
This same discernment shapes how people choose where to travel. Travel today is often driven by intention: restoration, connection, reflection, celebration. Experience has overtaken aesthetics. Beauty still matters, but beauty without meaning feels hollow. Guests are no longer asking to be impressed; they are asking to be met where they are.
Leadership sits beneath all of this. Many of the challenges hospitality faces stem from leaders promoted for technical excellence without being equipped to lead humans. Emotional regulation, communication and self-awareness were assumed rather than taught. The consequences are real: teams feel unsupported, pressure travels downward, and guests experience the instability indirectly. Leadership is a skill set, not a title—and it can be developed.
The same evolution has occurred with sustainability. What once lived in marketing language is now expected operationally. Guests notice when sustainability informs decisions rather than decorating storytelling. Honest practice signals long-term thinking. Long-term thinking builds trust. And trust builds loyalty.
What guests are choosing today is not difficult to observe. They return to places that feel intentional. Where service adapts naturally. Where imperfection is acceptable. Where leadership shows up as stability, not authority. Hospitality is not losing relevance. It is shedding what no longer serves it.
Presence is the new luxury. It’s not a trend; it’s a return to fundamentals. Care cannot be automated. Connection cannot be scripted. Meaning cannot be staged.
It must be built deliberately, one human interaction at a time.
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