Hotel pricing power continues to weaken into 2026

Softer rate momentum signals a more competitive, demand-sensitive market for hoteliers

The trends outlined in the article point to a sustained decline in hotel pricing power that is now extending into 2026. While travel demand remains broadly resilient, travelers are increasingly price-sensitive and more willing to compare rates across hotels, short-term rentals, and destinations. Uneven regional demand, expanding accommodation supply, and less predictable event-driven spikes are limiting hotels’ ability to push rates. As a result, revenue performance is shifting away from broad rate growth toward more precise, market-led pricing and total revenue strategies.

Key takeaways

• Pricing power continues to erode: Compared to last year, hotels have less room to raise rates, with competitive pressure expected to persist into 2026.
• Short-term outlook remains constrained: Market indicators suggest limited near-term improvement in rate leverage across many destinations.
• Demand is more price-elastic: activity remains healthy, but travelers respond quickly to price changes, reducing tolerance for aggressive rate increases.
• Supply growth caps rate potential: New hotel openings and the ongoing expansion of short-term rentals continue to dilute pricing leverage.
• Event-led pricing is less dependable: Large events no longer guarantee sustained rate premiums, increasing the risk of overpricing and demand loss.
• Local market dynamics matter more: Pricing decisions increasingly depend on granular, real-time market data rather than historical year-over-year benchmarks.
• Profitability shifts beyond room rates: With rate growth under pressure, ancillary revenue, personalization, and disciplined revenue management become critical levers.

Source: Lighthouse

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