U.S. hotel performance faces cautious growth outlook in 2026

Cost pressures, shifting demand patterns, and AI-driven travel discovery are reshaping profitability expectations

U.S. hotel performance in 2026 is expected to remain stable but challenging, with modest rate growth offset by persistent cost pressures and evolving demand patterns. Industry forecasts suggest limited revenue-per-available-room growth, while inflation and changing distribution dynamics continue to affect margins. Demand trends vary significantly by segment, with luxury hotels outperforming midscale and lower tiers. At the same time, AI-driven travel planning, alternative accommodations, and global market shifts are increasingly influencing how travelers book hotels.

Key takeaways

• Modest revenue growth expected: U.S. hotel RevPAR growth is forecast at around 0.6% for 2026, driven mainly by slight ADR increases rather than stronger demand.
• Margin pressure persists: Inflation and rising operating costs are likely to continue compressing profitability despite stable pricing.
• Segment divergence continues: Higher-end hotels are expected to grow, lower tiers may decline, and midscale performance is likely to remain flat.
• Distribution dynamics shifting: Competition between brand websites and OTAs is intensifying, while traditional direct channels such as voice bookings continue to decline.
• Alternative accommodations gaining share: Short-term rentals captured most accommodation demand growth in 2025, highlighting competitive pressure on hotels.
• AI reshaping travel discovery: Increasing use of generative AI for trip planning means hotels must optimize content and positioning to be recommended by AI systems.
• Global demand growth uneven: Emerging regions such as India, Latin America, and the Middle East are projected to grow faster than mature markets like the U.S.
• Profitability focus evolving: Hotels are encouraged to analyze net revenue and broader competitive sets, using data and AI tools to identify overlooked demand opportunities.

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