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JW Marriott/Ritz-Carlton Los Angeles L.A. LIVE was the host hotel for the 2026 Americas Lodging Investment Summit – Image Credit Marriott International
Forecasters predict that while US hotels may see slight growth in average daily rates in 2026, ongoing cost pressures and shifting demand patterns—especially outside key event markets—are expected to challenge industry profitability and require a broader approach to market analysis and competition.
2026 Hotel Performance Forecast: Modest Growth, Persistent Cost Pressures
Bryan Wroten of CoStar reported that, according to Industry analysts at the 2026 Americas Lodging Investment Summit, a cautious outlook for US hotel performance in 2026 was presented. Forecasts from STR and Tourism Economics show that revenue per available room (RevPAR) is expected to grow by just 0.6% for the year. Average daily rate (ADR) growth is projected at 1%, while inflation is anticipated to be 2.4%. This scenario indicates continued margin pressure for hotel operators, as rate increases are unlikely to keep pace with rising costs.
Isaac Collazo, senior director of analytics at STR, noted that these pressures have persisted for the past 18 months. He described the demand landscape as split into three segments: growth in higher-end hotels, declines at the lower end, and flat performance in the middle. Collazo emphasized that, while 2026 may be marginally better than 2025, it is not expected to be a strong year overall.
Impact of Major Events and Market Variations
A significant factor influencing the 2026 outlook is the FIFA World Cup, which will be hosted in 10 of the top 25 US hotel markets. Collazo indicated that these cities will see a notable boost in demand. Excluding these markets, the national RevPAR would likely turn negative for the year. This underscores the importance of major events in driving hotel performance, while many other markets may see stagnation or decline.
Cindy Estis Green, CEO of Kalibri Labs, added that the overall flatness in average rates is partly due to declines in discount segments, such as bookings from online travel agencies (OTAs) and government rates, offsetting gains in corporate and group bookings. Kalibri Labs projects that US hotel RevPAR could end 2026 between -1.5% and +1%.
Distribution Channels and Shifting Demand
Estis Green observed a renewed competition between direct brand websites (Brand.com) and OTAs, while traditional property direct and voice channels continue to decline. The upcoming World Cup is expected to increase OTA bookings due to higher international demand. Government-related hotel demand may rise if defense spending increases, but a full recovery from last year’s drop is unlikely.
Other discount categories, such as AAA and AARP rates, have grown, and these bookings tend to be more profitable than bookings on some third-party channels. Corporate demand, however, is expected to remain flat or slightly down, with growth concentrated among larger companies.
Profitability and Market Analysis Strategies
Collazo reported that only about 30% of US hotels grew RevPAR above inflation in 2025, with luxury hotels more likely to do so. He noted that inflation is not expected to decline significantly in 2026, so cost pressures will persist, though they may not worsen relative to the previous year.
Both Collazo and Estis Green stressed the need for hoteliers to expand their market analysis. Traditional competitive sets may no longer capture all opportunities, especially as the number of hotels in many markets has increased. Estis Green recommended using broader data sources and tools, including AI, to identify opportunities by rate category and better understand net revenue.
Competition from Alternative Accommodations
The rise of short-term rentals and the cruise industry is affecting hotel demand. Collazo pointed out that, while total accommodations (hotels plus short-term rentals) increased by about 6 million room nights in 2025, hotel demand alone declined. This suggests that growth in travel is being absorbed by alternative lodging options rather than traditional hotels.
Lower-tier hotels have seen the greatest drop in demand, which Collazo linked to broader economic factors. Higher living costs are pushing some travelers, particularly those with lower or middle incomes, toward more affordable alternatives.
Global Trends and the Role of Artificial Intelligence
Mitra Sorrells, senior vice president of content at Phocuswright/Phocuswire, provided a global perspective. She projected a compound annual growth rate of about 4% in US hotel bookings through 2028, compared to higher rates in India, Latin America, and the Middle East. While the US remains the largest market, emerging regions are growing faster and may increasingly influence global travel demand.
Sorrells also highlighted the growing role of artificial intelligence (AI) in travel planning. AI tools are becoming more popular than traditional search engines, especially among frequent and higher-spending travelers. This shift means hotels must optimize their content and reviews for AI-driven platforms, as visibility and recommendations are increasingly determined by these technologies rather than by search engine rankings.
In summary, US hotels are likely to see modest rate growth in 2026, but ongoing cost pressures and shifting demand patterns—both within the industry and from alternative accommodations—will challenge profitability. Industry experts recommend a broader, data-driven approach to market analysis and competition, as well as adaptation to new technologies and global trends.
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