Deloitte: Gen Z, Millennials, and AI Drive Change as US Travel Faces Slower Growth in 2026 :: Hospitality Trends

The US travel industry is expected to experience cautious growth in 2026, with economic uncertainty, changing traveler demographics, increased use of generative AI, and evolving regulations all contributing to a shifting outlook, according to Deloitte’s 2026 Travel Industry Outlook.

Travel Demand: Signs of Cautious Growth

After a period of resilience following the COVID-19 pandemic, the US travel industry is showing signs of more conservative consumer behavior. Deloitte’s 2026 Travel Industry Outlook, based on surveys conducted in 2025, indicates that while over half of Americans planned to travel during the 2025-2026 holiday season—a post-pandemic high—many are cutting back on trip frequency, trip length, travel distance, accommodation class, and activities. This shift is attributed primarily to growing financial pessimism, which has extended to higher-income households.

Despite these changes, there is no indication of a significant drop in travel demand. However, if cautious spending becomes widespread among both consumers and businesses, travel metrics may plateau in 2026. The industry’s performance will depend on the evolution of consumer confidence, especially among high-income travelers. If financial anxiety increases, particularly among wealthier Americans, the industry could face a slower recovery. Conversely, a rebound in confidence could sustain the sector’s post-pandemic momentum.

Premium and Luxury Travel: Facing New Pressures

Premium and luxury travel segments, which have led the industry’s recovery, may encounter challenges in 2026. High-income Americans, once a reliable source of demand for premium offerings, are showing increased financial concern. Deloitte’s research found that the proportion of higher-income travelers ($200,000+ annual income) with negative financial sentiment rose from 9% in 2024 to 15% in 2025.

This group, referred to as the “cautious class,” plans fewer, more conservative trips. Corporate travel is also showing signs of slowing, with frequent business travelers expecting to travel less often and potentially reducing their spending on premium options. If these trends continue, airlines and hotels that have invested heavily in premium products may experience demand softening or plateauing, particularly in the mass-market luxury segment. The ultra-luxury segment, however, appears more insulated from economic pressures, with high average daily rates and stable occupancy.

Generational Shifts: Gen Z and Millennials Lead Travel Demand

As of late 2025, Gen Z and millennials accounted for half of all U.S. travelers. Gen Z’s share of holiday travelers increased from 8% in 2024 to 14% in 2025. These younger generations are influencing travel planning and booking behaviors, sustainability preferences, and spending patterns.

– Planning and Booking: Gen Z and millennials are the largest users of social media for trip planning, with over half using these platforms, compared to lower rates among Gen X and baby boomers.

– Sustainability: 38% of millennials and 42% of Gen Z travelers report taking sustainability-related actions, such as purchasing carbon offsets or selecting hotels with sustainability certifications.

– Spending: Even as overall travel budgets declined in 2025, Gen Z and millennials planned more trips than older generations, though they remain cost-conscious.

Differences exist between the two groups. Millennials are leading adopters of generative AI for trip planning and associate luxury with family and dining experiences. Gen Z prioritizes room comfort and amenities and uses short-form social video as a primary planning tool. Both groups are shaping the future of travel demand and preferences.

Generative AI: Transforming Travel Planning and Personalization

Generative AI is rapidly changing the travel industry, with nearly a quarter of travelers using AI tools for trip planning by late 2025—three times the rate in 2022. This adoption is occurring even before fully integrated AI-powered discovery and booking platforms are common.

AI offers travelers greater personalization and automation, allowing them to define preferences and delegate planning tasks. For travel providers, AI enables real-time personalization of offers, dynamic pricing, and improved merchandising. While the immediate impact on booking experiences may be limited, the broader implications could include changes in how travel products are marketed, priced, and distributed. Both younger and older travelers are adopting AI tools, signaling broad-based change.

Regulatory and Policy Developments: Key Issues for 2026

Policy and regulatory changes are expected to shape the travel industry in several ways in 2026:

– Visa and Entry Requirements: New US regulations include stricter visa interview waivers, a $250 “visa integrity fee,” and requirements for some visitors to provide social media history. These changes come as the US seeks to reverse a decline in inbound tourism and prepares for major events like the FIFA World Cup.

– Data Privacy and Consumer Protection: The rise of digital travel and AI-driven personalization is increasing the importance of data privacy regulations. The European Union’s GDPR and new US state-level rules are affecting how travel companies collect, use, and share consumer data. Enforcement against hidden fees and evolving requirements is creating a complex regulatory environment.

– Climate Regulation: While pressure for sustainability remains, some climate reporting deadlines have been postponed in the US and EU. However, state-level requirements in the US persist, and travel companies must monitor ongoing developments.

Outlook for 2026: Uncertainty and Transformation

The travel industry’s trajectory in 2026 is marked by uncertainty. Segments that were expected to experience a strong recovery, such as corporate and international inbound travel, may continue to face challenges. Sectors that benefited most from recent growth, such as destination resorts and midscale hotels, could also face new pressures if cautious consumer behavior persists.

Despite these challenges, opportunities exist for companies that adapt to changing traveler needs, especially those of Gen Z and millennials. The adoption of generative AI presents new avenues for targeting high-value demand and personalizing offers. The industry’s ability to respond to economic, demographic, technological, and regulatory shifts will be crucial in determining its performance in the coming year.

Methodology

Deloitte’s 2026 Travel Industry Outlook is based on findings from three primary research efforts conducted in 2025: the Summer Travel Survey, Holiday Travel Survey, and Corporate Travel Study. The research draws on representative samples of U.S. leisure travelers and business travelers in 2025, supplemented by secondary data and industry expert insights.

Discover more at Deloitte.