Value, AI, and Income Segmentation Shape U.S. Hospitality Outlook for 2026 According to Colliers

Market Overview: Renewed Momentum Amid Cautious Growth

According to the Colliers 2026 U.S. Hospitality Outlook Report, the U.S. hospitality industry is projected to enter 2026 with renewed, yet measured, momentum. Improved debt market liquidity and selective equity investments are supporting a rebuilding of investment activity. Capital is increasingly targeted, with a focus on both high-quality assets and properties facing significant challenges, as investors seek opportunities near cyclical turning points.

Demand Trends: Segmented Growth and International Headwinds

Lodging demand in the top 50 U.S. markets is forecast to grow by 1.3% in 2026, which is below the long-term pre-pandemic average of 2.0%. This moderate growth is expected to return to the historic trend by 2027. The market is characterized by segmentation along income lines. Higher-income households, particularly those in the top 10% of earners, continue to support luxury and upper-upscale hotels. In contrast, middle-income travelers are driving demand for midscale and economy accommodations, prioritizing affordability.

International travel remains a challenge. The number of international visitors fell by 2.5% in 2025, with arrivals down 3.5% as of April 2026. Factors such as political rhetoric around tariffs and immigration have contributed to this decline, especially in border and coastal markets. However, domestic air travel has shown resilience, with Transportation Security Administration (TSA) throughput in 2025 averaging 6.8% above 2019 levels and continuing to trend upward into 2026.

Pricing and Value: Increased Competition and Consumer Sensitivity

Average daily rate (ADR) growth is projected at 1.35% in 2026, reflecting a competitive environment as travelers become more price-conscious. The proportion of consumers prioritizing “value for money” in their travel decisions rose from 83% in 2024 to 90% in 2025. This trend is leading hotel operators to emphasize loyalty programs, bundled offerings, and value-driven pricing to maintain occupancy and market share. ADR growth is expected to gradually improve after 2026 as demand stabilizes.

Major summer destination markets such as New York City, Boston, and Seattle may see opportunities to maximize ADR during events like the FIFA World Cup 2026, although occupancy gains are expected to be limited due to the timing of these events within peak travel seasons.

Occupancy: Stabilization and Slow Recovery

Occupancy rates in the top 50 U.S. markets are forecast to remain steady at 64.1% in 2026, unchanged from 2025 and below the 2019 level of 69.5%. Modest improvements are anticipated over the next several years, with occupancy projected to reach 65.3% by 2029. The pace of new hotel supply is slowing, which may help support gradual occupancy gains.

Capital Markets and Technology: AI Drives Structural Change

Investor sentiment is improving as previous challenges recede and delayed transactions return to the market. Cross-border investors are monitoring currency fluctuations and pricing for potential reentry. Artificial intelligence is emerging as a significant driver of change, affecting marketing, revenue management, and operations. AI adoption among Millennials and Gen Z increased from 10% in 2024 to 18% in 2025. Since early 2025, over $1 billion in venture capital has been invested in hospitality technology, with 2026 investment on track to surpass previous years.

Conclusion

The U.S. hotel market in 2026 is expected to experience modest growth, shaped by value-driven consumer behavior, segmented demand, and increased technology adoption. While challenges remain, especially regarding international travel and pricing pressure, gradual improvement is anticipated in the years ahead.

The full report is available at Colliers.