LOS ANGELES — U.S. hoteliers should expect to see rate growth in 2026, but cost pressures will continue to challenge profitability.
During "The Numbers: What to Expect in 2026 and Beyond" panel at the 2026 Americas Lodging Investment Summit, hotel industry forecasters laid out their companies' expectations for the year.
The full-year 2026 forecast from STR and Tourism Economics expects 0.6% revenue-per-available-room growth for U.S. hotels. The most important piece to look at is the average-daily-rate side, which projects 1% growth for the year, said Isaac Collazo, senior director of analytics at STR. The rate of inflation is expected to be 2.4%.
“It’s going to be pressures on the margins, as we’ve seen in the past year, year and a half, because we’re not seeing that rate growth,” he said.
When looking at the forecast by hotel chain scale, it’s not just bifurcation of demand but trifurcation, Collazo said. There’s growth in the higher-end segments, negative trajectory at the bottom and flat in the middle.
“We still believe it’s going to be a better year than 2025 but not a stellar year,” he said. He added that World Cup matches, though only in 10 of the top 25 U.S. cities, will be the main demand drivers.
“If you just eliminate those 10 markets, it's a 90-basis-point difference,” Collazo said. “So, without those 10 top 25 markets, you would see negative U.S. RevPAR in 2026.”
One of the main issues with U.S. hotel rates is not that the average rate has been flat but that the discount categories, such as online travel agencies and government, were down enough to counter growth in corporate and group, said Cindy Estis Green, CEO of Kalibri Labs. Kalibri projects U.S. hotel RevPAR to end 2026 in the range of -1.5% to +1%.
“It really has to do with the exchange,” she said. “You just have more volume at the lower end.”
Within the distribution channels, the horse race is back between the Brand.com and OTA booking channels while property direct and voice channels continue their 10-year-long decline, she said. With the World Cup games coming up, Estis Green expects more of a bump in OTA bookings because of the international inbound demand.
Kalibri expects government-related hotel demand to increase this year because so much was cut last year, she said. If the defense spending bill passes, that will help demand return as well, but even so, that 13% drop from last year won’t fully come back.
In some other categories, such as AAA and AARP, advanced-purchase forms and other discount categories, there’s been healthy growth, Estis Green said. From a profitability point of view, that business is more profitable than some of the third-party business.
Corporate demand will be a bit flat overall to possibly a bit down, she said. Even though global distribution systems may grow, that’s more of the Fortune 500, high end of the market. Following the pandemic, there were a lot of small- and medium-sized companies that started growing.
“Now with some of the tariff and other economic turbulence, that has come down some,” she said.
When reviewing how many U.S. hotels grew RevPAR above the rate of inflation in 2025, Collazo said he found that roughly 30% of them achieved this feat. Luxury hotels had a higher probability of growing RevPAR that much, but they weren’t the only ones that did.
“It shows there is still growth out there,” he said. “You cannot become myopic.”
STR doesn’t expect inflation to abate much in 2026, dropping from 2.7% to 2.4%, so there will continue to be cost pressures that will push margins down but not as much as last year, he said. It’s the most difficult forecasting environment in decades because every day something new and unexpected happens, including the decoupling of the trajectory of hotel demand and gross domestic product.
Because the U.S. hospitality industry is so profit-challenged by rising expenses and muted demand, it’s important for hoteliers to understand all the opportunities in their markets, Estis Green said. The legacy view has been to have primary and secondary competitive sets, but those don’t reflect all the opportunities in a market and cause near-sightedness.
Having the ability to cast a wider net and use the tools available, including AI, to find those opportunities by rate categories can translate to having a competitive set for each rate category, she said. Some of the narrowly focused competitive sets worked when there were 20 hotels in a market to let them look at five or 10, but now there are hundreds.
“We have to operate differently,” she said.
It’s about understanding the opportunity and then being able to see not just top-line revenue but net revenue for what actually flows through, Estis Green said. To pile up top-line revenue without anything flowing through leads to “you start chasing your tail,” she added.
Collazo agreed that having a wide net is necessary. Hoteliers need to look outside just hotels, because the cruise industry is taking demand as are short-term rentals.
“If you look at just hotel demand and short-term rentals demand this year, in 2025 together, total accommodations were up, about 6 million room nights, but hotel demand was down,” he said. “That means the entire gain in total accommodations was short-term rentals.”
Taking a broader look will create a better understanding of what’s happening in the total travel industry, Collazo said. People are traveling, but they didn’t stay in hotels as much in 2025 as they did in years before.
A look at overall demand in the U.S. hotel industry shows it fell among the lower hotel tiers, he said.
“You can tie that back to economics,” Collazo said. “It’s the higher cost of living that may be actually pushing folks to short-term rentals because, again, middle- and lower-income individuals have a higher cost of living. They don’t have that discretionary funds that they once had before.”
There’s no one data set to turn to, he said. It takes looking at multiple sources of information and different parts of the overall travel picture to see it within context.
The U.S. is projected to have a compound annual growth rate in hotel bookings of about 4% through 2028, said Mitra Sorrells, senior vice president of content at Phocuswright/Phocuswire by Northstar. India and Latin America are expected to see growth of 10% while the Middle East will be 8%. The U.S. is still the largest market among these, the other growth markets are meaningful in scale.
The Middle East is projected to reach about $136 billion in gross bookings in 2028, she added.
“The result is that these markets are not just growing, they are accelerating faster than the mature markets, and they are increasingly shaping where the next wave of travel demand comes from,” she said
Artificial intelligence is rapidly becoming a mainstream trip-planning tool, stealing share from traditional search engines, namely Google, Sorrells said.
“That trend is only going to continue,” she said.
The shift started to grow in early 2025 when the usage for traditional searches dropped sharply when generative AI tools, namely ChatGPT and Google Gemini, showed a meaningful jump over a short period, Sorrells said. It’s not just the youngest travelers driving this change as millennials are using AI because it helps them save time and cut through information overload.
Travelers using AI tend to also be wealthier and more frequent travelers who spend significantly more for hotels, she said.
“The implication is clear: You are not just competing for visibility on Google,” Sorrells said. “You are competing to be recommended by AI, and that means your content, your reviews, your value proposition, really have to be easy for these tools to understand.”