AHLA Projects Hotel Industry Growth in 2026 Amid Major Events and Cost Pressures

The American Hotel & Lodging Association’s 2026 State of the Industry report forecasts increased hotel demand and economic contributions driven by major events, while highlighting ongoing cost challenges and the need for supportive policy measures.

Overview of the 2026 State of the Industry Report

The American Hotel & Lodging Association (AHLA) has released its 2026 State of the Industry report, providing a detailed analysis of hotel sector performance, economic impact, and future outlook. According to the report, the hotel industry is expected to see improved conditions in 2026, supported by significant events such as the FIFA World Cup and the America250 celebrations. These events are anticipated to drive increased travel demand and contribute to the industry’s recovery and growth.

Economic Contributions and Projections

The report highlights the hotel sector’s substantial economic contributions. In 2025, hotels generated $85.1 billion in local, state, and federal taxes, marking an increase of $1.7 billion from the previous year. This figure is projected to rise further, reaching nearly $87 billion in 2026. Hotel guest spending is also expected to increase, with projections indicating nearly $805 billion in 2026, a 1.7% rise from 2025.

Despite these positive trends, the industry continues to face challenges related to operating expenses. Gross operating profit per available room (GOPPAR) remains at approximately 90% of 2019 levels, primarily due to rising costs. Wage and benefit expenses are also increasing, with the industry paying nearly $128 billion in 2025 and projected to approach $131 billion in 2026.

Workforce Trends and Employment Outlook

The hotel industry remains a significant employer. In 2025, hotels supported more than two million jobs, and this number is expected to grow by over 30,000 in 2026. Direct hotel operations employment is projected to reach approximately 2.2 million jobs next year. The report notes that the industry continues to invest in hiring and workforce development, which is essential for meeting the anticipated rise in consumer demand.

Travel Demand and Market Recovery

Domestic leisure travel remains the largest segment of U.S. travel activity, according to the report. However, international inbound travel remains below pre-pandemic levels, posing a challenge for destinations that depend heavily on overseas visitors and high-spending travelers. The report emphasizes that while domestic demand has been relatively stable, this stability does not equate to a full recovery to pre-pandemic fundamentals, especially given inflation and higher expenses.

Industry Challenges and Policy Considerations

The AHLA report underscores that converting the industry’s resilience into sustained growth will require a supportive operating and policy environment. Key areas include measures to facilitate travel, address ongoing cost pressures, and strengthen workforce development. The report suggests that continued investment in these areas will be crucial for the industry to fully capitalize on the opportunities presented by major events and rising consumer spending.

Conclusion

The 2026 State of the Industry report from AHLA provides a comprehensive assessment of the hotel sector’s current status and future prospects. While the industry is projected to benefit from increased demand driven by large-scale events and a growing workforce, it continues to face significant cost pressures and an uneven market recovery. The report calls for targeted policy support to help the industry achieve sustained growth and maximize its economic contributions in the coming years.