What's Happening?
The U.S. hospitality industry is projected to experience modest growth in 2026, according to the Colliers 2026 U.S. Hospitality Outlook Report. The report indicates that improved debt market liquidity
and selective equity investments are fostering a rebuilding of investment activity. The focus is on high-quality assets and properties facing challenges, as investors seek opportunities near cyclical turning points. Lodging demand in the top 50 U.S. markets is expected to grow by 1.3% in 2026, with a return to historic trends anticipated by 2027. The market is segmented along income lines, with higher-income households supporting luxury hotels, while middle-income travelers drive demand for midscale accommodations. International travel remains a challenge, with a decline in international visitors due to political rhetoric around tariffs and immigration. However, domestic air travel shows resilience, with TSA throughput in 2025 exceeding 2019 levels.
Why It's Important?
The report's findings highlight the evolving dynamics in the U.S. hospitality sector, emphasizing the role of artificial intelligence and value-driven consumer behavior. AI is becoming a significant driver of change, affecting marketing, revenue management, and operations. The adoption of AI among Millennials and Gen Z increased from 10% in 2024 to 18% in 2025, with over $1 billion in venture capital invested in hospitality technology. This trend suggests a shift towards more technologically integrated operations, which could enhance efficiency and customer experience. The focus on value and income segmentation reflects changing consumer priorities, with a growing emphasis on affordability and value for money. This could lead to increased competition among hotel operators to attract price-conscious travelers.
What's Next?
Occupancy rates in the top 50 U.S. markets are forecast to remain steady at 64.1% in 2026, with modest improvements expected over the next several years. The pace of new hotel supply is slowing, which may support gradual occupancy gains. Major summer destination markets like New York City, Boston, and Seattle may see opportunities to maximize average daily rates during events like the FIFA World Cup 2026. However, occupancy gains are expected to be limited due to the timing of these events within peak travel seasons. The continued adoption of AI and value-driven strategies will likely shape the industry's trajectory, with potential implications for investment and operational practices.
