➤ Key Highlights
Total salaries, wages and benefits paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Lodging Association, shared with Hotel Dive.
In 2026, that figure is projected to climb to $131 billion, representing a roughly 3% year-over-year increase, per AHLA.
Overall, hotel labor costs have increased 15.3% from 2019 to 2025, outpacing the 12.8% growth in total operating revenue, according to AHLA.
Salaries, wages and payroll-related expenses paid by hotels now account for more than 32% of total revenue, according to AHLA.
In 2026, union negotiations will be “front and center” in New York City, where the New York Hotel and Gaming Trades Council’s union contract with the Hotel Association of New York City is set to expire in July.
According to PwC’s 2025 Holiday Outlook report, 76% of millennials said they’re likely to use AI for travel recommendations.
In 2025, Hyatt reduced staff by approximately 30% across its guest services and support teams “in response to the evolving nature of guest inquiries and shifting business needs,” per the company.
U.S. hotel labor costs have risen significantly, with salaries, wages, and benefits reaching $127 billion in 2025 and projected to grow to $131 billion in 2026. Labor expenses now exceed 32% of hotel revenue, and major union negotiations are upcoming in New York City. Meanwhile, guest preferences are shifting, with a majority of millennials expressing interest in using AI for travel
This event illustrates how guest demand in hospitality is increasingly shaped by evolving expectations and engagement with digital tools. The widespread adoption of AI among younger travelers points to a broader transformation in how guests interact with hotel brands and make travel decisions. As digital engagement becomes more central, hospitality providers are prompted to rethink service models and guest experiences. These shifts highlight the ongoing importance of aligning business models with the changing ways in which guests discover, book, and experience hospitality services.
⚠️ Why it matters
For CRE360’s audience, understanding how demand patterns are shifting due to changes in guest expectations and digital engagement is essential for anticipating operational and investment priorities. The growing use of AI in travel planning, combined with evolving labor and service models, may prompt stakeholders to adapt their offerings and workforce strategies. Staying attuned to these demand-driven changes helps position hospitality assets and developments for relevance in a dynamic market environment.
Stop Reading Headlines
Start Understanding the Market
➤ TAKEAWAY
Ongoing monitoring of traveler preferences and digital adoption will be important as hospitality businesses respond to these shifts. Union negotiations and further adjustments to staffing models could occur as operators align labor with evolving guest needs. Market participants may continue to explore new service offerings and engagement channels to meet changing expectations and capture demand.
