In a time of geopolitical uncertainty, rising labor costs and inflation, hotel executives at the annual NYU International Hospitality Investment Forum were guardedly optimistic – and they seemed to have reason for that view.
A Surprising Shift in Revenue Forecasts
In its presentation, CoStar, the industry’s data provider, raised its U.S. revenue per available room (RevPAR) forecast for 2026 to 2.8% growth, up dramatically from the 0.6% projection in January. In 2025, U.S. hotel RevPAR was down 0.3%
And that heightened optimism seems to extend across segments – from luxury to economy - although there was still talk of a "K-shaped" recovery, with luxury leading the way.
Jan Freitag, national director of hospitality analytics at CoStar Group, said, "We're projecting that this year is actually very much a reversal from last year, and that room demand is going to continue to grow, and that gives us some pricing power."
The Push and Pull of Consumer Spending
The news was not all positive. Adam Sacks, president of Tourism Economics, said consumer sentiment reached its lowest level in recorded history in April.
The price of gas remains above $4 per gallon in the U.S., significantly affecting the disposable income of the bottom half of earners.
Consumer spending has steadily risen, however, indicating Americans haven't yet hit a breaking point opening their wallets for experiences, including travel, he said.
From "K-Shaped" to a "C-Shaped" Economy
On a panel of CEO’s, leaders were upbeat about global travel demand. Christopher Nassetta, CEO of Hilton, saw a "C-shaped economy” – with the C standing for convergence – emerging as the midscale and economy segments begin to recover alongside continued strength in upscale and luxury segments.
"It's not politically advantageous for people to be talking about things getting better -- people want to talk about a 'K' economy because the political system is so divisive," said Nassetta. "I'm just offering you hard data that says people in those other price points are traveling more. They're traveling more on weekends, they're traveling more on weekdays, they're traveling more for vacations, they're traveling more for business."
Nassetta said the recovery in the lower-priced segments is being driven by large-scale federal infrastructure spending, a “reshoring” of manufacturing and construction activity around AI data centers and other facilities.
"Building the power facilities and building the bridges and the tunnels and the ports -- that is all getting done by the middle class," he said.
Navigating Geopolitical Headwinds
But geopolitical factors are affecting Accor, which is based in France and has a significant presence in the Middle East. Sebastien Bazin, CEO, said the group's diverse global footprint has helped the company weather some of that impact. "Half the customers that we lost who no longer go to Dubai, we'll be gaining them in Egypt, Morocco and other places," he said.
Elie Maalouf, CEO of IHG Hotels & Resorts, estimated that the Middle East region, which accounts for roughly 5% of its business, was down around 50% at its peak, with Saudi Arabia holding up better than most markets. He sees that recovery is already underway.
"Business travel is coming back, leisure's coming back with good rates," Maalouf said. Airlines are busy. It's going to be gradual, but there's no doubt, given the level of investment and leadership in that region, it will come back."
The AI Elephant in the Room
Inevitably, AI was a recurring theme on the panels and in interviews with TravelPulse. Bazin said, "My biggest stumbling block is that I know [artificial intelligence] will replace anything administrative and automated. What I need to decide is that probably a third, if not 40%, of my jobs at the corporate level will be replaced by AI technology, and you're talking about 2,000 people. I need to warn them that what you do today is not what you'll be doing 18 months from now. And that's fine, they don't need to be scared, but I need to find a place for them."
Warren Fields, CEO of Pyramid Global Hospitality, a hotel management company, said, “AI is not going away and people are not going away. You have to have people to run our business successfully. I don’t believe AI bots will take over our industry.”
Redefining Luxury and Branded Residences
There were several panels on luxury travel. In a panel called Premium Demand, Real Returns: Luxury, Lifestyle and Hybrid Hospitality, Tiffany Cooper, head of development, Americas, for Mandarin Oriental, said, “We are redefining luxury where people want the feeling of being connected to the community, where they want more meaning in their lives. Luxury is less about opulence and more about anticipating the needs of people, so they leave with memorable experiences.”
The panel discussed the rapid growth of luxury-brand residences to the point where it’s impossible to develop a luxury project without them. Cooper said there are 1,077 branded residential projects worldwide, and the U.S. accounts for almost a quarter of that share. “It’s so critical to making a project work,” she said, “especially in the ultra-luxury space." But even in lower-priced categories, Cooper said, there is strong demand for branded residences in lifestyle and upscale properties.
Panelists also said there has to be an emotional connection to the brand. John Paul Nichols, CEO of Club Quarters, said, "Whatever we do has to work for the person in the community. I want to mirror what's around me and bring it inside. That creates a sense of belonging. We want the city to be part of the hotel and not the other way around. The trick is to do that cost-effectively.”
Shifting Focus: Community, Loyalty, and World Cup Buzz
In an interview, Larry Cuculic, CEO of BWH Hotel Group, which operates Best Western as well as the luxury WorldHotels, said 2026 will be an important year for the company on several fronts. One is that the loyalty programs for Best Western and WorldHotels will be merged to simplify members' plans.
In addition, said Cuculic, the company will launch a total revamp of its online presence “so it will be more about community than commodity.” Rather than just information about the hotel, there will be extensive content about the destination.
There was also buzz at the conference about what seems to be a disappointing level of bookings for the FIFA World Cup. However, Cuculic said that it will depend on who’s playing and if countries with strong fan bases advance in the tournament, there will be a surge of interest. He said his company alone has 200 hotels within 25 miles of World Cup venues.
New Models: Glamping, Memberships, and Condo Hotels
A product that seemed to create buzz as well as is “outdoor hospitality" – i.e., glamping and the growing number of variations on that – luxury tents, containers, etc. Paul Sacco, chief growth and development officer for PM Hotel Group, a management company, told TravelPulse that “outdoor hospitality is a real growth mode,” including a container resort managed by PM called Reset near Joshua Tree National Park.
World Hotels also has an outdoor hospitality brand, said Cuculic. It is called WorldHotels Backdrop. He said it is a brand that tour operators can easily leverage.
Membership clubs are also a trend, said Sacco. He said the idea is to maximize a hotel’s revenue, whether through food and beverage, co-working spaces, or other possibilities.
Jake Pinsof, vice president of luxury development for Marriott International, said the company is also interested in the membership-based model. “It’s all about driving revenue to the hotel,” said Pinsof. “You can’t just build beautiful hotels. We are focusing on trevPAR – total revenue per available room – not just room revenue."
Still, one more trend, said Sacco, is the return of condo hotels, which were popular earlier this century but ran into financial and other problems. He said there are many smarter models now that accentuate the hospitality experience for guests. “They have figured out how to do it,” he said.
For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.
Topics From This Article to Explore
