Walking the floor and sitting in sessions at my first Lodging Conference last week, I heard two stories at once. One is about a very good year; the other is about how little of that good year is making it to the owner's bottom line.
I'm new to hospitality – just one month into my role as CEO of Otelier – so I went to Phoenix last week with one goal: listen. I spent most of my time at the Otelier booth meeting customers and prospects, slipped into as many sessions as I could, and filled a notebook with what owners, operators and asset managers say is keeping them up at night.
Three themes came up again and again:
By most measures, 2026 has been a strong year for hotels. A relatively healthy economy and the World Cup have kept demand up, and nobody I spoke with expects a sharp drop-off heading into 2027.
The problem is what happens below the top line. Labor costs continue to outpace RevPAR growth, and insurance costs keep climbing. That squeezes NOI – the cash profit left for hotel owners after the brand takes its fees, the management company takes its share, and everyone else gets paid.
Craig Smith, CEO of Aimbridge Hospitality, put it succintly on an ownership panel: "Even this year, as great as things are, you look at inflation and what it's done. It's still taken a pretty big chunk out of that great RevPAR increase."
The wage numbers in some markets are hard to ignore. Jeff Wagoner, president and CEO of Outrigger Hospitality Group, said the average starting wage is $32 an hour in Waikiki, according to Lodging Conference coverage in Hotel Management.
One bright spot: luxury. The high end is outperforming, and most people I talked with expect that to continue, fueled by a K-shaped economy and the large generational wealth transfer now underway.
Coming from outside the industry, I was struck by how many people described a great revenue year and a frustrating profit year in the same breath. In this environment, the operators who win will be the ones who see their costs clearly and early enough to act on them.
AI came up in nearly every session I attended. Operators are adopting it in some form, and many say it's making their teams more productive. What I didn't hear was anyone pointing to lower labor costs or a better bottom line because of it.
Keith Pierce, CEO of Sonesta International, said the company is using AI at the property and enterprise level across housekeeping, scheduling, analytics and legal. His view is that the biggest gains won't come from general-purpose chatbots. "There are going to be applications that are going to be specific to all different types of disciplines," he said.
At Outrigger, AI now handles much of the contact center's service volume.
Ayesha Molino, COO of MGM Resorts, described using AI to forecast what large groups will do on property. "It could be as simple as opening the gym two hours earlier or keeping it open two hours later or making sure that you have an additional breakfast venue open," she said.
Still, outside those panels, I didn't see or hear about many tangible, direct use cases with dramatic financial impact. Some of the AI conversation centered on robots, which tells you where a lot of the industry still is – excited, curious and not yet sure what it adds up to.
Productivity gains only matter if they show up somewhere you can measure. Saving a manager three hours a week is great, but if you can't connect it to labor hours, cost per occupied room or flow-through, it stays a nice story. That's all the more reason to know your baseline before you layer AI on top of it.
The most pointed conversation I heard all week was between owners and brands – in public, on stage.
Shai Zelering, managing partner of Brookfield's Real Estate Group, called the shift to asset-light brand models "the worst thing that happened to our industry," according to coverage in CoStar Hotels. Greg Friedman, managing principal and CEO of Peachtree Group, was more measured but made the same point about economics. "The brands could always probably do more," he said. "At the end of the day, there's a lot of franchise fees that we're paying as owners to the brands."
What is raising the stakes is AI-driven search. If more travelers plan trips through large language models, where do they ultimately book – and does that traffic still flow through brand websites?
When distribution gets less predictable, owners and operators need their own view of where business comes from, what it costs and what it nets. That kind of independent visibility gives you leverage in any brand conversation.
The sessions were about AI, brands and margins. The conversations at our booth kept coming back to measuring performance across all three.
Hotel management groups large and small told me they still want clean, reliable data – and many still struggle to get it from their current technology providers. You can't defend NOI if your labor and cost data arrives late or doesn't reconcile. You can't prove AI is paying off without a trustworthy baseline. And you can't negotiate from strength with a brand if you don't have your own picture of performance.
Data is the foundation. It's what unlocks every AI opportunity the industry is excited about, and it's where Otelier spends its days – helping operators trust the numbers behind the decisions.
I left Phoenix with a full notebook and a clear sense of the job ahead. Demand will likely stay healthy into 2027, while costs will keep pushing. AI will keep moving faster than most of us expect. The operators who come out ahead will be the ones who start with clean data and build from there.
If we didn't get a chance to connect in Phoenix, drop me a message on Linkedin – I'd like to hear what you're seeing in your markets.
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