If you only looked at the headlines coming out of this year's NYU International Hospitality Investment Forum, you'd probably feel pretty optimistic about the state of the hotel industry.
The biggest news from NYU this week was the upward revision to the 2026 U.S. hotel forecast – CoStar and Tourism Economics increased their RevPAR growth forecast from 0.6% to 2.8%, driven by stronger-than-expected demand, improving occupancy projections, and continued constraints on new supply. Demand growth expectations increased from 0.4% to 1.3%, occupancy projections rose from 62.1% to 62.8%, and ADR growth expectations doubled from 1% to 2%.
The tone of the conversation felt different than it did even three months ago at the Hunter Conference.
But as I read through the NYU coverage and compared it with the conversations we're having every day with hotel owners and operators, I kept coming back to the same conclusion.
Demand is improving. Profitability remains the challenge.
Revenue growth has returned. That's good news. But inflation and operating costs continue to rise alongside it. Labor remains the largest expense for most hotels. Insurance costs remain elevated. Food, utilities, fuel, and other operating expenses continue to pressure the bottom line.
"How do we make margins stick?” asked CoStar's Jan Freitag, according to coverage in Hospitality Investor. This is exactly what hotel operators are wrestling with today.
Even if the industry achieves 2.8% RevPAR growth this year, inflation is still expected to outpace revenue growth. That means operators can't rely on demand alone to improve financial performance.
That's why I believe the conversation inside hotel organizations is changing. Occupancy, ADR, and RevPAR remain critical metrics. But increasingly, owners and operators are looking deeper into profitability. They're focused on GOPPAR, NOI, labor productivity, flow-through, and total guest spend. They're asking whether revenue growth is actually translating into stronger financial performance.
Michael Grove, CEO of HotStats, highlighted another important trend at NYU: guests continue to spend money beyond the room. He reported year-over-year growth of 4.5% in food and beverage revenue, 5.6% in wellness revenue, 6.3% in conferences and events, and 9.2% in golf revenue.
The operators who outperform over the next few years won't simply be the ones generating more revenue. They'll be the ones who understand where profitability is being created – and where it's being lost.
One of the biggest demand stories of 2026 is the FIFA World Cup. Like many people in the industry, I've been watching it closely.
I'm headed to Seattle for a match directly after HITEC, and over the past several weeks I've been monitoring hotel rates in the market. When I first started looking, many mid-service hotels were pricing rooms in the $700-$800 range. Since then, I've watched rates come down. Not dramatically, but enough to notice.
I've seen a similar pattern with ticket prices for some matches. Premium matches remain in high demand, but pricing for others has softened as the event approaches.
That doesn't mean the World Cup won't be successful. I think people will ultimately come. But I do think it highlights something we've been seeing across the industry for the past couple of years: travelers are waiting longer to make decisions. Consumers are watching airfare, gas prices, hotel rates, and many are willing to wait until they're more confident before committing.
Recent analysis from Amadeus, using forward-looking air search data and hotel booking activity, shows occupancy continuing to build across many World Cup host markets while ADR remains flat, or in many cases declining. Dallas, Miami, Philadelphia, and San Francisco have all seen occupancy improve while rate growth has softened.
In revenue management, we often talk about "reverse yielding" – pricing extremely high when a major event is announced, then gradually reducing rates as the event approaches. A stronger approach would be to build a base of business at BAR rate and then yield remaining rooms as day-of-arrival closes, but the industry tends to repeat that bad habit whenever a major event comes to town.
The lesson here is that, while national forecasts and industry averages are useful, hospitality remains a street-corner business. What matters most is what's happening in your market, with your customers, and with the specific demand drivers influencing your property. The operators who understand those signals in real time will make better decisions than those relying solely on industry averages.
At NYU, some hotel leaders pointed to AI-driven investment as a contributor to economic growth and travel demand. That's not difficult to see. Data centers are being built across North America at an incredible pace, creating demand for contractors, engineers, project managers, and construction crews. Many of those workers are staying in hotels, particularly in secondary and tertiary markets.
In some places, AI is already creating measurable hotel demand. But the more interesting AI discussion is happening on the operational side.
As labor costs continue to rise, hotel operators are understandably looking for opportunities to automate processes, streamline workflows, and improve efficiency. At Otelier, that's a conversation we're having every day.
The assumption, however, is often that AI automatically lowers costs, and I'm not convinced it's that simple.
Many AI providers have spent the last few years prioritizing adoption and market share over profitability. Those economics will evolve. Pricing models will evolve.
Which leads me to a question I find myself asking more often lately: Are the machines really cheaper than the humans?
For certain tasks, the answer may be yes. For others, especially in a service business like hospitality, I'm not so sure. Technology will absolutely help operators become more efficient. It will automate manual work. It will improve decision-making. It will help teams do more with less.
But great hospitality still depends on people.
A luxury hotel experience isn't defined by technology. It's defined by human interaction. Even in more select-service environments, guests still value personal service when it matters most.
The challenge for operators isn't choosing between people and technology – it's figuring out how to use both more effectively.
Operators are navigating rising costs, shifting booking behaviors, evolving technology, and increasing pressure to turn revenue into profit. While demand may be strengthening, the question now is how effectively we manage what comes next.