Asset managers remain optimistic about hotel performance in 2026 while continuing to navigate demand uncertainty, rising labor costs and broader economic headwinds. Grant Dupart, principal, WalshDupart; Marina Kostic, asset manager, Hotel Asset Management and Investments LLC; and Prath Mehta, director, asset management, Westmont Hospitality Group, share their perspectives on the challenges and opportunities shaping the industry.
—Gregg Wallis
How are hotel owners balancing strong performance with demand volatility and geopolitical uncertainty?
Dupart: Year-over-year comparisons are looking strong across many portfolios, but that optimism may be overstated—2025 was weaker than most expected. More conservative underwriting and budgeting, grounded in realistic expectations of today’s hotel operating environment, is essential. Hospitality investing has rarely rewarded the overly optimistic, given its cyclicality and close correlation to macroeconomic conditions and geopolitical events. Although revenues are trending better in 2026, we need to see sustained national RevPAR improvement—consistent gains of +3% or more—before seeing a fundamentally healthier industry.
Kostic: Hotel owners and asset managers remain cautiously optimistic, supported by strong Q1 performance and continued momentum into Q2 driven by solid domestic leisure and group demand. Robust stock market conditions are also encouraging increased corporate spending on business travel and conferences, further supporting demand. While international demand remains pressured by geopolitical uncertainty, it is expected to benefit from seasonal domestic leisure strength over the summer. However, this same geopolitical uncertainty is likely to negatively impact high-profile events such as World Cup, reinforcing the need for continued caution in forward planning.
Mehta: It seems the industry is cautiously optimistic. In several markets, travel demand and ADR continues to hold, but overall booking windows are getting shorter, and it is getting harder to predict consumer behavior. We are closely monitoring booking pace, reforecasting more frequently and being very flexible in pricing and sales strategies. The focus remains on protecting rate integrity, diversifying demand sources and targeting underpenetrated segments. With ongoing global uncertainty, we continue to watch ultimately how the summer leisure demand and FIFA-related travel will materialize.
How are asset managers working with operators to protect profitability while maintaining service levels?
Dupart: We are focused on keeping the most capital available directed toward labor in guest-facing operations and revenue-generating areas of the hotel. Making meaningful progress in this challenging operating environment requires strong operators who are willing to collaborate. We are working closely with our management companies to trim back-of-house expenses by sharing roles across hotels, outsourcing centralized services where cost savings are available and automating back-of-house systems and processes—freeing the team to focus on driving revenue and improving the guest experience.
Kostic: Labor costs and wage pressures remain a key challenge, driven not only by inflation but mostly by labor availability constraints, growing benefits costs and increased organized labor activity. Asset managers are working closely with operators to protect profitability by improving productivity, optimizing staffing models and aligning labor deployment more precisely with demand patterns. In some cases, they are also engaging with brands to modify operating standards, hours of operation and service schedules to better control labor costs. At the same time, there is continued investment in technology and automation to offset wage inflation while maintaining service quality.
Mehta: This indeed is one of the biggest operational challenges facing the industry and a difficult balancing act. Asset managers are working very closely with operators to improve labor efficiency through smarter scheduling, consolidating positions where possible, tighter overtime controls, cross-training and continuous payroll monitoring, while still protecting the guest experience. At the same time, retention and culture is even more important now. A culture where employees feel valued helps improve retention and thus minimizes turnover and associated costs. Culture in many ways is a financial hedge against turnover and service disruption. We are also seeing more operators leverage technology for staffing forecasting and improve labor productivity.
