According to the recent PwC Hospitality Directions report, the U.S. lodging industry is navigating a period of recalibration, with moderate RevPAR growth projected for 2026 amid evolving demand patterns and technological shifts. While the sector anticipates a 0.9 percent increase in RevPAR and an average occupancy rate of 62 percent, challenges persist amid inflationary pressures, supply growth and the impact of AI on travel behavior and hotel operations.

After a period of post-pandemic recalibration, the U.S. lodging industry is facing a more familiar, yet less forgiving, landscape. Growth is slowing, demand patterns remain inconsistent and the cost of capital, while trending down from historical highs over the past 18-24 months, remains elevated. Some degree of predictability is returning, such as group travel, but it’s modest and unevenly distributed, according to the report.

Revenue per available room is expected to rise 0.9 percent in 2026. While not a rebound, the forecast suggests a steadier trajectory ahead, supported by a more stable macro environment, easier year-over-year comparisons, particularly in the latter half of 2026, and major national events in 2026. Still, margin pressure is likely to intensify as supply grows faster than demand and inflationary pressures create a drag on flow-throughs, leaving operators and owners with narrower cushions and higher stakes.

“Even as RevPAR bifurcation persists, supply growth is finally expected to normalize across chain scales after several years of constraint. At the same time, AI’s accelerating influence is reshaping how hotels operate, compete, and connect with travelers," Abhi Jain, principal, hospitality and real estate, PwC U.S., said in a statement.

Where Demand is Heading Next

According to the report, two distinct demand patterns are emerging. One is rising leisure travel, increasingly concentrated in warmer and secondary markets, driven by a busy U.S. events calendar and wellness trends. The other—corporate travel, group bookings and international inbound—has been slower to rebound. PwC’s outlook anticipates short-term RevPAR growth headwinds in the first two quarters of 2026, followed by moderate sequential acceleration in the second half as large-scale events and a more stable macro environment begin to lift both business and inbound international travel.

In early 2025, RevPAR declines were concentrated in urban markets and upscale segments. Later in the year, consumer spending showed early signs of stabilization, though year-over-year comparisons remained challenging.

But expectations should be recalibrated. PwC’s forecast for 2026 points to normalization, not resurgence. While demand is being reshaped by new patterns — such as leisure concentration in secondary markets and softened corporate travel — the return of more predictable booking cycles and fewer macro disruptions may help operators reorient strategy. Still, growth is expected to remain uneven, favoring metropolitan geographies and chain scales more than others, continuing the trend observed over the past 18 months.

Higher-priced hotels are expected to outperform, supported by resilient spending among higher-income households, robust group travel demand (especially in the second half of 2026), and below-average, but accelerating, supply growth. Lower-priced hotels are likely to face continued RevPAR headwinds due to inflationary pressure on lower-income households and limited exposure to group and meeting-driven demand.

AI Is Reshaping

Behind the RevPAR forecast lies a broader transformation. Artificial intelligence is changing not only how people discover and book hotels, but also how owners and operators manage performance. Traditional brand touchpoints are being bypassed as AI-powered assistants surface personalized options earlier in the planning process.

These shifts, related to the rise of agentic commerce, are already visible in early-stage trip planning. As large language models influence destination choices, they can narrow booking funnels long before a traveler reaches a brand-owned platform.