The hospitality industry remains below pre-pandemic levels. What are your expectations for ADR, occupancy and RevPAR in 2026?
In 2026 Sonesta expects modest growth in both occupancy and [average daily rate] leading to average [revenue per available room] gains around the pace of inflation, driven in large part by renovation hotels and those with the greatest impact from events like FIFA and America 250.
What is your greatest challenge going into 2026 and what steps are you taking to overcome it?
Economic uncertainty remains the primary challenge industry-wide as we have seen expenses increase for labor, food and beverage, insurance, utilities and taxes. Tariff impacts and significantly increased renovation costs are also a challenge, particularly in the face of revenues which remain flat. Sonesta is exploring new approaches – including a recent agreement with Airbnb for hotel inventory for their clients in NYC and LA. Hotel companies need to remain current with where and how guests want to book and open to new opportunities for partnership and engagement beyond traditional approaches.
What steps are you taking to drive revenue and maximize asset ROI, and is it on the top line or bottom line?
Sonesta is leaning into its managed segments like groups and contract business, where we have the most control as well as providing incentives to corporate negotiated accounts to maintain transient business levels. We are also working on exciting potential partnership opportunities that will help us drive revenue via access to new guests. Of course, we expect that FIFA World Cup 2026 and America’s 250th celebration will be significant demand generators. We do a good job controlling expenses but need to do a better job growing revenues, to also grow the bottom line.
In discussions with owners, what are their biggest concerns for 2026?
In our Brand Advisory meeting in September we continued to hear continuing owner/franchisee concerns about labor shortages & wage pressure, rising operating costs (especially insurance premiums) and technology overload. But driving revenue into the hotels remains the most important focus, engaging with our revenue management tools and responding to all leads we deliver.
Labor issues and fluctuating occupancy are two operating issues going into 2026. How are you strategizing to operate more efficiently?
Within our managed portfolio, we have developed systematic labor drivers by job code to enable the hotel teams to best leverage a proactive business volume approach to scheduling and ensure the teams have the labor hours needed to exceed guest expectations during peak business. We are beginning our second year with FLEXFORCE providing a centralized program for 'speed to need' labor resources that enables continuity of service and strengthened partnerships with our labor suppliers so field leaders can proactively manage labor needs.
In 10 words or fewer, what is your overall hospitality industry outlook for 2026?
Slow, steady growth setting up for a banner 2027.
This article was originally published in the January edition of Hotel Management magazine. Subscribe here.