ATLANTA — As the hotel industry enters the second quarter of 2026, operators are navigating an increasingly complex mix of demand uncertainty, rising costs, and policy pressures that threaten profitability in key markets, according to leaders at the American Hotel & Lodging Association.
In an exclusive interview with Hotel Management last week in Atlanta, AHLA President and CEO Rosanna Maietta and Chief Operating Officer Kevin Carey said that while lodging has once again demonstrated resilience, the challenges facing hoteliers today are broader—and more interconnected—than they were a year ago.
“There is still a great deal of uncertainty about what the rest of the year will look like,” Maietta said. “That’s despite the industry showing real strength and adaptability.”
Demand Under Pressure
Top of AHLA’s concerns is travel demand, both domestic and international, which has been unsettled by a combination of political dysfunction, operational disruptions and global economic factors.
The federal government shutdown that began earlier this year—the largest on record—has already created ripple effects across the travel sector. According to Maietta, prolonged disruptions at airports and border crossings have made travelers more hesitant to book, particularly heading into the critical summer travel season.
“Travel has been caught in the crosshairs,” she said. “When consumers see long lines and uncertainty, it makes them less inclined to travel.”
At the same time, rising oil prices are putting pressure on airfare and drive-to travel costs just as the industry approaches the Memorial Day weekend.
International dynamics are also weighing on outlooks as hoteliers look ahead to global events like the World Cup. While stadiums are expected to sell out, hotel bookings—particularly in large gateway cities such as New York and Los Angeles—have been slower to materialize than anticipated.
Secondary markets, Maietta noted, have performed comparatively better, underscoring uneven recovery across regions.
Labor Costs and Local Policy Collisions
If demand uncertainty is one side of the equation, escalating labor costs represent another immediate pressure point—especially in major urban markets. Los Angeles, in particular, has become a cautionary example. Since the implementation of a citywide labor ordinance last year, the local hotel industry has lost approximately 6 percent of its workforce, with some properties shuttering operations entirely, Maietta said.
“We are job creators,” Maietta emphasized. “Hotels build local economies—restaurants, retail, entertainment. When hotels struggle, the ripple effects are significant.”
AHLA leaders emphasized that the industry has already made major strides in improving wages, benefits, and workplace competitiveness since the pandemic. However, rapid policy changes without transitional pathways have strained operating margins. “We were never opposed to progress,” Maietta said. “What we said was: We can’t do this overnight.”
What concerns AHLA most is that similar labor policies are emerging outside those coastal markets, including in states such as Arizona and Oklahoma—regions traditionally viewed as more business-friendly.
Costs Rising Faster Than Revenue
Beyond labor, property taxes and insurance premiums have emerged as major pain points, widening the gap between policymaker assumptions and on-the-ground realities.
In Philadelphia, city leaders have proposed additional hotel taxes to address homelessness, a move AHLA says oversimplifies a complex issue while placing an outsized burden on lodging operators.
“Hotels become easy targets,” Maietta said. “There’s this perception that the industry must be doing well, so let’s tax it. But when operators add up property taxes, insurance costs, labor and new levies, many are saying they’re barely breaking even—or not at all.”
That environment, she warned, risks pushing long-term capital out of lodging markets and undermining future hotel development and reinvestment.
Advocacy Takes Center Stage
Against this backdrop, AHLA has sharpened its advocacy focus, positioning itself as what Carey described as “a strong voice for profitability, asset valuation, and demand protection.”
The association’s upcoming Hotel Day on Capitol Hill will center on issues including travel demand, workforce challenges, welcome messaging, Brand USA funding and the American Franchising Act—legislation AHLA continues to advance despite the difficulties of a midterm election year. “The industry needs engagement now more than ever,” Carey said. “These are business conditions that affect every segment of lodging.”
Amid operational and policy challenges, AHLA leaders pointed to one area of meaningful progress: the industry’s response to human trafficking.
Through AHLA and the AHLA Foundation’s No Room for Trafficking initiative, hotels have expanded training, awareness and survivor support nationwide. Carey said the initiative has gained strong traction across brands, owners, and operators, elevating both industry standards and public trust.
“This is about training, awareness, and survivor support,” Carey said. “It’s a reputation issue, an insurance issue, and most importantly, the right thing to do.”
The initiative illustrates how coordinated industry action can drive results—an approach AHLA aims to replicate as it confronts the broader challenges ahead.
A Defining Moment
As hoteliers look toward the rest of 2026, AHLA leaders say the industry is at a defining moment—one requiring alignment between operators, policymakers and communities.
“The hotel business thrives when the environment allows it to,” Maietta said. “Our job is to make sure that leaders understand what’s at stake and that the policies they pursue don’t unintentionally undermine the very economic engines they rely on.”
For an industry built on resilience, collaboration and advocacy may be just as essential as demand and rate recovery in the months ahead.