The cost of doing business is high and still going up.
In California, Las Vegas and Hawaii, hospitality employees are demanding higher wages to keep up with the rising cost of living. In those locations, union hotel workers have threatened to go on strike soon, with hopes of driving an increase in their wages to $30 an hour.
Partly due to such demands, labor costs are anticipated to rise in 2026 by at least three percent. In 2025, total salaries, wages and benefits paid by U.S. hotels rose to $127 billion, a number that is projected to become $131 billion by late 2026, per data from the American Hotel and Lodging Association (AHLA)
[Related: How Hotels are Acting on 2026 Meeting Trends]
The AHLA data finds that labor costs represent the largest proportion of total hotel expenses. At unionized properties, labor accounts for about 43% of total expenses on average, while non-union hotels see labor account for about 33.5% of total expenses on average.
“We’re also seeing these challenges compounded by legislation that targets hotel operations, such as extreme labor and licensing policies like the New York City Safe Hotels Act,” said Rosanna Maietta, president and CEO of AHLA, in this Hotel Dive article. “But when demand is falling and costs are soaring, the math simply doesn’t add up.”
Even though meeting planners and business travelers often note that there are fewer employees on property now than in the past, a recent report shows jobs in hospitality are actually on the rise.
According to the “Economic Impact of the US Hotel Industry Report” by AHLA, the number of hotel industry jobs in 2024 increased to 9.2 million. This is a 4.1% increase from 2019, a year before the Covid pandemic. However, this is largely because of the number of new midscale and extended-stay properties that have opened nationwide since 2022.
“We’ve seen increased labor costs, increased cost of property taxes and insurance, and these are enduring issues that owners are fighting across the country,” Kevin Davis, CEO at JLL Hotels and Hospitality, told Hotel Dive. “It is an absolute concern.”
