What Hotel Owners Need to Know for 2027: Recap of the 2026 Lodging Conference

The 2026 Lodging Conference kicked off in Phoenix mid-October and brought together more than 3,000 hospitality professionals, including hotel owners, developers, lenders, and brand executives to discuss the industry’s evolving outlook. The overall sentiment was one of cautious optimism, with improving revenue performance and limited new supply coming online. However, rising operating expenses, elevated borrowing costs, and upcoming loan maturities being repriced from former historic low rates continue to present unique challenges for owners. 

Revenue Growth is Improving, but Profitability Remains Challenged 

Hotel revenue performance has exceeded initial expectations of 2026, with revenue per available room (RevPAR) growth projected to reach approximately 5% by the end of the year, primarily driven by luxury and upper-upscale properties. Economy and midscale segments continue to experience flat to modest growth as price-sensitive consumers face greater constraints to discretionary spending. 

Despite revenue improvement, profitability has remained a concern with gross operating profits coming in relatively flat year over year. The cause is mainly due to the rising labor, insurance, utilities, technology, and admin expenses absorbing any incremental revenue performance. 

Constrained New Supply in the Pipeline 

Unsurprisingly, new hotel supply remains constricted by elevated construction costs and financing challenges. As noted by multiple panelists throughout the conference, U.S. hotel supply has increased just 0.4% year over year. Limited new construction has however created a favorable environment for existing owners while encouraging developers to explore brand conversions or more cost-efficient models, shifting focus from ground-up development to more conversions and property improvement plans (PIPs). 

One of the more interesting data points of the conference is that of 0.4% supply growth, approximately 38% of the construction pipeline is slated to be extended-stay models. Higher profit margins, lower staffing requirements, and a growing demand for project-based workers have helped contribute to this segment’s expansion. Major brands including Marriott, Hilton, and Hyatt have introduced extended-stay brands to capitalize on the demand, reflecting a broader shift towards products offering greater operational efficiency and more predictable occupancy. 

Concerning brand-mandated PIPs, there have been continued discussions of brands possibly moving away from traditional blanket requirements towards allowing greater flexibility and negotiation based on property performance and upkeep. This flexibility is contingent on executing strong operating fundamentals, consistent property maintenance, and guest satisfaction scores, all subject to the brand’s approval. While the approach continues to evolve, it seems that owners who can demonstrate these qualities may be better positioned to negotiate deferred timelines, phased renovations, or waivers on certain improvements. 

Artificial Intelligence Becomes an Operational Priority 

No industry conference in 2026 would be complete without extensive discussion surrounding artificial intelligence (AI), and the Lodging Conference was no exception. Brand executives, operators, and owners emphasized AI’s potential to improve labor management, revenue forecasting, and guest experience, although its applications will likely vary across hotel segments.  

For economy and midscale properties where guests typically prioritize affordability and convenience, AI powered check in systems and automated guest communication can help streamline operations. These technologies can improve operating margins without materially compromising the value of the guest experience. 

Conversely, upper-upscale and luxury hotels will see a different use case. Guests paying premium rates often expect personalized attention, staff, and a higher level of in-person service. In turn, the efficiencies may be more seen through revenue management and operational coordination rather than replacing direct guest communication. 

Ultimately, the value of AI will depend on how effectively operators balance automation with the service expectations of their consumer bases. 

Capital Markets Remain Dynamic 

Despite improving industry fundamentals, the current financing environment can present a series of challenges for hotel owners with pending loan maturities. Properties financed during the post Covid low interest rate environment with upcoming maturities are now facing significantly higher borrowing costs that will place additional pressure on debt-service coverage and loan proceeds. That said, well-located properties with strong fundamentals and operating performance will see improved sentiment and lender interest as capital continues to return to the hospitality sector. 

Banks and credit unions remain active, particularly for stabilized hotels with experienced sponsors and strong cash flow. Life insurance companies continue to offer competitive long-term financing for institutional quality assets, generally favoring lower leverage and stronger debt yields and debt service coverage ratios (DSCR). Commercial mortgage-backed securities (CMBS) lenders remain a viable source of non-recourse, full term interest only financing, while debt funds and alternative lending sources are available as options to provide flexibility for acquisitions or transitional type properties that require significant capital improvements or repositioning. 

Bottom Line 

Hotels head into 2027 on stronger footing, but expenses and refinancing costs, not revenue, will decide which deals work. 

For Borrowers 

• Plan maturities early. Model debt service at today’s rates and line up equity or alternative capital to cover any shortfall in loan proceeds. 

• Lead with profitability. Lenders underwrite cash flow, so expense control matters as much as RevPAR growth. 

• Use property condition as leverage. Strong operations and upkeep can win PIP flexibility from brands and better terms from lenders. 

For all, 2027 rewards preparation and disciplined underwriting.