Hotel owners, investors, and operators gathered at The Lodging Conference 2026 in Phoenix this month expressing strong optimism for 2027, with soft-brand conversions emerging as the dominant growth strategy over costly ground-up development.

Conversations across the event reflected an industry that has moved past several years of caution around rising costs and tight financing. Attendees reported renewed confidence in business levels heading into next year, though tempered by a clear preference for repositioning existing assets rather than breaking new ground.

Why are conversions winning over new builds?

Developers are walking away from ground-up hotels in growing numbers. The economics rarely pencil out: land, construction, financing, and the multi-year timeline to deliver a project create a hurdle many investors no longer want to clear.

Conversions offer a different path. An owner can take an existing property into a brand family, gaining distribution, loyalty program access, and marketing infrastructure without the construction risk. Soft brands, which let a property keep its identity while plugging into a larger distribution network, drew the most attention in Phoenix.

Not every conversion makes financial sense. Renovation scope, market position, and return on investment still require hard-nosed underwriting. But the message from operators was consistent: 2027 growth will come more from unlocking existing assets than from building new ones.

How will AI change how travelers book hotels?

Artificial intelligence dominated hallway talk at the conference, though the focus has shifted from back-of-house efficiency to consumer-facing distribution. For the past two years, owners and operators have mostly asked how AI can automate tasks and cut labor. Now the bigger question is how AI tools will shape the way travelers discover, compare, and book rooms.

As travelers lean on AI assistants to plan trips, the traditional search-and-compare path could erode. That raises direct questions for operators about property visibility, the cost of distribution, and the economics of AI-generated recommendations. Conference attendees flagged brand partners as the natural guide through this transition, and warned that management companies will need to show measurable ROI on any AI or robotics deployment.

Why is third-party management more valuable than ever?

Smaller owners, in particular, are leaning on experienced operators to handle an environment that keeps getting more technical. Revenue management, digital marketing, labor optimization, technology integration, and financial reporting each demand specialized staff. Building that infrastructure in-house is rarely feasible for a single-asset owner.

Third-party groups are now expected to act as strategic partners, not just operators. For owners weighing a conversion, repositioning, or acquisition, an experienced management company can pressure-test the deal before capital goes in.

As one conference observer put it, "Owners aren't simply looking for someone to run their hotels. They want partners who can help them make better business decisions and create long-term value."

What does this change for hoteliers in 2027?

The takeaways from Phoenix point to a year when discipline matters as much as optimism. Owners will spend more time auditing their existing portfolios for repositioning upside, and less time chasing ground-up deals that the cost structure no longer supports. They will also press their brand and management partners harder on AI strategy, expecting a clear answer on how the technology will protect bookings and margins.

Speakers framed the moment as a window for action. Several years of waiting on certainty have left data points pointing in the same direction, and operators who can move decisively on conversions, acquisitions, or targeted tech spend stand to capture the most ground.

The message carried out of Phoenix was simple. As the source observed, "optimism alone doesn't produce results." The owners and operators who pair that optimism with disciplined underwriting and the right operating partners are the ones positioned to grow in 2027.