Will Fast Casual Franchises Be Lucrative in 2026?

, hospitality industry leaders are looking toward 2026 with cautious optimism. Increasing operational costs are slated to challenge owners this year and lower-tier sections could struggle in the middle of a growing wealth bifurcation.

And through everything, hotel companies are anticipated to strengthen their portfolios with brand-new brand name offerings and collaborations. As the year gets underway, Hotel Dive spoke to hospitality leaders from differing corners of the market about their 2026 predictions. Below are the leading patterns anticipated to effect hotel operations, efficiency, net system development and more this year.

Overall salaries, salaries and advantages paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Accommodations Association, shared with Hotel Dive. In 2026, that figure is forecasted to reach $131 billion, representing an approximately 3% year-over-year boost, per AHLA. For hotel owners, rising labor costs pose a challenge to net operating earnings development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

Will Hospitality Franchises Remain Profitable in 2026?

"It is an absolute issue." Rising labor costs have been a challenge for hoteliers for many years, Davis said, particularly following the COVID-19 pandemic. In general, hotel labor expenses have increased 15.3% from 2019 to 2025, surpassing the 12.8% growth in total operating profits, according to AHLA. Over the last few years, countless union hotel employees have actually gone on strike requiring greater incomes in order to stay up to date with the increasing cost of living in locations such as California, Hawaii and Las Vegas.

3, 2024 in San Francisco, California. Justin Sullivan via Getty Images In 2026, Davis kept in mind, union settlements will be "front and center" in New york city City, where the New York City Hotel and Gaming Trades Council's union contract with the Hotel Association of New York City is set to end in July.

"Need has not kept up with this rate," she said. Salaries, salaries and payroll-related expenses paid by hotels now account for more than 32% of total profits, according to AHLA.

Proven Steps for Hospitality Brand Expansion

As more hotel visitors turn to expert system to improve their travel experience, scheduling hotels directly through big language designs (LLMs) may be next, hospitality experts said. Agentic commerce a process by which autonomous AI representatives act on behalf of a customer to find, compare and finish purchases is a trend that has actually accelerated across markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials stated they're most likely to use AI for travel recommendations. A smaller portion (57%) stated they 'd be most likely to use it for reserving travel. However that number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. "The variety of consumers that are browsing [through LLMs] for items and services in travel has actually ballooned in the last 12 months and is accelerating every day," Kletzel stated, adding that inevitably, hotels will "take a hard take a look at how they can allow commerce and transactions through agentic [AI]"" [Brands] can develop on the trust they currently have if they do a great job with how they handle AI in 2026." Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct reservation, larger multibrand hotel companies will "embed LLMs into their own brand name sites and mobile apps, and alter the way the customer searches," Kletzel said.

"If you are not discoverable in an LLM search engine result which numerous brands aren't, and this is the big panic that they're all going through right now customers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality item marketing at AI client experience platform Talkdesk, similarly told Hotel Dive that hospitality gamers require to ensure their home information is being indexed by LLMs to appear in traveler queries.