Can Fast Casual Franchises Remain Lucrative in 2026?

Listen to the post 17 minutes This audio is auto-generated. Please let us understand if you have feedback. Following a year of broad economic unpredictability that stifled growth for hotels, hospitality market leaders are looking toward 2026 with cautious optimism. Rising operational costs are slated to challenge owners this year and lower-tier segments could struggle in the middle of a growing wealth bifurcation.

And through it all, hotel business are expected to strengthen their portfolios with new brand name offerings and partnerships. As the year gets underway, Hotel Dive talked to hospitality leaders from differing corners of the market about their 2026 predictions. Below are the leading trends expected to impact hotel operations, performance, net system development and more this year.

Overall wages, salaries and benefits paid by U.S. hotels rose to $127 billion in 2025, according to information from the American Hotel & Accommodations Association, shared with Hotel Dive. In 2026, that figure is projected to reach $131 billion, representing a roughly 3% year-over-year increase, per AHLA. For hotel owners, rising labor costs posture an obstacle to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an absolute issue." Increasing labor costs have actually been a difficulty for hoteliers for several years, Davis stated, especially following the COVID-19 pandemic. Overall, hotel labor expenses have increased 15.3% from 2019 to 2025, outmatching the 12.8% growth in total operating earnings, according to AHLA. Over the last few years, countless union hotel workers have actually gone on strike requiring greater salaries in order to keep up with the rising expense 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 negotiations will be "front and center" in New york city City, where the New York Hotel and Gaming Trades Council's union agreement with the Hotel Association of New York City City is set to end in July.

"Demand has actually not kept up with this speed," she stated. Wages, incomes and payroll-related expenses paid by hotels now account for more than 32% of overall revenue, according to AHLA.

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As more hotel guests turn to synthetic intelligence to improve their travel experience, scheduling hotels directly through big language designs (LLMs) might be next, hospitality professionals said. Agentic commerce a process by which self-governing AI representatives act on behalf of a customer to find, compare and complete purchases is a trend that has sped up across markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials said they're likely to utilize AI for travel recommendations. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To remain competitive with direct booking, larger multibrand hotel business will "embed LLMs into their own brand name websites and mobile apps, and change the way the consumer searches," Kletzel said.

"If you are not discoverable in an LLM search engine result which lots of brand names aren't, and this is the huge panic that they're all going through right now consumers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality product marketing at AI client experience platform Talkdesk, similarly informed Hotel Dive that hospitality gamers require to guarantee their home information is being indexed by LLMs to appear in tourist queries.