Can Hospitality Franchises Be Lucrative in 2026?

, hospitality industry leaders are looking toward 2026 with careful optimism. Rising operational expenses are slated to challenge owners this year and lower-tier sectors could struggle amid a growing wealth bifurcation.

And through all of it, hotel companies are anticipated to strengthen their portfolios with brand-new brand offerings and partnerships. As the year gets underway, Hotel Dive talked with hospitality leaders from varying corners of the industry about their 2026 forecasts. Below are the leading patterns anticipated to impact hotel operations, performance, net system growth and more this year.

Total incomes, wages and advantages paid by U.S. hotels rose to $127 billion in 2025, according to data from the American Hotel & Lodging Association, shared with Hotel Dive. In 2026, that figure is forecasted to climb up to $131 billion, representing an approximately 3% year-over-year boost, per AHLA. For hotel owners, rising labor costs position a difficulty to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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Rising labor expenses have been a challenge for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. Overall, hotel labor expenses have increased 15.3% from 2019 to 2025, outpacing the 12.8% growth in overall operating earnings, according to AHLA.

3, 2024 in San Francisco, California. Justin Sullivan through Getty Images In 2026, Davis noted, union settlements will be "front and center" in New York City, where the New York City Hotel and Video gaming Trades Council's union agreement with the Hotel Association of New York City City is set to expire in July.

In 2015, the union backed New York City's recently chosen Mayor Zorhan Mamdani, who worked on a pledge to raise New York City's minimum wage to $30 per hour by 2030. Hotel market associations, including AHLA, have actually denounced similar legislation throughout the country, consisting of the just recently passed $30 wage regulation in Los Angeles. "Need has not kept up with this speed," she said. Incomes, wages and payroll-related expenses paid by hotels now account for more than 32% of total income, according to AHLA.

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As more hotel guests turn to expert system to enhance their travel experience, scheduling hotels straight through large language designs (LLMs) might be next, hospitality specialists stated. Agentic commerce a process by which self-governing AI representatives act upon behalf of a consumer to discover, compare and complete purchases is a pattern that has actually sped up across industries like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials said they're likely to use AI for travel suggestions. A smaller percentage (57%) stated they 'd be likely to use it for booking travel. But that number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. "The variety of consumers that are searching [by means of LLMs] for services and products in travel has swollen in the last 12 months and is speeding up every day," Kletzel said, including that inevitably, hotels will "take a tough take a look at how they can make it possible for commerce and transactions through agentic [AI]"" [Brands] can build on the trust they currently have if they do an excellent job with how they deal with AI in 2026." Michael Klein Head of retail, travel and hospitality product marketing at Talkdesk To stay competitive with direct reservation, bigger multibrand hotel companies will "embed LLMs into their own brand websites and mobile apps, and change the method the customer searches," Kletzel stated.

"If you are not visible in an LLM search engine result which numerous brand names aren't, and this is the big panic that they're all going through today customers aren't going to consider you," he stated. Michael Klein, head of retail, travel and hospitality item marketing at AI customer experience platform Talkdesk, likewise informed Hotel Dive that hospitality players require to guarantee their residential or commercial property information is being indexed by LLMs to appear in traveler questions.