Can Fast Casual Franchises Be Lucrative in 2026?

, hospitality market leaders are looking towards 2026 with careful optimism. Increasing operational costs are slated to challenge owners this year and lower-tier segments could have a hard time amid a growing wealth bifurcation.

And through it all, hotel companies are expected to fortify their portfolios with new brand offerings and collaborations. As the year gets underway, Hotel Dive consulted with hospitality leaders from differing corners of the market about their 2026 predictions. Below are the leading patterns expected to effect hotel operations, performance, net system development and more this year.

Total incomes, earnings and advantages paid by U.S. hotels increased 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 increase, per AHLA. For hotel owners, increasing labor costs position an obstacle to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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"It is an absolute concern." Increasing labor expenses have been a difficulty for hoteliers for years, Davis stated, particularly following the COVID-19 pandemic. Overall, hotel labor costs have actually increased 15.3% from 2019 to 2025, exceeding the 12.8% growth in overall operating profits, according to AHLA. Recently, countless union hotel employees have actually gone on strike demanding higher salaries in order to keep up 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, where the New York Hotel and Video gaming Trades Council's union contract with the Hotel Association of New York City City is set to expire in July.

In 2015, the union backed New york city City's recently elected Mayor Zorhan Mamdani, who ran on a guarantee to raise New york city City's minimum wage to $30 per hour by 2030. Hotel market associations, consisting of AHLA, have knocked similar legislation throughout the country, including the recently passed $30 wage regulation in Los Angeles. "Demand has not kept up with this rate," she stated. "We're likewise seeing these challenges compounded by legislation that targets hotel operations, such as severe labor and licensing policies like the New York City Safe Hotels Act. When demand is falling and costs are skyrocketing, the math merely doesn't add up." Wages, earnings and payroll-related expenses paid by hotels now represent more than 32% of overall revenue, according to AHLA.

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As more hotel guests turn to expert system to enhance their travel experience, reserving hotels directly through large language models (LLMs) may be next, hospitality specialists said. Agentic commerce a process by which self-governing AI representatives act on behalf of a customer to find, compare and finish purchases is a trend that has accelerated throughout markets like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials said they're most 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 reservation, larger multibrand hotel business will "embed LLMs into their own brand websites and mobile apps, and change the method the consumer searches," Kletzel said.

"If you are not discoverable in an LLM search result which many brand names aren't, and this is the big panic that they're all going through today consumers 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 gamers need to guarantee their property info is being indexed by LLMs to appear in tourist questions.