Can Hospitality Franchises Be Profitable in 2026?

, hospitality market leaders are looking toward 2026 with cautious optimism. Rising functional costs are slated to challenge owners this year and lower-tier sections might have a hard time amid a growing wealth bifurcation.

And through all of it, hotel companies are expected to fortify 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 market about their 2026 predictions. Below are the leading trends anticipated to impact hotel operations, efficiency, net unit development and more this year.

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

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Rising labor expenses have actually been an obstacle for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. In general, hotel labor expenses have actually increased 15.3% from 2019 to 2025, surpassing the 12.8% development in overall operating income, according to AHLA.

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

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

Why Hospitality Brand Share Will Be Rising

As more hotel visitors turn to expert system to improve their travel experience, scheduling hotels straight through big language models (LLMs) may be next, hospitality professionals stated. Agentic commerce a procedure by which autonomous AI agents act on behalf of a customer to discover, compare and finish purchases is a pattern that has accelerated 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. A smaller portion (57%) said they 'd be likely to utilize it for scheduling travel. But that number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, informed Hotel Dive. "The variety of consumers that are browsing [via LLMs] for product or services in travel has ballooned in the last 12 months and is speeding up every day," Kletzel said, adding that inevitably, hotels will "take a tough take a look at how they can allow commerce and deals through agentic [AI]"" [Brands] can construct on the trust they currently have if they do a great job with how they deal with AI in 2026." Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct reservation, larger multibrand hotel business will "embed LLMs into their own brand websites and mobile apps, and alter the method the customer searches," Kletzel said.

"If you are not discoverable in an LLM search results page which many brands aren't, and this is the huge 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 told Hotel Dive that hospitality gamers require to guarantee their property details is being indexed by LLMs to appear in traveler inquiries.