Can Hospitality Franchises Remain Lucrative in 2026?

, hospitality market leaders are looking toward 2026 with cautious optimism. Increasing operational costs are slated to challenge owners this year and lower-tier segments might have a hard time in the middle of a growing wealth bifurcation.

And through it all, hotel companies are expected to strengthen their portfolios with brand-new brand name offerings and partnerships. As the year gets underway, Hotel Dive talked to hospitality leaders from differing corners of the industry about their 2026 forecasts. Below are the top patterns anticipated to effect hotel operations, performance, net unit development and more this year.

Overall salaries, incomes and benefits 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 a roughly 3% year-over-year increase, per AHLA. For hotel owners, increasing labor costs posture a challenge to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an absolute concern." Increasing labor expenses have been a difficulty for hoteliers for several years, Davis stated, particularly following the COVID-19 pandemic. Overall, hotel labor expenses have actually increased 15.3% from 2019 to 2025, outpacing the 12.8% growth in total operating earnings, according to AHLA. In recent years, thousands of union hotel workers have gone on strike requiring higher earnings in order to stay up to date with the rising expense of living in places such as California, Hawaii and Las Vegas.

3, 2024 in San Francisco, California. Justin Sullivan through Getty Images In 2026, Davis noted, union negotiations 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 City's freshly elected Mayor Zorhan Mamdani, who operated on a guarantee to raise New York City's base pay to $30 per hour by 2030. Hotel industry associations, including AHLA, have actually denounced similar legislation throughout the country, consisting of the just recently passed $30 wage ordinance in Los Angeles. "Need has actually not kept up with this speed," she stated. Incomes, salaries and payroll-related expenses paid by hotels now account for more than 32% of overall profits, according to AHLA.

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As more hotel visitors turn to expert system to improve their travel experience, reserving hotels directly through big language models (LLMs) may be next, hospitality experts stated. Agentic commerce a procedure by which autonomous AI agents 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 Vacation Outlook report, 76% of millennials said they're likely to utilize AI for travel recommendations. That number is growing, Jonathan Kletzel, PwC's travel, transport and logistics leader, informed Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct reservation, bigger multibrand hotel companies will "embed LLMs into their own brand sites and mobile apps, and alter the method the consumer searches," Kletzel said.

"If you are not discoverable in an LLM search result which lots of brand names aren't, and this is the huge 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 customer experience platform Talkdesk, similarly told Hotel Dive that hospitality players require to guarantee their home details is being indexed by LLMs to appear in tourist queries.