Comparing Leading Franchise Schemes for Growth

Listen to the short article 17 minutes This audio is auto-generated. Please let us know if you have feedback. Following a year of broad economic unpredictability that suppressed growth for hotels, hospitality industry leaders are looking towards 2026 with cautious optimism. Increasing operational expenses are slated to challenge owners this year and lower-tier sections could 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 new brand offerings and partnerships. As the year gets underway, Hotel Dive spoke to hospitality leaders from differing corners of the market about their 2026 forecasts. Below are the leading patterns anticipated to effect hotel operations, performance, net system development and more this year.

Total wages, incomes and benefits paid by U.S. hotels increased to $127 billion in 2025, according to information 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 boost, per AHLA. For hotel owners, increasing labor costs position a difficulty to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an outright issue." Rising labor costs have been an obstacle for hoteliers for years, Davis stated, especially following the COVID-19 pandemic. In general, hotel labor expenses have actually increased 15.3% from 2019 to 2025, outmatching the 12.8% growth in overall operating profits, according to AHLA. In the last few years, thousands of union hotel employees have gone on strike requiring higher wages 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 via Getty Images In 2026, Davis kept in mind, union negotiations will be "front and center" in New York City, where the New York Hotel and Video gaming Trades Council's union agreement with the Hotel Association of New York City City is set to end in July.

"Need has actually not stayed up to date with this rate," she stated. "We're likewise seeing these challenges intensified 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 expenses are skyrocketing, the math just does not accumulate." Wages, earnings and payroll-related expenses paid by hotels now represent more than 32% of total earnings, according to AHLA.

Will Hospitality Franchises Be Profitable in 2026?

As more hotel visitors turn to expert system to boost their travel experience, booking hotels straight through large language models (LLMs) may be next, hospitality specialists stated. Agentic commerce a process by which self-governing AI representatives act upon behalf of a consumer to find, compare and complete purchases is a trend 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 most likely to use AI for travel recommendations. A smaller percentage (57%) said they 'd be likely to use it for scheduling travel. However that number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. "The number of customers that are browsing [by means of LLMs] for product or services in travel has actually swollen in the last 12 months and is speeding up every day," Kletzel stated, including that undoubtedly, hotels will "take a hard appearance at how they can allow commerce and deals through agentic [AI]"" [Brands] can develop on the trust they currently have if they do a great task with how they handle AI in 2026." Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct reservation, bigger multibrand hotel business will "embed LLMs into their own brand websites and mobile apps, and alter the way the consumer searches," Kletzel said.

"If you are not visible in an LLM search result which many brands aren't, and this is the big panic that they're all going through today customers aren't going to consider you," he said. 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 info is being indexed by LLMs to appear in traveler inquiries.