Evaluating Leading Franchise Models for Growth

Listen to the article 17 min This audio is auto-generated. Please let us know if you have feedback. Following a year of broad financial uncertainty that stifled growth for hotels, hospitality industry leaders are looking toward 2026 with cautious optimism. Rising functional costs are slated to challenge owners this year and lower-tier segments could have a hard time amid a growing wealth bifurcation.

And through everything, hotel companies are expected to fortify their portfolios with brand-new brand name offerings and collaborations. As the year gets underway, Hotel Dive consulted with hospitality leaders from varying corners of the industry about their 2026 predictions. Below are the leading trends anticipated to impact hotel operations, efficiency, net unit growth and more this year.

Overall wages, earnings and advantages paid by U.S. hotels increased to $127 billion in 2025, according to information from the American Hotel & Accommodations Association, shown 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, rising labor expenses position an obstacle to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, informed Hotel Dive.

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"It is an absolute concern." Rising labor expenses have been an obstacle for hoteliers for several years, Davis stated, particularly following the COVID-19 pandemic. In general, hotel labor expenses have increased 15.3% from 2019 to 2025, surpassing the 12.8% development in total operating income, according to AHLA. In the last few years, countless union hotel employees have gone on strike requiring higher incomes 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 settlements will be "front and center" in New York City, where the New York Hotel and Gaming Trades Council's union agreement with the Hotel Association of New York City City is set to expire in July.

"Need has not kept up with this pace," she stated. "We're also seeing these difficulties intensified by legislation that targets hotel operations, such as extreme labor and licensing policies like the New York City City Safe Hotels Act. When need is falling and costs are skyrocketing, the mathematics just does not build up." Incomes, salaries and payroll-related expenses paid by hotels now represent more than 32% of total earnings, according to AHLA.

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As more hotel visitors turn to expert system to enhance their travel experience, reserving hotels straight through large language designs (LLMs) might be next, hospitality professionals stated. Agentic commerce a process by which self-governing AI representatives act upon behalf of a customer to find, compare and finish purchases is a pattern that has sped up across markets 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 portion (57%) stated they 'd be most likely to utilize it for scheduling travel. However that number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. "The variety of consumers that are browsing [by means of LLMs] for services and products in travel has ballooned in the last 12 months and is accelerating every day," Kletzel said, including that inevitably, hotels will "take a difficult take a look at how they can allow commerce and deals through agentic [AI]"" [Brands] can build on the trust they currently have if they do a terrific task 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 name websites and mobile apps, and change the method the customer searches," Kletzel said.

"If you are not visible in an LLM search result which many brand names aren't, and this is the huge panic that they're all going through right now consumers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality item marketing at AI client experience platform Talkdesk, similarly informed Hotel Dive that hospitality gamers require to ensure their property information is being indexed by LLMs to appear in traveler queries.