Can Hospitality Investments Remain Lucrative in 2026?

Listen to the article 17 minutes 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 towards 2026 with careful optimism. Rising functional costs are slated to challenge owners this year and lower-tier sections could have a hard time amidst a growing wealth bifurcation.

And through it all, hotel companies are anticipated to fortify their portfolios with new brand name offerings and partnerships. As the year gets underway, Hotel Dive spoke to hospitality leaders from differing corners of the industry about their 2026 forecasts. Below are the leading trends expected to effect hotel operations, efficiency, net system development and more this year.

Overall salaries, earnings and benefits paid by U.S. hotels rose 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 expenses pose a difficulty to net operating income growth, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

Can Hospitality Franchises Remain Lucrative in 2026?

Increasing labor costs have actually been a difficulty for hoteliers for years, Davis said, particularly following the COVID-19 pandemic. In general, hotel labor expenses have increased 15.3% from 2019 to 2025, exceeding the 12.8% growth in overall operating earnings, according to AHLA.

3, 2024 in San Francisco, California. Justin Sullivan through Getty Images In 2026, Davis noted, 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 is set to expire in July.

"Demand has not kept up with this speed," she said. Incomes, incomes and payroll-related expenses paid by hotels now account for more than 32% of overall earnings, according to AHLA.

Top Lucrative Franchise Prospects for the Future

As more hotel visitors turn to artificial intelligence to enhance their travel experience, scheduling hotels directly through large language designs (LLMs) may be next, hospitality professionals stated. Agentic commerce a process by which self-governing AI agents act on behalf of a customer to discover, compare and complete purchases is a pattern that has actually accelerated across markets like retail.

Freddy's Frozen Custard & Steakburgers

According to PwC's 2025 Holiday Outlook report, 76% of millennials said they're likely to utilize AI for travel suggestions. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, informed Hotel Dive. Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct booking, larger multibrand hotel business will "embed LLMs into their own brand name websites and mobile apps, and alter the way the consumer searches," Kletzel stated.

"If you are not visible in an LLM search results page which many brand names 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 information is being indexed by LLMs to appear in traveler queries.