Will Fast Casual Investments Remain Lucrative in 2026?

Listen to the short article 17 min This audio is auto-generated. Please let us understand if you have feedback. Following a year of broad financial uncertainty that suppressed growth for hotels, hospitality industry leaders are looking toward 2026 with mindful optimism. Rising functional costs are slated to challenge owners this year and lower-tier sections could struggle amidst a growing wealth bifurcation.

And through everything, hotel business are expected to strengthen their portfolios with brand-new brand offerings and collaborations. As the year gets underway, Hotel Dive talked with hospitality leaders from differing corners of the market about their 2026 predictions. Below are the top patterns expected to effect hotel operations, performance, net unit growth and more this year.

Total salaries, salaries 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 climb up to $131 billion, representing a roughly 3% year-over-year boost, per AHLA. For hotel owners, increasing labor costs present a challenge to net operating income development, Kevin Davis, Americas CEO at JLL Hotels & Hospitality, told Hotel Dive.

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"It is an absolute 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, outpacing the 12.8% development in total operating income, according to AHLA. Over the last few years, thousands of union hotel employees have actually gone on strike requiring greater incomes in order to keep up with the increasing cost 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 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.

Last year, the union backed New York City's freshly elected Mayor Zorhan Mamdani, who ran on a pledge to raise New york city City's minimum wage to $30 per hour by 2030. Hotel industry associations, including AHLA, have denounced similar legislation throughout the country, including the recently passed $30 wage ordinance in Los Angeles. "Need has not stayed up to date with this rate," she stated. "We're likewise seeing these challenges compounded 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 mathematics just doesn't accumulate." Salaries, salaries and payroll-related expenditures paid by hotels now represent more than 32% of total income, according to AHLA.

Modern Hospitality Industry Innovations Driving 2026 Success

As more hotel guests turn to expert system to boost their travel experience, reserving hotels directly through large language designs (LLMs) might be next, hospitality professionals stated. Agentic commerce a process by which self-governing AI agents act on behalf of a customer to find, compare and complete purchases is a trend that has actually accelerated throughout industries like retail.

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According to PwC's 2025 Holiday Outlook report, 76% of millennials stated they're likely to use AI for travel suggestions. A smaller sized percentage (57%) stated they 'd be likely to use it for booking travel. That number is growing, Jonathan Kletzel, PwC's travel, transportation and logistics leader, told Hotel Dive. "The variety of customers that are browsing [by means of LLMs] for product or services in travel has swollen in the last 12 months and is accelerating every day," Kletzel said, including that inevitably, hotels will "take a tough look at how they can allow commerce and transactions through agentic [AI]"" [Brands] can construct on the trust they already have if they do a great job with how they manage AI in 2026." Michael Klein Head of retail, travel and hospitality item marketing at Talkdesk To stay competitive with direct booking, bigger multibrand hotel companies will "embed LLMs into their own brand sites and mobile apps, and change the way the customer searches," Kletzel stated.

"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 consumers aren't going to consider you," he said. Michael Klein, head of retail, travel and hospitality item marketing at AI consumer experience platform Talkdesk, similarly told Hotel Dive that hospitality players require to guarantee their residential or commercial property info is being indexed by LLMs to appear in traveler questions.