ORLANDO—Hotel industry leaders remain cautiously optimistic about growth despite ongoing economic uncertainty, elevated costs and a challenging development environment. Speaking during a development-focused fireside chat at LendingCon 2026 here, executives pointed to resilient travel demand, operational discipline and the continued rise of extended-stay hotels as bright spots for the sector.
Asked to describe the first half of 2026, Matthew Hostetler, chief development officer at Red Roof, chose the word "discipline," noting that owners and developers are still pursuing deals, but with greater scrutiny around financing, locations and long-term returns. He said franchisors also are focused on delivering stronger support to franchisees as they navigate a more complex operating environment.
Despite concerns ranging from tariffs and geopolitical conflicts to inflation, panelists said consumer demand for travel has remained surprisingly durable. Brian Quinn said travelers continue to prioritize experiences and are finding ways to stay on the road despite economic pressures.
Mark Williams, Extended Stay America's chief development officer, reiterated that it is just tough to find development money. "It's tough to get construction costs within a reasonable level, and I've never seen it like this in my entire career," he said. "But key money seems to be king in development right now."
Krishna Paliwal, president of midscale extended-stay at G6 Hospitality, added that the industry's recent slowdown has forced owners to make more strategic decisions about brands, renovations and investments.
"The clarity of this last six months or last 18 months," he said, has helped owners better assess what will drive success at the property level.
While demand has held up, profitability remains under pressure. Brian Quinn, chief development officer at the Rivett Group and My Place Hotels, said the brands must do more to help franchisees reduce operating costs and guest acquisition expenses as labor and other costs continue to rise.
A major focus of the discussion was the extended-stay segment, which panelists described as one of the industry's strongest performers.
Paliwal said extended stay demonstrates the value of operational discipline and delivering the amenities guests truly need rather than continually adding services that may not contribute to profitability.
Hostetler noted that extended-stay properties continue to find opportunities near hospitals, universities, workforce housing developments and major infrastructure projects. Success, he said, depends on following the operating model rather than treating the property like a traditional transient hotel.
Quinn said extended stay succeeds because it aligns the interests of consumers, operators, developers and lenders. Demand from construction crews, utility workers, healthcare professionals and other long-term travelers continues to support the segment's growth.
Williams added that extended-stay properties typically generate stronger flow-through than traditional hotel assets and have become a major focus for hotel companies in recent years.
Even with those strengths, development challenges remain significant. Williams said securing financing remains difficult and construction costs continue to pressure project economics. He also pointed to the growing importance of key money in development deals.
Quinn agreed that debt and equity markets remain out of sync, making it harder to get projects across the finish line. However, he suggested developers willing to move forward in today's environment may be rewarded when market conditions improve.
For Hostetler, the answer lies in staying close to owners and franchisees.
"The data always has a story," he said. But understanding the challenges behind the numbers is key. "Why are you [your customers] performing the way you are? How can we help you be better?" remains essential Hostetler said.