US: Luxury hotels rise as low-end brands slump

Luxury hotels in the U.S. have seen strong growth in demand and rates, while economy hotels have seen year-over-year declines, bucking historical trends

Jun 26, 2024

Higher-end travelers, and therefore higher-end hotels, are experiencing robust growth in demand and room rates. However, the same cannot be said for the lower end of the market.

Key takeaways

• For the first five months of the year, luxury hotel occupancy was up 1.8% year-over-year, while economy hotel occupancy was down 3.4%, according to CoStar;
• This break from the usual pattern, where room demand across all segments tracks GDP growth, suggests that current economic pressures are affecting consumers differently across income levels;
• High inflation for core items for lower-income households, such as housing, food and car payments, may force them to prioritize essential expenses over discretionary travel.

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