\n\t\t\t\t\t\t\tFind out more <\/a><\/p>\nAnalysts say stock market gains and rising home values are propping up high-income travellers, who are willing to pay premium prices for high-end hotels, while lower- and middle-income households cut back on travel spending.<\/p>\n
Wealthy travellers drive demand for luxury hotels<\/p>\n
Enquiries for top-tier stays are rising, according to the Luxury Travel Agency in Nashville, which reports typical nightly rates of $1,500 to $2,500 for destinations such as Miami, New York, Europe and the Caribbean\u2014up from around $900 before the pandemic.<\/p>\n
Some clients are accepting quotes as high as $3,500 per night, indicating resilient appetite for five-star hotels and exclusive resorts.<\/p>\n
Industry tracker CoStar says revenue at luxury brands including Four Seasons, Ritz-Carlton and St. Regis is up 2.9% so far this year, contrasting with a 3.1% decline at economy hotels.<\/p>\n
\u201cThe upper end is doing okay, but the lower end is decidedly not,\u201d said Jan Freitag, CoStar\u2019s national director of hospitality analytics, describing an \u201cuneven\u201d market where the high-end traveller continues to book despite wider weakness.<\/p>\n
At the property level, some upscale resorts report steady growth. Rancho Valencia near San Diego, where entry-level rooms start at roughly $1,000 per night, says bookings have been strong in 2025, with multi-bedroom residences priced up to $22,000 per night proving popular among repeat guests.<\/p>\n
Domestic slowdown and fewer international visitors weigh on the wider market<\/p>\n
Beyond the luxury travel segment, the broader US hotel industry is under pressure from weaker domestic demand and a drop in international visitors to the US.<\/p>\n
CoStar data indicate two consecutive quarters of declining hotel revenue\u2014a pattern typically seen only during major downturns such as the pandemic, the Great Recession and the aftermath of 9\/11. Average room rates have grown more slowly than inflation for eight straight months.<\/p>\n
In August, the average daily rate (ADR) across US hotels was essentially flat year on year at $159. Analysts note this headline figure is flattered by price increases at luxury brands; many mid-scale and budget properties are discounting to fill rooms.<\/p>\n
Travel businesses in key urban markets report cancellations and softer group bookings. In Washington, D.C., reservations at the Viceroy and Hotel Zena\u2014popular with government travellers and conference attendees\u2014have fallen by double digits from last year, with wedding enquiries also slowing.<\/p>\n
Industry sources cite cost-of-living pressures, a cooler jobs market and higher credit card balances as reasons households are postponing trips.<\/p>\n
Inbound tourism has also weakened. Research firm Tourism Economics expects overseas travel to the US to fall by more than 8% this year, translating to $8.3 billion in lost spending, with Canadian visits reportedly down 25%.<\/p>\n
A softer dollar would usually support inbound demand, but analysts say sentiment and visa frictions are likely weighing on long-haul travel plans.<\/p>\n
Spending power concentrates at the top as hotel strategies shift<\/p>\n
Economic growth remains positive, yet spending is increasingly concentrated among higher earners.<\/p>\n
Moody Analytics estimates the top 10% of American households\u2014those making $250,000 or more\u2014now account for about half of all consumer spending, up from roughly 35% in the early 1990s.<\/p>\n
That divergence is mirrored in travel: some households are cutting holiday budgets, while affluent travellers expand itineraries and shift to premium hotels for service and reliability.<\/p>\n
Major chains are recalibrating towards the most resilient demand. Marriott International plans to add nearly 300 luxury hotels to its portfolio of about 670, while Hilton Worldwide intends to almost double its Waldorf Astoria footprint from 36 to 66 properties.<\/p>\n
Executives say the strategy reflects clear luxury travel trends\u2014strong loyalty, higher RevPAR potential and less price sensitivity at the top end.<\/p>\n
For consumers, the gap is visible in pricing and experience. Travellers with rising incomes and robust rewards balances report choosing five-star resorts more often, citing service differences compared with mid-tier hotels.<\/p>\n
Meanwhile, households facing tighter budgets describe cutting back on holidays altogether, prioritising bills over discretionary travel expenses.<\/p>\n
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