U . S . Luxury Hotel Industry Sees Rates Soar to New Heights
Luxury Hotel Spa Additions Deserve Scrutiny BY JAN D . FREITAG
WITH THE PANDEMIC FADING in the rear-view mirror , luxury hotel operators in the U . S . are now refocusing on revenues and profitability . Room demand for luxury hotels has recovered well , and the industry is now selling almost 30 million room nights annually , more than ever before .
Effects of the Covid-19 disruption , however , are evident . Expected demand numbers based on pre-pandemic growth rates still have not been achieved .
Even while demand was disrupted between 2020 and 2022 , room supply has continued to grow . Developers and investors are eager to participate in the healthy industry fundamentals that drive profitability . Forty-six million
room nights are available annually , which will likely continue to increase as more investors place a bet on the segment .
Slower demand recovery goes hand in hand with solid pricing power for luxury-class hotels . Room rates on the high end grew around 18 percent between 2013 and 2019 . That growth rate soared to almost 30 percent between 2019 and 2023 . In other words , operators could make up for the lower occupancies by increasing their rates to the highest amounts ever recorded . Anecdotally , some owners are confiding this was a welcome trade-off , since fewer guests meant less wear and tear on their facility and less stress for their staff . At the
Luxury Room Demand Has Not Fully Recovered Supply and Demand in Millions of Room Nights at U . S . Luxury Class Hotels , 12 Month Moving Average , by Year
24 PULSE n JULY / AUGUST 2024