same time , the customers willing to pay the higher rates were often also willing to spend more money in restaurants , retail and spa or golf outlets .
Eighteen years ago , Professor Mary Tabacchi from the Nolan School of Hotel Administration asked me to present at a spa event . At the time , STR , a Costar group company , had no spa data available , so I created a slide that has lived on in pitch decks around the globe ever since . I charted the average daily rate ( ADR ) premium for luxury hotels with a spa compared to luxury hotels that did not offer treatment rooms . I hasten to point out this chart and room rate premium do not automatically suggest a hotel needs a spa to drive the rate . A myriad of reasons could drive this premium ,
including location ( urban versus resort ), brand ( flagged versus independent ) or other amenities ( golf or beach access ). It is impossible to condense the competitive pressures and hotel-specific circumstances into one chart and one number of ADR premiums . The chart shows what developers want to see , so it is used as support in development meetings . But it ’ s wise to take caution : Much more project-specific research is needed before a spa is added to the program , rather than relying on one slide .
Looking ahead , luxury hotels will likely continue attracting travelers willing to spend money on experiences . In turn , luxury hotel developers will continue investing and adding new supply , often including a spa . n
Luxury Room Rates Have Soared Since 2019 U . S . Luxury Class , ADR ( Average Daily Rate ), by Year
Luxury Hotels With Spas Have Higher Room Rates U . S . Luxury Class , with and without Spa , ADR ( Average Daily Rate ), by Year
JAN D . FREITAG is the national director , hospitality analytics , for the CoStar Group . A sought-after public speaker , Freitag comments on the trends that shape the U . S . hotel industry and is frequently quoted in trade publications and the general news media . He is a trusted source of timely insights for investors , owners and operators . He holds a bachelor ’ s degree , with distinction , from the School of Hotel Administration , Cornell University , and received his Executive MBA , with honors , from Vanderbilt University .
JULY / AUGUST 2024 n PULSE 25