Luxury Travel Continues Surge
Editor’s note: This report accompanies an article, Forecast Sunny for Hotels, first published in the June 2023 Special Edition of Beyond the Meeting Room, ALHI’s printed magazine, a luxury lifestyle publication focused on sharing compelling, inspirational and educational stories from beyond the four walls of a meeting room.
Looking for a persistent driver in the hotel industry’s comeback? Look no further than luxury travel.
Spending on luxury lodging was surpassed only by spending on luxury cars and personal luxury goods in 2022, according to a Bain and Company analysis.
Michael Dominguez, President and CEO of Association of Luxury Hotels International, said he’s “very bullish” on luxury travel and the luxury market.
“Marketing conversations are revolving around the forgotten generation—90% of the income in this country is tied to the (baby) boomers and the (Gen) Xers,” he said. “They were the birth of the 401(k) plan, and they have money that has to be withdrawn. There is a lot of money on the sidelines that wants to move and the people moving it want experiences.”
Luxury and lifestyle resorts are one of the best-performing hotel segments in the U.S., said Alex Cabañas, President of Pyramid Global Hospitality in Boston.
“Much of that has been driven by a continued appetite for memorable experiences and a willingness to devote disposable income to those pursuits,” he said. “STR reported (in April) that U.S. luxury hotels have seen 27.3% growth in ADR from 2019, which we believe reflects the strength of the experiential traveler.”
Urban luxury hotels have seen a slower recovery because of high dependence on group and business travel, the two slowest recovering segments, Cabañas said.
But STR now finds group demand at luxury hotels is at 85% of pre-pandemic levels.
“We see similar results and are encouraged by the rapid growth we see moving forward,” he said.
Amanda Hite, President of hotel industry research firm STR, said room rates are coming down in some places in the luxury segment, but upscale and upper upscale are doing well.
“That’s more of a normalizing and showing inflation is easing,” she said.