If you’re in the hospitality industry, right now is a good time to target high-net-worth customers, but not so good a time to be in the budget business. That’s one of the big takeaways from Hotels magazine’s David Eisen’s analysis of the industry’s current state, based on comments made by Hilton CEO Chris Nassetta earlier this month about the economic impact the pandemic has had on the industry.
“People had checking accounts full of COVID-19 money, but they’re spending it and borrowing more,” Nassetta said during a recent earnings call. “They have less disposable income and can’t afford to do anything, including travel.”
Hotels’ analysis also incorporates revenue per available room (RevPAR) data from analytics firm CoStar Group. As of June 2024, RevPAR was up 2.1% for luxury hotels, 2.4% for upper upscale hotels and 2.0% for upscale hotels. Economy hotels were down 4.4% and midscale hotels were down 1.4% during the same period. Eisen also points to another reason for hotels’ current ups and downs: A strong U.S. dollar abroad is causing some travelers to travel more internationally and less domestically.
It’s not hard to see the impact of this being felt in how the hospitality industry is expanding and where the investment is being made. Earlier this year, luxury hotel group Rocco Forte Hotels announced plans to expand its US footprint, and the Drifter in New Orleans was recently sold to an ambitious group of investors. Even the ongoing motel revival across the US, as The New York Times noted, is a move to turn previously modest properties into luxury establishments. For an industry in flux, it’s a trend to watch.
Similar
This article was featured in the InsideHook Newsletter. Sign up now!
