Luxury Hotels Boom While The Rest Of the Industry Slumps

Many Americans are cutting back on hotel stays, pushing the industry into one of its steepest declines since the pandemic. But the wealthy are still spending freely on luxury travel, buoyed by stock gains and rising home values, according to the Washington Post.

That divide mirrors the wider economy: the housing market has slowed, but million-dollar homes and high-end cars are selling briskly. Hotels show the contrast most sharply — while overall bookings and prices slump, luxury brands like the Four Seasons, Ritz-Carlton and St. Regis are up 2.9 percent this year, compared with a 3.1 percent drop for economy hotels.

“The upper end is doing okay, but the lower end is decidedly not,” said Jan Freitag of CoStar. “The industry is on a very uneven keel … but the high-end traveler is still traveling.”

Weaker demand and fewer foreign visitors — especially Canadians reacting to the Trump administration’s “America First” policies — have driven hotel revenue down for two straight quarters. “Overall the hotel industry is not doing well,” Freitag said. “Foreign travel is down, group bookings are decelerating, and lower- and middle-income travelers are struggling.”

WaPo writes that international visits to the U.S. are expected to fall more than 8 percent this year, costing $8.3 billion, while Canadian travel is down 25 percent. In cities like D.C., cancellations are mounting. “Things haven’t been this bad since covid,” said hotel manager Oksana Gyulnazaryan. “People are scared.”

For families like Jeremy Boutin’s near Boston, vacations are no longer possible. “All the money we have is going right to our bills,” he said.

Still, the broader economy is growing, and the top 10 percent of earners — those making $250,000 or more — now account for roughly half of all U.S. spending, up from 35 percent in the early 1990s.

Luxury resorts such as Rancho Valencia near San Diego, where rooms start at $1,000 a night, report strong bookings. “For us, 2025 has been a great year,” said general manager Milan Drager.

Hotel giants are following suit: Marriott plans nearly 300 new luxury properties, and Hilton will almost double its Waldorf-Astoria hotels.

Travelers like Michelle Tong of Dallas embody the trend. “I’m definitely splurging more,” she said. “I’m fortunate that I have disposable income … and the pandemic reminded me that life is short, so if I can afford to travel, I should go for it.”