A rebound in demand for luxury hotels was seen across the US in 2021, although the category’s sales remained far below the pre-pandemic level, as international travel remained restricted for most of the year. The growth in 2021 was largely attributable to the lifting of domestic travel restrictions and increases in savings amongst US consumers.
In 2021, a massive shift in booking patterns for luxury hotels was noted from business groups and individuals. Living in hotels is by no means a new concept, but experienced a resurgence during the pandemic.
Even though the use of digital devices was increasing prior to the pandemic, many luxury hotels had hesitated to fully adopt digital technologies, instead prioritising personal services for affluent consumers. When social distancing became the norm, however, luxury hotels and their customers were forced to embrace many technologies overnight, including video calls.
Pent-up domestic demand ignited the recovery of luxury hotels in the US in 2021. However, the sales of luxury hotels will still take years to recover – expected to reach the pre-pandemic (2019) level of current value sales in 2024.
Luxury hotels typically need higher occupancy rates than other types of hotels, such as economy hotels, to cover variable and semi-fixed costs. Amidst the pandemic, economy hotels reduced their variable and semi-fixed costs by cutting labour costs or using family labour.
Consumer concern to follow environmentally-friendly practices has been evident for a while in luxury hotels. However, demand is expected to expand over the forecast period, as changes in luxury hotel booking patterns in 2021 have already been identified.
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Luxury: includes luxury and upper upscale hotels. Would generally include 5-star hotels and above, but may include some “4.5-Star” outlets, provided that the brands positioning warrants it. The luxury classification is primarily determined by the brand’s positioning and marketing, which will be at the high-end. Brand examples include Marriott, Hilton, Sofitel and InterContinental.See All of Our Definitions
This report originates from Passport, our Luxury Hotels research and analysis database.
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