If you’re running an ultra-luxury property and your occupancy has softened, you’re targeting the wrong guests, it really is that simple.

The K-shaped economy everyone keeps referencing isn’t bad news for high-end hospitality. In fact, it’s the best thing that’s happened to it in decades. Yes, the middle of the market has flattened, and yes, entry-level travel is under pressure—but your guest isn’t in either of those categories.

The upper arm of the K, the top decile of travelers, has pulled away from the pack. They’re spending more, staying longer, and booking earlier. The most recent CoStar data shows luxury room revenue up nearly three percent while the economy tier dropped by the same amount. Hudson Valley and Napa are sold out this fall. The Caribbean’s top properties are pacing well ahead of 2019. The guests who matter never got the memo that travel was supposed to slow down.

That’s the defining truth of this cycle: the affluent are accelerating. They’ve stopped apologizing for it, and they’re not price-sensitive because price isn’t their governing variable. What does govern them is discernment. They’re intolerant of friction, allergic to sameness, and utterly indifferent to what most brands call “value.” They’re not looking for deals. They’re looking for difference.

Operators who miss that distinction are busy chasing ghosts. They respond to perceived “softness” with discounting, then act surprised when it doesn’t work. But discounting doesn’t attract the right guest—it announces that you’ve joined the wrong league. You might fill a few rooms, but you’ll do it by trading down. And once you’ve taught your customers to expect less from you, you can’t teach them back up again.

This is what the K-shape really means for hospitality: it’s not a split between haves and have-nots. It’s a sorting mechanism between those who understand their customer and those who still believe everyone is their customer.

Look at what’s actually happening. At the top of the K, the composition of demand has changed. These guests are traveling more often, but with greater intention. They’re stacking experiences—art, food, wellness, ecology—into coherent stories. They’re booking private chefs instead of prix-fixes, helicopter transfers instead of shuttles, and whole-property buyouts instead of suites. Their expectations aren’t higher; they’re narrower. They know exactly what they want, and they expect you to know it before they do.

Meanwhile, operators in the middle of the market are misreading the signal. They see declining volume and interpret it as a macro problem when it’s actually a segmentation problem. Their guests are slipping away, not because the economy failed them, but because they’ve been trained to accept mediocrity dressed up as luxury. A “five-star” badge on a Marriott doesn’t fool anyone who knows what distinction feels like.

For serious hoteliers, the path forward is remarkably clear. Hold rate, refine your product, and deepen your narrative. In a bifurcated economy, the safest position isn’t in the middle—it’s at the top, protected by scarcity and discernment. True luxury is capacity-constrained on purpose; the more the world polarizes, the more valuable that constraint becomes.

This isn’t theory. It’s what’s playing out in every market that actually matters. The Hudson Valley, Napa, Capri, St. Barth’s, —all are reporting record ADRs and waitlists that stretch into 2026. The idea that “people are traveling less” is a story told by operators who built for the wrong audience. The right audience is still traveling, and spending, and upgrading. The only question is whether they’re doing it with you or someone else.

If your hotel feels slower, look at who you’ve been marketing to, not what the Fed did last week. The guests who belong in your rooms are out there, wallets open, waiting for someone to offer them something rare, not merely available.

Thomas Brown
CEO at Ad Altius Advisors

adaltius.com