Strong leisure demand from high-end travelers has supported robust pricing increases at high-end hotels; US, Italy and France show strongest growth in properties with a four-digit average rate.
This translates to more hotels that can regularly charge well over $1,000 per room per night and are reporting an average daily rate, or ADR, of over $1,000 for the first half of the year.
In the same period in 2019, around 150 hotels globally reported an ADR of over $1,000. This year, that number has jumped to 460 hotels.
The ADR is an average for all rooms sold and implies that hoteliers can command even higher rates on certain nights and for certain room types. Traditionally, this was true for suites and connected rooms. Anecdotally, hotel operators have reported that in 2020, many of their guests felt unable or unwilling to travel and that in the following years, they wanted to make up for lost time.
In addition, the strong desire to be with loved ones and family members gave rise to multigenerational trips, requiring more and larger accommodations. This allowed operators to yield the more desirable room types such as suites with multiple bedrooms.
The increase in hotels charging four-digit ADRs is a global phenomenon. Since 2019, the number of hotels in that price range has tripled in the Americas and Europe and more than doubled in the Asia Pacific and the Middle East and Africa region. This speaks to the proliferation of higher-end brands and the global nature of high-end leisure demand.
The hotels in this sample report their monthly and weekly revenues to CoStar. Smaller, ultra-luxury hotels, such as lodges in the African savannah or boutique bed and breakfasts in rural Europe may not participate in the CoStar reporting, so the number of hotels reported here is likely undercounting the total.
Five of the 10 countries that grew their stable of $1,000 ADR hotels the fastest since 2019 are in Europe. Not surprisingly, hoteliers in Italy and France were able to monetize the strong desire of American tourists to leave the U.S. in 2023 and 2024, buoyed by the strong U.S. dollar. Switzerland, the United Kingdom and Spain have always had a strong consumer base of luxury leisure travelers, especially from the Middle East and, over the last few years, increased their luxury hotel counts.
In the U.S., the number of hotels charging $1,000 ADR has almost quadrupled over the last four years. In 2019, only 22 hotels could command such high prices, but by 2024, this number had increased to 80.
As the strong growth in the number of high-rated properties shows, ultra-luxury leisure travelers are eager to spend on lavish hotels and the accompanying bespoke experiences.
Looking ahead, continued growth in hotels charging these high ADRs is likely as the growth will be fueled by two trends. For one, hotels will continue to monetize the demand for their high-end offerings. In addition, hotel developers will continue building properties to target the high-end income level, and the number of properties reporting an ADR of over $1,000 will likely steadily increase.
By Jan Freitag
CoStar Analytics
www.costar.com
