The situation: Budget hotel chains are facing the same turbulence hitting discount airlines, per Yahoo Finance.
- In the current K-shaped economy, lower-income travelers are pulling back while wealthier consumers trade up to more comfortable stays, leaving budget hotels on the side of the road.
- While budget chains are usually resilient in downturns, this time they face what Bank of America calls “structural” headwinds: lower-income travelers contending with slow income growth, weakening sentiment, and persistent inflation.
Broader challenges: More than half of Americans (52%) say today’s economic pressures—from tariffs to rising prices—are reshaping their travel plans, according to a Harris Poll for The Points Guy.
- 1 in 5 is traveling less than originally planned.
- Nearly as many (19%) are shortening trips.
- 14% are postponing or canceling altogether, while another 14% are swapping destinations.
A shutdown would only magnify the strain. Three in five Americans (60%) say they’d scrap or avoid air travel, an Ipsos survey finds. The US Travel Association estimates the fallout could sap $1 billion a week from the economy, as flight and rail disruptions stack up alongside shuttered parks and museums. The ripple effects would squeeze hotels, restaurants, and retailers.
Our take: Companies like Hyatt and Marriott have the cushion of diversified portfolios—and may even pick up business as wealthier travelers trade up. But others, such as Choice Hotels and Wyndham, don’t have that safety net. Their focus on the budget segment makes them more vulnerable, which is why Bank of America downgraded Choice shares to “underperform” from “buy” this week.
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