The trend: Hotel companies are expanding their upscale offerings to capitalize on strong demand for unique and customized accommodations among affluent consumers.

Major hotel operators are creating luxury collections and building or acquiring lucrative higher-end assets.

• In late May, Hyatt Hotels announced Unscripted by Hyatt, an upscale collection that will include independent properties. The company is in talks with 40-plus hotels globally about joining the collection, which will be part of Hyatt’s loyalty program.
• Marriott made a similar move last month, launching its Series by Marriott brand of upscale and midscale independent hotels.
• Choice Hotels, operator of budget brands Econo Lodge and Rodeway Inn, acquired Radisson in 2022 and is building out its Ascend Collection of independent resort, historic, and boutique hotels.
• Hilton now has 1,000 luxury and lifestyle brand hotels and will add more than 150 such properties worldwide in 2025, including reopening the Waldorf Astoria in New York.

Where the growth is: The desire for luxury accommodations is underpinned by a global rise in wealth, demand for unique experiences, and technology advances that are pushing higher-end hotel brands to upgrade their properties.

Even as the hotel sector and broader travel industry brace for slower growth in an uncertain economy, high-end properties are outperforming their lower-tier counterparts. Luxury hotels are still attracting consumers with disposable income, while economy hotels are feeling the pullback from price-sensitive guests.

Analytics firm Tourism Economics and real estate data provider CoStar downgraded their US hotel forecast this month, citing decreased business spending in wake of the Trump administration’s tariffs and soft international visitor volume.

• Revenues per available room (revPAR) are now expected to rise 1% this year for hotels, down from a prior forecast of 1.8%.
• Luxury, upper upscale, and upscale hotels are expected to post revPAR growth of 3.6%, 1.9%, and 0.5%, respectively. Midscale and economy hotels are projected to decline by 0.8% and 0.7%, respectively.
• Average daily room rate is expected to rise 1.3% this year, easing from 1.8% last year.

Our take: Hospitality is becoming increasingly segmented as rising affluence spurs demand for bespoke services and high-end amenities.

Luxury and lifestyle brands are weathering economic ambiguity better than budget lodging. This divergence indicates that upscale, experiential offerings will be more resilient, while economy hotels face headwinds from cost-conscious consumers. Hotel operators and travel-related retailers that invest in personalization and meet the demands of high-end travelers will be best poised to weather volatility.

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