Which Way is Luxury Hotel Pricing Going in 2023?


At Skift Global Forum East, Bernstein Research managing director Richard Clarke projected prices will continue to increase but could do even better business with bespoke experiences.


Pricing to Increase as Luxury Travelers Come Back

Using data from hospitality analysis firm STR, luxury pricing is increasing in line with a trend interrupted by the Great Recession of 2009. Luxury hotel prices are expected to rise to around 110% of current upper upscale prices.


Part of the reason is that luxury customers, who generally have more money and have no problem spending despite economic conditions, were only stopped by the COVID-19 pandemic. The other part is that luxury hotels are a comparative value when priced against other high-end goods.


“Even though every survey will tell you that luxury consumers want to spend more money on experiences, not less, we haven’t seen that catch-up come through in market share,” Clarke told the Skift Global Forum East. “If you look at luxury lodging as a percentage of the luxury market, you see there’s plenty of upsides to come.”


Although prices are projected to rise, there are reasons to be skeptical about paying more in cash or points. Hotel investment companies are betting more on luxury travel, developing new top-end properties. Clarke points to Marriott, which currently has 35 luxury hotels in development to join their portfolio of around 500 destinations.


The definition of luxury may change as well, as some properties add scarcity to their allure. For example, the members-only Soho House currently has a long waitlist for new guests to join their ranks.


Hotels Slowly Shift Focus from Opulence to Experience

The shift away from opulence to experience isn’t new for the hospitality industry. In October 2022, Hilton announced a partnership with Peloton to start bringing the digital workout bikes to their properties, with every U.S. property to get at least one.


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Source: frugal travel guy

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