Recent data highlights a remarkable surge in the number of luxury hotels worldwide that charge an average daily rate (ADR) of $1,000 or more, with notable growth seen in the U.S., Italy, and France. According to reports, these countries have experienced the most significant increases in high-end hotel properties, reflecting the global shift towards more luxurious and exclusive accommodations. This trend signals a growing demand for premium experiences in the hospitality sector, with travelers increasingly willing to pay for the heightened luxury offered by these high-end establishments.
In the U.S., the number of hotels maintaining an ADR of $1,000 or above has dramatically risen in recent years. In 2019, only 22 hotels were able to sustain such rates annually. However, by the first half of this year, that figure skyrocketed to around 80 properties. This considerable growth underscores the rising popularity of luxury travel, particularly in major urban centers and sought-after destinations across the country, where upscale accommodations are increasingly becoming a defining feature of the travel experience.
Italy has also seen a notable expansion in its luxury hotel offerings. In the same period, the number of Italian hotels with ADRs of $1,000 or more has jumped from fewer than 20 to nearly 70. Italy’s combination of rich cultural heritage, stunning landscapes, and world-class hospitality continues to attract affluent travelers, pushing the demand for ultra-luxury hotels to unprecedented levels. This rise further cements Italy’s status as one of Europe’s top destinations for discerning travelers seeking unique and lavish experiences.
France, too, has made significant strides in this area, with its roster of $1,000-plus ADR properties increasing from just over 20 to nearly 50 in recent years. While these numbers offer a clear snapshot of the luxury hotel market’s expansion, it’s important to note that they may actually underestimate the true count. Many smaller, ultraluxe hotels are excluded from this data, suggesting the real scope of the high-end market could be even larger than reported.
Jan Freitag, senior vice president of lodging insights at STR and national director of hospitality analytics for CoStar Group, indicates that the current trend points to a growing “bifurcation” within the hospitality industry. This split reflects the widening gap between luxury hotels and more affordable options, as premium properties continue to command higher rates while budget and mid-range accommodations remain more stagnant. The rise in ultra-luxury hotels charging $1,000 or more per night illustrates the growing demand for exclusive experiences, catering to affluent travelers who seek top-tier amenities and personalized services.
This bifurcation signifies a broader transformation within the sector, where luxury and economy hotels are diverging in both pricing and offerings. As a result, high-end properties are pushing the boundaries of what defines a luxury experience, while more economical options focus on affordability and practicality. This division not only highlights the evolving preferences of consumers but also signals a shifting landscape in hospitality, where travelers are either willing to pay a premium for upscale experiences or gravitate towards value-driven alternatives.
CoStar data revealed that RevPAR for economy hotels in the U.S. experienced a decline of 4.2% in 2024 through July. In contrast, upper-upscale, full-service properties saw a 2.1% increase in RevPAR during the same period, highlighting the growing disparity between different segments of the hospitality market.
This data underscores the continued strength of the luxury hotel sector, which has maintained steady growth, while more affordable accommodations have faced challenges. The performance gap between these segments illustrates the shifting dynamics in consumer preferences, with high-end properties benefiting from increased demand for premium experiences.
Freitag points out that an additional layer of bifurcation is emerging within the luxury segment itself. This new divide highlights the growing distinction between standard luxury offerings and those catering to the ultra-high-end market, where exclusivity and bespoke experiences set certain properties apart.
Peter Ricci, the director of the hospitality and tourism management program at Florida Atlantic University, observed a growing trend of $1,000-per-night accommodations becoming more common in Florida markets, particularly in areas such as Palm Beach and Boca Raton.
Some luxury travelers are finding the sharp rise in hotel rates harder to justify. Beth Washington, founder of the Washington-based Getaway Guild, has observed a significant surge in accommodation costs, leading many of her clients to reconsider their travel plans. One notable example involved clients who rescheduled a trip to Italy initially planned for 2019 but postponed due to the pandemic. When the trip was originally booked, their five-star hotel rooms ranged from $612 to $723 per night. However, upon rebooking last year, Washington found that the same rooms during the same season had drastically increased in price, with two properties exceeding $1,660 per night and a third reaching $945. This stark difference highlights the growing challenge for luxury travelers in navigating the evolving market.
Due to the fluctuating nature of hotel rates driven by dynamic pricing, Washington recommends her clients secure flexible rates as early as possible. This strategy allows them to lock in the current prices and avoid future rate hikes.
Despite the rise in costs, many travel advisors are discovering a silver lining in this trend, offering opportunities to enhance the value of luxury travel experiences.
The future of the rapid rise in $1,000 hotel rates across the U.S. and Europe remains unclear. According to Sarah Fazendin of Videre Travel in Denver, the surge in demand triggered by the pandemic, which contributed to the steep price increases, now seems to be leveling off.
