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Luxury Travelers Pushing Hotel Room Rates Past Pre-Pandemic Levels In Tourist Destinations


The uneven recovery from the pandemic-induced recession is already bearing out in the hospitality market, as certain markets and hotels are seemingly back to full health.

Average hotel room rates are only 5% below what they were a year ago, up from an 11% gap a month before, according to data from travel booking technology platform Koddi reported by CNBC. In popular vacation destinations, room rates are surpassing pre-pandemic levels.

High-income households, which by and large didn't suffer financially as a result of the coronavirus pandemic but were unable to spend the same amounts on travel, are seeking to splurge as the world reopens. Households worldwide saved about $5.4 trillion more than they expected to in 2020, with the high-income subset holding the bulk of the excess, according to a Goldman Sachs report.

U.S. consumers who self-identify as "luxury travelers" told surveyors from hospitality and tourism marketing firm MMGY Global that they plan to take four trips in the next year, Skift reports. Vacation rental platform Vacasa noted a 28% increase in spending per rental in March 2021 compared to March 2019.

Though the past year has seen an increase in adoption of vacation rental homes through platforms like Vacasa and Airbnb, those bookings have not yet come at the expense of luxury hotels in those tourist destinations, Skift reports. While luxury hotels have consistently accounted for 3% to 4% of room nights over the past few years, alternative luxury rentals have grown from 2% to 3% of room nights before the pandemic to 4% to 5% of room nights this spring, according to data from regular industry survey Shifflet Travel Performance/Monitor reported by Skift.

Meanwhile, hotels in the largest U.S. cities are still seeing depressed room rates, CNBC reports — likely due to the glut of hotels that depend more on business and convention travel than tourism. Because such hotels make up a high percentage of the total luxury rooms in the U.S., they drag overall averages down. For the week ending April 10, average revenue per available room was down to $172.13 from the $233.81 that the corresponding week in 2019 averaged, according to STR data reported by Skift.