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The luxury hotel market size is estimated to grow by USD 54.46 billion accelerating at a CAGR of 4.5% between 2022 and 2027.
Our report offers in-depth analysis of market drivers, trends, opportunities, challenges, and restraints, with segmentation by Type (upscale, upper-upscale, and luxury) and Geography (North America, Europe, APAC, Middle East and Africa, and South America) and geography North America, Europe, APAC, Middle East and Africa, and South America. Additionally, Technavio provides valuable insights through value chain analysis, parent market analysis, Porter’s Five analysis, vendor analysis, and COVID-19 impact data. The report also includes a thorough analysis of historical market data from 2017 to 2022.
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The growing disposable income among the guests is a key driver boosting the luxury hotel market. The hospitality industry, particularly in developed economies like the US, Canada, Germany, and France, is a driving force for economic growth. Rising middle-class populations, increased disposable income, and evolving preferences among millennials contribute to higher spending on luxury experiences. The global surge in disposable income, evident in a USD 89.7 billion rise in the US from February to March 2022, according to the Bureau of Economic Analysis, is complemented by consistent growth reported by the OECD. This increased spending power, coupled with a booming tourism industry, fuels demand for luxury hotels, propelling the growth of the global luxury hotel market.
The higher acceptance of online booking platforms is a major luxury hotel market trend. A growing number of individuals prefer online portals for hotel bookings, facilitating organized and efficient reservations. These portals employ innovative strategies, offering customized deals, like pre-launch VIP programs for high-earning individuals, attracting early sign-ups. Notably, platforms such as booking.com allow users to tailor bookings based on their visit type, sort and filter hotels by amenities, and access detailed destination information, saving time. The increasing popularity and acceptance of online bookings are anticipated to create opportunities for vendors in the global luxury hotel market during the forecast period.
The high cost associated with luxury hotels is a key challenge hindering the luxury hotel market growth. Luxury hotels, characterized by higher investment and localization costs, are pricier than traditional options, often limiting their appeal to premium clientele. The elevated costs associated with luxury accommodations hinder market growth, compelling some guests to opt for traditional alternatives. In 2022, the cost of renting luxury hotel rooms and suites significantly rose, with a global hotel rate increase of approximately 13% year-over-year, projected to grow by about 10% in 2023. The average daily rate (ADR) for luxury hotels in June, July, and August 2022 reached USD 200, over 11% higher than in 2019 at USD 180. This escalating ADR reflects rising room and suite prices, potentially discouraging patrons and hampering the global luxury hotel market's growth in the forecast period.
The market share growth by the upscale segment will be significant during the forecast period. The upscale hotels offer a wide range of services and amenities such as on-site food and beverage, concierge services, meeting and conference services and facilities, a fitness center, and a business center.
Luxury Hotel Market
By Type
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The upscale segment was valued at USD 156.59 billion in 2017 and continued to grow until 2021. The upscale hotels are generally three- and four-star hotels. Moreover, these hotels are also offering exclusive play areas for children, as many families are opting for upscale hotels for vacations and other leisure purposes. Hotel chains such as Marriott, Radisson, and Hyatt are examples of upscale hotels. Compared with the upper-upscale and luxury hotels, upscale hotels are affordable. The increasing disposable income of consumers across developing and developed economies is majorly driving the growth of the upscale rooms segment in the global luxury hotel market. This, in turn, will drive the growth of the upscale segment in the market during the forecast period.
North America is estimated to contribute 32% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Luxury Hotel Market
By North America
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The luxury hotel market in North America is experiencing significant growth driven by factors such as a growing baby boomer population, rising demand for micro trips from professionals, and increased interest in multigenerational customized travels. The region benefits from well-connected transportation, luxurious accommodations, and exotic tourism destinations, offering popular adventure activities like trekking, caving, hill climbing, skydiving, and surfing. The presence of renowned vendors and a surge in food festivals also contribute to the market's expansion. Multigenerational trips are on the rise, particularly among baby boomers seeking quality family time in exotic destinations with various activities. Las Vegas remains a preferred destination, particularly for casino gaming enthusiasts.
The COVID-19 pandemic significantly impacted the US in 2020, leading to strict travel restrictions that severely affected the hotel market. However, the market saw recovery in 2021 with the widespread vaccination of the population and the easing of lockdowns, fostering a staycation trend. The prevalence of remote work further fueled people's preference for traveling and working from their preferred locations. Additionally, increasing government initiatives in the region are anticipated to contribute to market growth during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
The luxury hotel market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Luxury Hotel Market Scope |
|
Report Coverage |
Details |
Page number |
153 |
Base year |
2022 |
Historic period |
2018 - 2022 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Decelerate at a CAGR of 4.5% |
Market growth 2023-2027 |
USD 54.46 billion |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
4.92 |
Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
Performing market contribution |
North America at 32% |
Key countries |
US, China, India, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Accor S.A., Aman Group Sarl., Best Western International Inc., Choice Hotels International Inc., Four Seasons Hotels Ltd., Hyatt Hotels Corp., InterContinental Hotels Group Plc, ITC Ltd., Jardine Matheson, Jumeirah International LLC, Kempinski Hotels SA, Kerzner International Ltd., LVMH Moet Hennessy Louis Vuitton SE, Marriott International Inc., Rosewood Hotel Group, Shangri La Asia Ltd., Soneva Mauritius Ltd., The Hongkong and Shanghai Hotels Ltd., The Indian Hotel Co. Ltd., and Wyndham Destinations |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
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