Luxury hotels prevail amid fallen consumer confidence

The CEO panel at the NYU forum discussed consumer hesitancy and the hotel industry's resilience. Photo Credit: Christina Jelski

NEW YORK -- Hotel CEOs on stage at the NYU International Hospitality Investment Forum on June 2 discussed how consumer hesitation is hitting midscale and economy hotels much harder than luxury hotels.

Hyatt CEO Mark Hoplamazian talked about a "massive divergence by chain scale," with economic pressure increasing the further down the chain scale you go. A month ago, Hoplamazian discussed the phenomenon during Hyatt's Q1 earnings call, saying luxury and upper-upscale hotels (about 70% of Hyatt's portfolio) were outperforming the company's lower-tier hotels.  

Hoplamazian's comments jibed with a revised 2025 forecast from CoStar and Tourism Economics at the NYU event.

Luxury hotels are expected to achieve 3.4% growth in revenue per available room (RevPAR) this year, and 1.8% growth is expected for upper-upscale hotels. 

Meanwhile, upscale hotels are projected for 0.5% RevPAR growth, and midscale and economy hotels are expected to record 0.8% and 0.7% RevPAR decreases, respectively.

Wyndham Hotels & Resorts CEO Geoff Ballotti said the company's midscale-and-above brands are driving profitability in the U.S., along with extended-stay hotels. Hawthorn Suites is Wyndham's primary extended-stay chain, and it has added Echo Suites and WaterWalk in recent years.

"There's just tremendously more demand in extended stay than there is supply right now," said Ballotti, attributing the segment's strength to housing shortages and corporate demand for accommodating blue-collar workers on infrastructure projects.

Hotel industry resilience

The CEOs also discussed the hotel industry's resilience during a time of economic uncertainty, saying travel demand has continued to hold up relatively well across most sectors. Marriott International CEO Anthony Capuano said that was "pretty encouraging."

Hoplamazian said consumers are putting off their booking decisions until the last minute, causing business on the books to initially appear weaker than usual. He's seeing that trend particularly in business travel.

"We're seeing the pace for transient business start to slow down maybe two months out, and then it gets weaker, and then as the date of travel gets closer and closer, it comes back up," he said.

Hilton CEO Christopher Nassetta acknowledged that most major hotel companies have lowered their 2025 outlook. Despite economic volatility, he expressed optimism that pending legislative packages and trade deals could provide the stability needed to restore consumer confidence.

"Getting those things buttoned down at least a little bit more, I think, will allow our customers -- whether that's leisure, business, meetings or events -- to have a little bit more confidence," said Nassetta. 

The other CEOs on stage were Elie Maalouf of IHG Hotels & Resorts and Sebastien Bazin of Accor.

Protestors disrupt CEO panel 

Midway through the session, the sound of protesting interrupted the proceedings, startling audience members.

A security guard said protesters had gathered on the fifth floor of the New York Marriott Marquis. The protest was about the use of eggs from caged hens. The panel resumed shortly after the disruption.

Original article from Travel Weekly can be found here: https://www.travelweekly.com/Travel-News/Hotel-News/Luxury-hotels-prevail-amid-fallen-consumer-confidence