Luxury Hotels May Be Underpriced Relative to Other Luxuries

Luxury hotel companies could flash a half-decent report card this year thanks to a post-pandemic surge in demand. But they could do better long-term if management teams sharpen their focus on opportunities to woo well-off consumers who increasingly care about experiences.

That was the view of Richard Clarke, a managing director at Bernstein Research, who presented "A Macro View on Travel's Future" at Skift Global Forum East on December 14 in Dubai.

Clarke and his team analyzed data from the hotel benchmarking service STR. They concluded that luxury hotels ought to command higher rates in the future in light of the willingness of well-off consumers to spend on other types of luxury goods and services at high levels. If shoppers are willing to buy Gucci handbags and Cartier watches, why aren't they paying premiums for luxury hotel rooms?

"You used to see an ever-growing premium of luxury hotels relative to upscale hotels," Clarke said. "That stopped in 2009."

In the past year, average rates for luxury hotels finally got back in line with the historical trend interrupted by the