Hotel developers invest less in luxury

Is this the end of luxury as we know it?

Hotel developers are investing less in luxury properties, according to a new report by the US-based research and consulting firm Lodging Econometrics. This is because the cost of providing high-end amenities is rising and profit margins are shrinking.
RevPAR at luxury properties was $202 in 2012, a fall from the high of $213 seen in 2007. Only six luxury hotels are due to open their doors in the US in 2013, just as only six opened in 2012. In 2011, by contrast, 23 opened.
As investment in the luxury market declines, money is switched to upscale properties. The upscale market in the US grew by 49% (131 hotels) in 2012. The trend is partly because since the recession the maximum room rate consumers are willing to pay does not appear to be increasing.
[pictured: Dorado Beach, a Ritz-Carlton Reserve; photo courtesy Ritz-Carlton]


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