The hotel industry is facing a stark reality: a significant decline in bookings across the board, but not for the wealthy. Yes, while many Americans tighten their belts, luxury travelers are booming, outpacing the rest of the market even as the economy shows signs of strain. This disparity lays bare the rift in our society.
The situation is alarming. The housing market may be cooling, but the high-end sector remains vibrant. Luxury hotel chains, such as Four Seasons, Ritz-Carlton, and St. Regis, have reported a 2.9% increase in bookings this year amid a 3.1% plummet in the economy hotel segment. The message is clear: the upper class is thriving while the average American is struggling.
As experts note, this divide creates instability within the industry. “The upper end is doing okay, but the lower end is decidedly not,” states Jan Freitag of CoStar. We must recognize that the high-end traveler continues to spend, while those with modest incomes are left behind.
For the hotel industry, the numbers tell a troubling story. Revenue has fallen for two consecutive quarters as foreign travel drops and group bookings dwindle. With fewer international visitors—especially Canadians responding to pro-American policies—the lower and middle-income brackets are bearing the brunt of this downturn. As Freitag points out, “Overall the hotel industry is not doing well.”
Consider the consequences: international visits to the U.S. are projected to drop by over 8%, costing our economy a staggering $8.3 billion. Cities including Washington, D.C. are witnessing a wave of cancellations, leading managers to lament, “Things haven’t been this bad since COVID.” Families facing financial pressure are opting out of vacations entirely, directing their money to essential bills.
Despite these struggles, the top 10% of earners—those raking in $250,000 or more—command nearly half of all U.S. spending, a significant increase from 35% in the early 1990s. This means that while many Americans cut back, a fortunate few continue to indulge.
Luxury establishments like Rancho Valencia in San Diego experience a surge in demand, with rates beginning at $1,000 per night. General manager Milan Drager boasts, “2025 has been a great year for us.” Major hotel chains are taking notice, with Marriott eyeing nearly 300 new luxury properties and Hilton doubling down on its Waldorf-Astoria locations.
Ultimately, wealthier travelers like Michelle Tong of Dallas are unapologetic in their spending. “I’m definitely splurging more,” she asserts. “If I can afford to travel, I should go for it.” This is a sentiment that highlights the growing divide and sets the stage for a turbulent future within our economy. The contrast is stark, and it requires our attention and action.
