Luxury Hotels: Elevated Occupancy and Expenses

the Authors | December 16, 2019

By Mark Woodworth and Robert Mandelbaum Despite the relatively high cost of construction and complexity of operations, developers are still attracted to owning and managing luxury hotels. As of August 2019, STR reports that just 0.7 percent of the hotels (2.3% of rooms) in the United States are chain-affiliated luxury hotels. Concurrently, the STR pipeline report shows that 1.2 percent of the properties (2.9% of rooms) either under construction or planned for development meet this criterion. The reasons for this attraction vary: Luxury hotels do achieve premium occupancy and ADR levels, that result in greater than average levels of...