Press

Shifting Ground: The new landscape of hotel performance

Originally seen HERE.

Across the hospitality industry, the data reveals a subtle yet telling shift. A divide appears to be emerging between luxury and midscale hotels, while budget properties remain largely steady.

Luxury hotels continue to inch ahead, driven by travelers who have the financial freedom to seek elevated experiences, personalized service and exceptional comfort. These guests continue to spend on indulgence, even as broader economic pressures persist. Meanwhile, budget and economy hotels remain steady by serving travelers who must watch every penny in this challenging economy. Guests who prioritize reliability and value above all else. Their consistency and affordability have become reassuring constants in an environment where every dollar counts.

Between these two extremes lies the real pressure point. Midscale and upper-midscale hotels are showing slight declines in demand, raising growing concerns about what the future may hold for this once-dominant segment. As one might say, “The middle of the market is no longer a comfort zone. It is a crossroads.” Guests appear to be gravitating either upward, in search of curated experiences, or downward, toward affordability and function.

While the data does not yet indicate dramatic divergence, the direction is clear. Luxury and upper-upscale properties benefit from stronger rates and more diversified revenue streams. These might include catering, recreation and premium amenities that help insulate them from softer cycles. Midscale operators face a more complex reality, challenged by higher costs and shifting guest expectations that can blur identity and erode margins. In many ways, luxury is evolving; budget is holding steady; midscale is finding its footing.

At AAHOA, we recognize that these emerging patterns represent more than numbers. They represent an inflection point for hotel owners across America. Our members, who operate properties at every scale of the chain, are directly affected by these gradual shifts in demand and profitability. Understanding where travelers are spending and how rate behavior is evolving helps owners make strategic, data-driven decisions.

This is not a story of winners and losers, but of equilibrium taking shape. Success in this environment depends on having a clear purpose and being adaptable. As the market realigns, hoteliers must clarify their position. Will they elevate experience, reinforce value or find innovative ways to bridge both worlds? Ultimately, the next chapter of hospitality will not be written by those who have the most rooms, but by those who have the clearest vision.

At AAHOA, our commitment remains steadfast: to equip hotel owners with insights and education that illuminate opportunity in every corner of the market. On this shifting ground, one thing is certain—AAHOA members will continue to lead in defining the future of American hospitality.