Zipping around the U.S. over the course of two travel industry conferences in the last week made one thing clear: We’re firmly in a K-shaped economy.
With U.S. RevPAR projected negative in 2025 and luxury bookings up more than 25 per cent, investors face a split-screen travel market.
At STR’s Hotel Data Conference in Nashville, the opening salvo was a hard dose of reality. The firm’s latest forecast points to a bumpy ride for U.S. hotels: Supply growth remains muted (+0.8% in 2025), but demand is expected to contract slightly (-0.1%). The revised forecast landed with the kind of collective gasp I haven’t heard since Madonna actually started on time for her Boston concert earlier this year — but less on the Material Girl and let’s instead focus on hotel data.
Days later in Las Vegas, the mood couldn’t have been more different. Virtuoso Travel Week, often dubbed the “Fashion Week of Travel,” was buzzing inside the Bellagio and Aria, the twin host resorts. If there’s economic trembling to be had, it wasn’t in those halls. Virtuoso’s network of 20,000 advisors across 58 countries celebrated record engagement, with luxury travel demand showing little sign of slowing. Year-to-date sales data shows global hotel sales up nearly 26% from a year ago, while cruise sales climbed more than 9%.
The question is how long can travel companies keep touting strength at the top of the market if the mainstream business lines, where the bulk of transactions occur, continue to drag?
For owners and asset managers, STR’s projections signal caution. Demand contraction may be slight, but coupled with stubbornly high operating costs — wages, insurance, and financing — even minor occupancy declines can have outsized impacts on margins. The forecast calls for U.S. occupancy at 62.5% in 2025 and RevPAR slipping into negative territory for the first time since the pandemic recovery.
Performance declines are expected to hit economy (-2.2%), independent (-1.5%), and upper midscale (-1.4%) hotels the hardest while luxury hotels (+3.9%) and upper-upscale hotels (0.9%) should still post gains for the year.
“The next six months are really going to be rocky and probably not feel so great, because we saw the bulk of our growth in the first half of the year, unless you're a luxury hotel,” said Amanda Hite, president of STR.
If there is a silver lining, it’s that STR forecasts growth to pick back up as next year progresses.
Virtuoso’s Counterpoint
Against this backdrop, Virtuoso Travel Week underscored the durability of the luxury customer.
Advisors reported sustained demand for extended stays, multi-generational travel, and high-touch, experience-driven itineraries. With demand up so far compared to 2024, the affluent traveler is spending aggressively despite broader macroeconomic headwinds.
“The business of human connection is turning out to be the most defensible business model there is,” said Virtuoso CEO Matthew Upchurch.
For investors, this suggests that luxury-focused assets remain better positioned to weather near-term volatility. Rate strength in the segment, combined with resilient demand, justifies premium positioning and continued capital allocation toward properties and experiences that deliver differentiation.
The bifurcation revealed by STR and Virtuoso could shape underwriting assumptions in the months ahead. Assets at the midscale level may require more conservative projections, cost control strategies, and proactive brand or product repositioning.
Conversely, luxury demand trends support continued development pipelines, renovation projects, and targeted investment in lifestyle offerings that resonate with high-net-worth consumers.
Of course, not all hospitality assets will move in tandem.
A K-shaped travel economy means portfolio performance will be increasingly defined by chain scale, brand positioning, and exposure to markets that capture resilient demand.
Bottom line: In 2025, it feels a lot better to hold the deed to a Ritz-Carlton than a Ramada.