LONDON—The U.S. will have 1,067 luxury hotels by the end of 2019. This is expected to increase to 1,123 by 2022, at a compound annual growth rate (CAGR) of 1.7%, driven by increasing numbers of Chinese tourists, says GlobalData, a data and analytics company.
GlobalData’s latest report, “Destination Market Insights: U.S.,” states that although this growth is not expansive, it showcases the gradually increasing demand from international and domestic source markets for more luxurious offerings within the U.S.
Chinese tourists are a high spending source market and their visitation numbers to the U.S. have been growing rapidly in recent years. A CAGR of 8.7% was recorded in Chinese visitation to the U.S. between 2014 and 2018, and luxury hotels such as Four Seasons state that China is their second-largest source market. Revenue from Chinese travelers has increased steadily for the company, with double-digit growth in revenue in recent years, according to the report.
The report also states that the average spend per inbound tourist in the U.S. is expected to carry on its upward trend. From 2016 to 2018, average expenditure has risen at a CAGR of 3.2% from $2,534 to $2,700.
Ralph Hollister, travel & tourism associate analyst at GlobalData, said, “This increase in average expenditure is creating a rising demand for luxury services whilst on vacation, especially in the accommodation sector.”
Luxury hotels are now being constructed in up-and-coming areas which may not necessarily be located in tourist hot spots, the report noted, pointing to the Nobu and the Hoxton, which will both open their doors in 2019 in Chicago’s meatpacking district.
Hollister said, “Hotels opening in up-and-coming areas away from city centers will help to reduce the effects of overtourism and are more socially sustainable. The meatpacking district is known for independent eateries and shops, so money spent there will stay in the local economy and won’t be leaked out of the area via multinational corporations.”
An increasing number of downtown areas in major cities within the U.S. are being gentrified in order to increase capacity, attract higher spending market segments, attract further investment in to the city and improve the overall brand image of the destination, according to the report.
“Luxury hotels opening in once industrial or downtown areas within large cities will be a continuing trend,” Hollister said. “Luxury consumers are moving away from standardization as the millennial market grows in size. Old industrial and downtown areas within cities often provide a vibrant mix of architecture, culture and are often non-commercial. This gives these areas an alternative image, which attracts younger market segments.”