The Profit Shift: Why Luxury Resorts Are Now Outperforming the Market

Luxury is the only hotel segment delivering real RevPAR growth above inflation.

U.S. data through August 2025 shows luxury properties outperforming all other classes, while midscale and economy segments experience flat to negative real growth. This signals a structural shift in where profit is being created.

For more than a decade, the hotel industry followed a familiar narrative: limited-service hotels drove profits, while luxury struggled to convert top-line growth into meaningful margins.

That story has now flipped.

Recent U.S. performance data shows a clear and durable shift... luxury and upper-tier boutique resorts are now leading the industry in real revenue growth, outpacing inflation and outperforming other hotel classes on both pricing power and demand quality. For independent owners, this is more than a trend; it’s a structural change in where profit is being created.

Luxury Resorts Growing Above Inflation—Everyone Else Is Not

According to STR / CoStar data through August 2025 YTD, luxury hotels are the only class achieving real RevPAR growth above inflation at a national level.

While economy, midscale, and even upper-midscale properties are seeing flat to negative real growth, luxury demand is expanding meaningfully—particularly in top-tier and experiential markets.

This matters because RevPAR growth above inflation is the threshold where owners regain:

• Margin expansion

• Capital reinvestment capacity

• Real asset appreciation

Luxury has crossed that line. Most of the industry has not.

Pricing power has returned, but only at the top of the market.

ADR Power Has Returned, But Only at the Top

ADR growth across the U.S. hotel landscape has weakened materially, with every class except luxury showing soft or negative real pricing gains.

Luxury hotels, however, continue to demonstrate:

• Stronger pricing acceptance

• Lower discount dependency

• Less reliance on opaque and distressed channels

This pricing power is especially pronounced in top 25 markets and destination-driven resorts, where affluent leisure demand remains resilient despite broader economic uncertainty.

In simple terms: luxury guests are still traveling AND they are still paying.

Why This Time Is Different for Luxury Owners

Historically, luxury hotels suffered from:

• High fixed costs

• Overbuilt service models

• Brand-driven expense creep

• Weak operating leverage

What’s changed is not demand alone; it’s how luxury properties are being operated.

Independent and boutique luxury resorts are now benefiting from:

• Leaner, experience-led staffing models

• Revenue diversification beyond rooms

• Smarter distribution and yield management

• Purpose-driven capital deployment

The result is operating leverage that did not exist in prior cycles.

Luxury is no longer just winning on rate; it’s winning on flow-through.

The Advantage of Boutique & Independent Luxury

While large branded luxury hotels still face structural cost challenges, boutique and independent resorts are capturing the upside faster.

Why?

• Fewer brand-mandated expenses

• Greater pricing flexibility

• Faster decision-making

• Stronger alignment between ownership, brand, and guest experience

These assets are uniquely positioned to convert RevPAR and ADR gains into actual profit growth, not just topline headlines.

What This Means for Owners and Investors

The implication is clear:

• Luxury boutique resorts are no longer defensive plays; they are growth assets.

• Capital is being rewarded at the top of the market, not the middle.

• Operational excellence now matters more than scale.

For owners willing to rethink management structure, cost discipline, and revenue strategy, this cycle offers something luxury rarely delivers at scale: outsized profitability with long-term asset appreciation.

The Bottom Line

The hotel industry’s old profit hierarchy has changed. Limited service is no longer the automatic margin leader.Luxury is no longer the under-performer.

For well-positioned boutique and independent resorts, this is the strongest profit environment luxury has seen in years—and those who act decisively will define the next decade of value creation.