“Are Luxury Hotels Recession Proof?” In an article by Market Metrix posted by HospitalityNet, Jonathan Barsky and Lenny Lash provide evidence that suggests Luxury Hotels are not falling victim to price sensitivity during the economic downturn. This news bodes well for luxury vacation rentals and the luxury travel market in general, as it appears, “Affluent buyers aren’t particularly affected by rising interest rates and mortgage related problems. So luxury hotel (and vacation rental) guests have the ability to absorb the cost increases rather easily.” See some insightful excerpts below, and read the full story here.

Price Sensitivity by Hotel Segment

“Luxury hotels typically cater to a distinct kind of guest, often wealthy individuals to whom price is less of a factor in selecting a hotel.”

“At least part of the price strength of luxury hotels can be explained by the size of this segment - there are not many luxury hotels and the number of guests able to afford luxury accommodations has risen dramatically in the past few years. This positive relationship will continue as long as the number of new luxury properties does not grow faster than the number of persons willing to pay their premium prices.”

“International tourists, taking advantage of a weakening US dollar, are looking to the US as a prime vacation spot and are spending more money, often upgrading to higher-end, luxury accommodations.”

“A lack of price sensitivity should not be viewed as a green light to raise luxury hotel prices. Excessive pricing in this fragile economy can create ill will and tarnish a brand.”

“Market share is more important than ever in a downturn. That means holding the line on extra fees and complementary services, and maintaining investments in service recovery and loyalty programs.”