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Hotel prices surge causing booking slump – but luxury remains fully booked

The hospitality industry is facing a major shift. According to the latest data from travel associations and booking platforms, the widespread rise in hotel rates is leading to a sharp drop in reservations. However, the trend is far from uniform: while luxury hotels are consistently sold out, lower-category accommodations are struggling to attract guests.

Five-star hotels and exclusive resorts are reporting full occupancy months in advance, often with waiting lists. In contrast, one-, two-, and three-star properties are seeing a significant decline in demand. This pattern has been observed in major art cities, coastal resorts, and mountain destinations alike.

Several factors explain the trend. On the one hand, inflation and rising energy costs have forced many hoteliers to increase prices, even for budget and mid-range hotels. On the other hand, price-sensitive travelers are cutting back on accommodation expenses, turning to short-term rentals, hostels, or simply canceling their trips altogether.

“A family that could afford a week in a three-star hotel now struggles to cover three nights with the same budget,” explains a spokesperson for a major hoteliers’ association. “As a result, many either give up or look for non-traditional alternatives.”

Luxury travelers, however, appear immune to the price hikes. For them, price is not a deciding factor. They seek exclusivity, personalized services, and high-end experiences — and are willing to pay a premium for them.

Experts warn that this trend could lead to an unsustainable polarization of the market. Mid-range and economy hotels may be forced to shut down or rebrand, further reducing affordable options for the average traveler.

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