Luxury Hospitality Is Evolving: Historic Rates, Balanced Spas, and a New Normal

“The $1,000 ADR is the new normal,” stated Jan Freitag, National Director of Hospitality Analytics at CoStar, during his much-anticipated presentation at ISPA Conference 2025. And he wasn’t exaggerating. What was once rare has now become a trend: luxury hotels are hitting record-high average daily rates (ADR), driven by a resilient traveler seeking meaningful, high-impact experiences.

But Freitag’s insights didn’t stop there. These are the key takeaways that sparked our attention.

Strong Demand, Slightly Lower Occupancy, and Soaring ADRs

The data confirms a full recovery in global luxury hotel demand. However, a rapid increase in supply has led to a modest decline in occupancy rates, with an average 5% drop. Still, the global ADR surged by +30% since 2019, proving that travelers are willing to pay more when they perceive real value​.

Unlimited Luxury: The Rise of $1,000+ ADR Hotels

In 2024, hotels charging $1,000 USD or more per night have become mainstream. European countries like Italy and France—along with destinations such as Mexico and the Maldives—are seeing strong growth in this ultra-premium segment. Luxury has a new benchmark, and as Freitag noted, this opens a powerful dialogue on perceived value, exclusivity, and guest segmentation​.

Spas: Strategic Assets Facing Operational Challenges

In the wellness segment, Freitag’s data revealed that spa revenue per available room held steady, while labor costs continued to rise, impacting profit margins. Interestingly, hotels with spas consistently showed higher ADRs, although this does not always equate to higher occupancy. The message is clear: spas add strategic value, but they must operate with purpose and efficiency​.

Strong Pipeline, Intensified Competition

The global luxury hotel pipeline remains healthy, with strong development in APAC, China, the U.S., and Saudi Arabia. This means that competition in the luxury segment will become even more intense in the coming years. Differentiation will no longer be optional—it will be strategic.

Wellness Needs Data, Too

Jan Freitag’s presentation was not only enlightening—it was a reminder that data must be part of our wellness strategy. In a world where luxury is shifting and wellness is gaining ground, understanding macro trends is key to designing hospitality concepts that are soulful, purposeful, and profitable.