Luxury hotels are embracing low occupancy as a deliberate strategy, according to hospitality experts. While most industries panic when sales are low, luxury hotels thrive when they are half empty, as it enhances the guest experience and brand value.
Julian Brittano, CEO of The Rook Hotels and The Cornerstone Collection, told The Independent that fewer guests allow staff to deliver personalised service and 'craft moments that would feel impossible in a busier setting.' He added that a half-empty hotel embodies privilege and that low occupancy is intentional curation, not inefficiency.
Minkyung Kim, assistant professor of marketing at Carnegie Mellon University, agreed that luxury hotels accept lower occupancy as the cost of delivering a less crowded, higher-quality experience. Hotels filter out travellers through aggressive pricing, with some charging over $1,000 per night, ensuring exclusivity.
The strategy pays off as wealthy guests spend more on additional services like restaurants and spas. Brittano noted that volume is not the key performance indicator; instead, yield per guest, brand equity, and exclusivity drive long-term success. In the US, average luxury hotel room rates have reached a record high of $394, yet bookings rose 2.5% year-to-date through September, according to CoStar.
