US Hotels Split Into a ‘K-Shaped’ Market as Luxury Surges and Economy Lags

US hotel performance data for the first half of 2026 shows a widening gap between the top and bottom of the market. Luxury hotels posted average daily rate growth of 10.1%, a 3.4 percentage point rise in occupancy and RevPAR growth of 15.9%, alongside a four-point improvement in gross operating profit margin, according to industry data from HotelData’s H1 2026 Profit Report. Economy hotels moved in the opposite direction: occupancy rose 4.6 points to 68.5%, but average daily rate fell 9.3%, dragging RevPAR down 2.7% even as gross operating profit margin stayed roughly flat.

The report describes the split as a “K-shaped performance story,” in which demand strengthened across the board but pricing power did not follow evenly. Luxury properties raised rates while still filling more rooms, while economy hotels pulled in significantly more guests only by cutting prices, a pattern consistent with what CBRE’s midyear 2026 outlook found across the wider market.

Confirmed in CBRE’s own data

CBRE’s first-quarter 2026 figures back up the divide: overall RevPAR grew 3.8% year-on-year, its best quarterly performance since the first quarter of 2023, driven by a 1.1-point gain in occupancy and 2.4% growth in average daily rate. Within that total, luxury RevPAR rose 7.0% and resort locations 6.6%, while midscale grew just 0.9% and economy fell 1.8%. CBRE’s full-year 2026 forecast calls for luxury RevPAR growth of 5.2%, roughly double the national pace, against 0.7% for midscale and a 0.6% decline for economy.

An upgraded outlook, unevenly shared

CBRE has since raised its full-year 2026 national RevPAR growth forecast to 2.5%, up from an initial 1.2% projection, citing a “meaningful recovery” in business transient and group travel, with convention-linked RevPAR growth reaching 5.4% by April. Markets tied to technology hubs and AI data centre construction, including the San Francisco Bay Area, Memphis, Houston and St Louis, are seen as best placed to benefit from the improved outlook.

Why it matters

The divergence points to a hotel industry increasingly shaped by the same income divide affecting broader consumer spending: higher earners still willing to pay more for premium stays, while budget-conscious travellers push economy operators to compete on price rather than rate. For investors and operators, the data suggests that where a hotel sits on the chain-scale ladder now matters as much as which market it is in.