Marriott sees hotel demand broadening beyond luxury

Select-service hotels are recovering as travelers shift spending patterns and Marriott balances geopolitical risks with long-term growth bets

Marriott says hotel demand in the U.S. is becoming more balanced across segments, with select-service hotels showing a notable recovery after lagging behind luxury properties. The company reported continued strength in luxury and resort travel, but also highlighted improving performance in more affordable hotel categories as travelers adapt to higher airfare costs and prioritize experiences over goods. Marriott raised its full-year RevPAR outlook despite ongoing uncertainty tied to the Iran conflict and fuel price volatility. At the same time, the company signaled a strong focus on AI-powered search, digital scale advantages, and expanding its co-branded credit card business.

Key takeaways

• Select-service recovery: Marriott reported a strong rebound in select-service hotels, with RevPAR rising 3.5% after declining in the previous quarter, suggesting demand is spreading beyond luxury travel.
• Drive-to travel is increasing: Rising airline fares linked to higher fuel prices are pushing more travelers toward regional and drive-to destinations, benefiting midscale and select-service properties.
• Travel remains a consumer priority: Marriott said credit card spending data continues to show consumers across income groups prioritizing travel and experiences over discretionary retail purchases.
• Luxury still leads growth: Luxury and resort hotels in the U.S. and Canada continued to outperform, with RevPAR growth approaching 7%, reinforcing ongoing resilience at the high end of the market.
• World Cup optimism remains intact: Despite industry concerns around softer demand, Marriott maintained confidence that the FIFA World Cup will positively contribute to RevPAR growth, with booking momentum still expected to build closer to the event.
• Middle East conflict is a major headwind: Marriott expects the Iran war to negatively impact global RevPAR, particularly in the second quarter, while also affecting nearby markets such as India and the Maldives through reduced airline capacity.
• AI and search are becoming strategic priorities: Marriott plans to introduce natural-language search across its digital platforms and is participating in OpenAI’s advertising initiatives, reflecting broader shifts in how travelers may discover and book hotels.
• Scale is increasingly a competitive advantage: Marriott emphasized that its global footprint, guest data, reviews, and real-time inventory capabilities position it strongly for an AI-driven and search-centric booking environment.

Source: Marriott

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