by Mia Taylor
Last updated: 2:27 PM ET, Tue June 25, 2019
The increasing number of Chinese tourists arriving in the United States is driving an expansion in the luxury hotel market.
New data shows the United States will have 1,067 luxury hotels by the end of this year and that number is expected to increase 1.7 percent, to 1,123 properties, by 2022, according to the new "Destination Market Insights: US" report from GlobalData.
Although the growth is not expansive, it points to a gradually increasing demand from international and domestic source markets, according to the report.
"Chinese tourists are a high spending source market and their visitation numbers to the US have been growing rapidly in recent years," the report continues.
Chinese visitation to the United States between 2014 and 2018 increased at a rate of 8.7 percent.
In addition, luxury hotels such as Four Seasons, have indicated that China is their second-largest source market, according to report authors, who said revenue from Chinese travelers has increased steadily for the hotel company, with double-digit growth in revenue in recent years.
The average spend per inbound tourist to the United States is also expected to continue the growth trajectory it's been on for the past several years, according to Destination Market Insights report. Between 2016 and 2018, average expenditure rose 3.2 percent from $2,534 to $2,700.
"This increase in average expenditure is creating a rising demand for luxury services whilst on vacation, especially in the accommodation sector," said Ralph Hollister, a travel and tourism associate analyst for Global Data.
Also notable, the report reveals that luxury hotels are now being constructed in up-and-coming areas around the country, places that may not necessarily be tourist hotspots. Nobu and the Hoxton, for instance, will both open their doors in 2019 in Chicago's meatpacking district, a gritty, industrial area that's undergoing a rapid transformation.
"Hotels opening in up-and-coming areas away from city centers will help to reduce the effects of overtourism and are more socially sustainable," Hollister continued. "The meatpacking district is known for independent eateries and shops, so money spent there will stay in the local economy and won't be leaked out of the area via multi-national corporations."
An increasing number of downtown areas in major cities within the US are being gentrified in order to increase capacity, attract higher spending market segments, attract further investment into the city and improve the overall brand image of the destination.
An example of such gentrification, according to the report, would be Industrial Way in Buellton, California.
For years the area was a collection of warehouses and light manufacturing buildings. In recent years, however, developers have added restaurants, breweries, and distilleries and Buellton has become a popular destination for wine tasting.
"Luxury hotels opening in once industrial or downtown areas within large cities will be a continuing trend," Hollister concluded. "Luxury consumers are moving away from standardization as the millennial market grows in size. Old industrial and downtown areas within cities often provide a vibrant mix of architecture, culture and are often non-commercial. This gives these areas an alternative image, which attracts younger market segments."
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