Boutique hotels in the U.S. demonstrated financial strength last year, particularly in the luxury segment. But ongoing economic uncertainty threaten to derail that progress.
For the week ending April 13, revenue was down 4% year-over-year and nights booked were down 3% at about 180 boutique hotels using reservation software from GuestCentric.
For the week of April 6, bookings at those U.S. boutique hotels were down 15%.
These declines were in sharp contrast to the previous month. “March [bookings] closed at 115% of 2024 figures, which is remarkable,” said Pedro Colaco, CEO of GuestCentric. “While we entered 2025 with caution — primarily due to a softening in ADR [average daily rates] throughout 2024 — the year started with strong momentum.”
Tariffs announced by the Trump administration this month have raised recession risks and created concern about a potential negative impact on international travel to the U.S.
Bookings in Europe were much stronger. For the week of April 6, bookings at about 490 European independent boutiques were up in count by 17% versus the same week a year ago, GuestCentric said.
U.S. Boutiques Rode High in 2024
The Highland Group’s “Boutique Hotel Report 2025” offers a snapshot of just how well U.S. boutique hotels performed in 2024 before the tariff concerns.Â
Last year, U.S. boutique hotels achieved average daily rates (ADRs) ranging from $141 to $440, outperforming comparable mainstream hotels, which saw ADRs of $134 to $353. They were also broadly profitable.
Last year, U.S. independent boutique luxury hotels, in particular, reported higher revenue per available room (RevPAR) at $328 and higher EBIDTA (at $166) than lifestyle hotels, hotels that are “soft branded” and part of major hotel groups, and full-service hotels.
Soft brand collections in the upper upscale/luxury class exhibited a RevPAR of about $199 and an EBITDA of $101. These figures were higher than the EBITDA reported for U.S. full-service franchise-affiliated hotels ($89) and U.S. full-service independent hotels ($94).
Kim Bardoul, partner at The Highland Group and author of the “Boutique Hotel Report 2025,” was cautiously optimistic, despite the recent weakness.
“There could be some…loss of income,” Bardoul said. “I don’t think the actual luxury or any boutique segment is going to see a huge downshift from this. Not huge, just some blips here and there.”Â
Evolving Landscape
There has been consolidation within the boutique hotel sector, with independent properties being absorbed by larger franchises.Â
“A large portion of those independent hotels were taken up by franchises,” said Bardoul, citing examples like Dream, Bunkhouse, and Graduate moving into soft brand lifestyle collections of Hyatt and Hilton in the past couple of years.
While acknowledging that this reflects the segment’s success and attractiveness to major brands, Bardoul also raises a cautionary note:
“The reason those hotels have been so successful is because they have stayed true to the experience,” Bardoul said. “They’ve stayed true to the authenticity of what a boutique hotel really is…and so is that going to continue? Let’s hope so.”
Accommodations Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200)Â combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.
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