.svg)
At the start of 2025, expectations for retail were optimistic – focused on replacement cycles, a rebound in discretionary spending, and continued consumer strength. In reality, the year has been far more disruptive than that early narrative anticipated.
Consumers faced ongoing pressure from economic uncertainty, weather disruptions, employment concerns, and declining confidence. With consumers more connected to real-time news than ever, shoppers adjusted their retail decisions quickly as conditions changed, often taking a cautious, defensive approach to spending.
The discretionary side of the retail industry, also known as general merchandise, has shouldered most of the impact of changing consumer dynamics. As consumers looked to create a balance between their needs and their wants, oftentimes the “needs” won out. In general, visitation to non-discretionary categories has remained relatively stable, while there has been more volatility across the discretionary space.
The non-discretionary retail sectors benefited from value based models like value grocery chains and dollar and discount stores. Warehouse clubs emerged as the new one-stop-shop for consumers as superstores struggled to maintain in-store traffic. And fresh format grocery stores still found success with wealthier consumers and new store formats.
Despite the challenges overall, there have still been pockets of growth and emerging trends that have shaped the discretionary sector. And, despite a lot of stormy weather, consumers continue to maintain some level of resilience. In particular, the holiday season has been shaped by this unforeseen optimism despite the circumstances of many shoppers.
Here’s a look back at the trends and stories that shaped discretionary categories in 2025:
One of the most stark examples of the current retail climate continues to be the bifurcation of consumers. The retail industry, particularly in discretionary categories, has been bolstered by wealthier shoppers, as lower and middle income families become more discerning and stretched financially. This trend became more pronounced throughout 2025, and the second half of 2025 saw a large pullback by “aspirational” shoppers.
The luxury market has been greatly impacted by this trend, as visits by wealthier consumers haven’t been able to offset the decline by more infrequent, aspirational visitors. Overall visit growth to luxury apparel and accessories retailers slowed in Q3 when compared to 2024 levels, and those trends have continued into the holiday season.
According to Spatial.ai’s PersonaLive consumer segmentation, 2025 has seen a higher distribution of visits by Ultra Wealthy Families, Sunset Boomers, and Upper Suburban Diverse Families as there has been a contraction of visits by Near-Urban Diverse Families, and City Hopefuls. Aspirational shoppers who may have once saved for or set aside disposable income for luxury purchases may have had to shift those funds elsewhere as lower income shoppers become more financially strained.
Retailers are going to face more pressure next year as this bifurcation continues and consumer spending becomes more polarized. Full-price brands and those that fit somewhere in the middle are going to need creative solutions to court consumers, especially those who have become much more discerning this year.
The American retail landscape has long been associated with the wide array of specialty retailers that operate all across the country. Whether mastering American fashion, stories, or experiences, retailers have ingrained themselves into the fabric of consumers’ celebrations, gifts, and leisure time.
For many retailers that have led both media coverage and performance in 2025, success has come down to one simple concept: going back to their roots. Retail brands have always been synonymous with specialties, whether it be quality, styling, service, or expertise. Brands that have once again harnessed these elements to repair relationships with consumers and cement their brand value have been able to circumvent a lot of the economic challenges this year.
The return of Gap has been well documented this year, but it bears repeating because it has been remarkable. While all Gap Inc. brands are somewhere along the road to recovery, the flagship brand has been most impressive. Traffic in 2025 was up 1.1% compared to 2024, which is impressive after years of declines. The brand has focused its marketing and merchandising around the return of trend-right, high quality and affordable American fashion, and shoppers have bought in wholeheartedly.
Nordstrom, another top pick for 2025, cemented its place as a category expert and customer service titan. Whether it be the shoe department, the cafe, or the in-store experience, Nordstrom is once again a top-of-mind destination for shoppers, especially those who have higher levels of disposable income. The chain is benefiting from this return to form, with visits up 2.3% in 2025.
Finally, against all odds, Barnes & Noble has continued its momentum this year. As the industry to be first disrupted by e-commerce, the bookstore category has faced an uphill climb after losing major retail chains and a strong digital presence. Barnes & Noble has been able to harness the power of in-store experience to cement itself as part of the consumers’ communities. As shoppers increasingly look to the retail industry as a third place for socializing, the chain has been able to adapt to keep customers in stores for longer.
With uncertain economic conditions, consumers have been much more discerning about discretionary purchases in 2025 – but still crave the concept of treating themselves. Self-gifting has been on the rise for the past few holiday seasons, but 2025 signaled that even when consumers are more intentional about purchasing, they still crave that joy of the shopping experience.
Small indulgence categories have been on the rise or rebound since the second half of 2025. Beauty, in particular, saw a turn in its business as consumers became more discerning. Beauty has always been synonymous with challenging economic times for consumers, with the “lipstick index” often seen as a barometer for consumer sentiment. Beauty’s rebound could very well continue into 2026 if consumers look for those small ways to update their look and satisfy their need to shop.
Collectibles can also fit into the small indulgence category, especially with 2025’s hottest item, Labubu. Although the viral sensation from retailer POP MART became almost impossible to secure, the price point was attainable for most consumers. Similarly, Trade Joe’s viral mini tote bag also comes at a low price point, at $2.99, and consumers continue to flock to the brand’s stores to purchase during the bag's drops in spring and fall.
The pet category has also had a strong 2025 performance, which can somewhat be attributed to the small indulgence trend. Consumers tend to pull back on self-purchasing, but will often limit the impact felt by pets or children. The pet category has not seen much change in consumer behavior and this trend is likely to continue into 2026.
At the start of 2026, discretionary retail has not so much rebounded as recalibrated. The year revealed a consumer who is highly informed, highly selective, and increasingly comfortable walking away – forcing retailers to compete not just on price or promotion, but on relevance. The winners were not those that chased volume at all costs, but those that clearly articulated why they exist, who they serve, and what role they play in consumers’ lives.
Looking ahead to 2026, the forces that shaped this year – income bifurcation, cautious spending, and the prioritization of emotional value – are likely to intensify. Retailers operating in the middle will face the greatest test, as consumers continue to polarize between value-seeking and premium experiences. Growth will likely come from precision: sharper assortments, clearer brand positioning, and formats that respect both consumers’ financial realities and their desire for moments of joy.
For more data-driven retail insights, visit placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
Between May of 2021 and November of 2025, The Home Depot saw year-over-year (YoY) visits down 50 of 55 months. The initial downturn was likely driven by the intense pull forward of demand during the pandemic, while the latter struggles were driven by a combination of economic headwinds and sector specific challenges. But, however you contextualize the issues, the result was an average monthly decline of 3.6% YoY from May 2021 to April 2025, despite the final months of that period taking place during the retailer’s normal annual visit peak.
But, there were also very positive signs during that period. The weeks prior to Liberation Day saw YoY visit increases of 2.5% and 4.6%, before tariff concerns drove significant declines, and those declines continued with 14 of the next 15 weeks seeing YoY visit drops.
So where are the signs of a sleeping giant?
For one, visits are getting better. The visit gap between May and November 2025 shrunk to just 0.5% – essentially flat.
Then November saw a visit jump of 3.8%, and the strength was part of a sustained effort, with the eight week period from October 20th to the week beginning December 9th seeing consistent YoY visit increases.
In addition, this strength during the holiday period gives added emphasis to the thinking that Home Depot’s return to growth could have been much earlier were it not for the tariff obstacles that appeared in March and April.
Great brand, clear market leadership and smoother sailing? Sounds like a recipe for a 2026 winner.
In the first half of 2025, Starbucks monthly visits were down 0.6% on average. In the first five months of the second half, that number jumped to being up 1.6%, including a 14 week period between September 1st and the week beginning December 1st where the coffee giant saw visits up 12 of 14 weeks driving October and November visits up 3.2% on average YoY. For context, Q4 2024 was down 2.9% YoY.
The takeaway?
There was real reason to be excited about the directional shifts CEO Brian Niccol built his Back to Starbucks strategy around. The concepts resonated and hearkened back to a Starbucks experience that would leverage its unique brand and status. But ultimately, the excitement needed to center around the belief that these strategies could work and be executed effectively.
The last few months have been a powerful indication that those who held this belief were justified. Visits didn’t improve because of strong coffee headwinds, they improved because Starbucks did what they do best – they owned the calendar and leveraged their creativity and brand to drive huge visit spikes. Cups – whether of the Red or Bearista variety – and menu shifts including the epic annual PSL launch drove visit surges, and the chain's massive footprint positioned it to dominate on major shopping days like Black Friday.
TLDR – the new strategy sounded exciting, there’s real evidence that it’s working, and the chain has maintained its unique hold on the calendar and an industry leading ability to drive urgency and visits almost at the flick of a switch. Lots of reasons to expect the Starbucks recovery to continue gaining momentum.
For more data-driven insights, visit placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
Craft retailers – one of the top destinations for purchasing holiday decor – posted impressive year-over-year (YoY) gains this holiday season: AI-powered location analytics reveals that visits to industry leaders Michaels and Hobby Lobby were up YoY by double-digits almost every week of the holiday season. And while some of these chains' success is likely due to the reduced competition – with Party City having ceased its operations earlier this year – the strong growth also suggests that, despite digital competition, the demand for physical browsing and festive inspiration remains high.
We dove into the data to analyze how the holiday decor market is evolving.
The 2025 closures of Party City and JOANN consolidated the crafting sector, leaving Michaels and Hobby Lobby with fewer competitors and driving up YoY visits. This market shift proved particularly advantageous in Q4 as shoppers seeking Halloween decorations and holiday trimmings flocked to the remaining specialty retailers.
But Michaels and Hobby Lobby's success is due to more than just a market consolidation – the two chains have cemented themselves as premier destinations for holiday home decor. And while these retailers have traditionally relied on families looking to fill suburban homes with seasonal cheer, AI-powered location analytics reveal that younger, more urban shoppers are also fueling the holiday traffic boost.
Focusing on October and November data reveals that both chains saw the share of "households with children" in their captured market dip between 2024 and 2025, while the share of Young Professionals and Young Urban Singles increased. This suggests that at least some of the holiday decorating in 2025 was fueled not just by family traditions, but also by a younger generation curating their spaces with viral, budget-friendly finds.
While the exit of competitors like Party City and JOANN cleared the playing field in 2025, Michaels and Hobby Lobby's success is due to more than just absorbing the displaced demand. By capturing a new wave of young, urban shoppers hunting for viral trends, these retailers have proven that holiday décor is no longer solely the domain of suburban families. This successful pivot from traditional utility to trend-driven destination suggests that the craft sector isn't just surviving the retail shakeout; it is effectively reshaping itself for a new generation of consumers.
For more data-driven insights, visit placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
7 Brew Coffee may be the fastest-growing coffee chain in the US right now. The chain surged from just 14 locations at the start of 2022 to around 500 locations by October 2025. And average visits per location also increased significantly – indicating that despite the breakneck expansion, the drive-thru brand still has significant runway left to grow.
The chain's hypergrowth has been fueled by significant capital, including an equity investment from Blackstone in 2024 and a massive franchise agreement with the Flynn Group to develop an additional 160 stores. With a modular building model that allows for rapid deployment, 7 Brew is positioned to aggressively challenge major drive-thru competitors like Dutch Bros and Scooter's Coffee.
7 Brew's success can also be linked to a broader rise in drive-thru-centric coffee concepts. The chart below illustrates the shifting category dynamics in recent years as leading drive-thru coffee chains – with Dutch Bros in the lead – commanding a growing share of overall coffee visits since 2019.
Even amid the broader rise of drive-thru coffee chains, 7 Brew’s growth continues to stand out. While the brand still holds a relatively small share of the overall coffee market, the brand’s proportional growth outpaces its peers, reflecting both aggressive unit expansion and strong consumer adoption. The chart also underscores how 7 Brew is increasingly carving out space within a segment historically dominated by brands like Dutch Bros – suggesting meaningful long-term competitive potential.
With drive-thru coffee continuing to surge in popularity and consumers gravitating toward convenience-forward formats, 7 Brew is well positioned to continue capturing incremental market share and solidifying its status as one of the fastest-rising brands in the category.
For more data-driven retail insights, visit placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
Despite the ongoing consumer headwinds, the 2025 holiday shopping season delivered year-over-year (YoY) gains for both retail and dining chains nationwide, with the majority of states registering retail and dining traffic increases during the holiday window. And while performance varied meaningfully by category and format, aggregate retail traffic numbers point to significant consumer engagement throughout the end of 2025.
Bifurcation has been a defining trend of consumer behavior in 2025 and continued to shape shopping patterns during the holiday season. Thrift stores and off-price retailers led the apparel category with traffic up 11.7% and 6.6% (November 1st to December 24th, 2025), respectively, compared to last year’s holiday period. Luxury chains and department stores also posted modest gains (+1.8%), while traditional apparel chains saw slight declines (-1.8%) and mid-tier department stores experienced more pronounced traffic drops (-6.2%).
Open-air shopping centers led mall-format performance during the 2025 holiday season, with visits up 1.7% YoY, as consumers gravitated toward environments that offered a more festive, experiential atmosphere and a wider mix of dining options. The format likely received an additional lift from warmer-than-average weather across much of the country, which encouraged shoppers to fully take advantage of the outdoor amenities and social experiences open-air centers offer during the holidays.
Indoor mall traffic was largely flat (+0.8%) – a positive signal given ongoing consumer headwinds, especially for mid-tier formats – suggesting that traditional malls were able to maintain relevance during a pressured spending environment.
Meanwhile, outlet mall visits declined slightly (-0.8%), likely reflecting reduced appetite for destination-driven, discretionary trips as shoppers prioritized convenience, everyday value, and locally accessible retail over longer, deal-oriented excursions during the holidays.
Within the superstore category, wholesale clubs and discount & dollar stores outperformed mass merchants. This performance underscores consumers’ continued shift toward value-driven retail during the holidays and highlights that “value” extends beyond low prices alone; wholesale clubs, with their compelling value propositions, are also seeing meaningful gains in the current consumer environment.
Categories most closely tied to self-gifting outperformed more traditional holiday segments during the 2025 season. Pet stores and services (+5.5% YoY) and home improvement retailers (+3.4% YoY) led the way, perhaps because purchases from these categories are typically positioned as practical investments in everyday life, ranging from caring for pets to improving and maintaining living spaces.
In contrast, home furnishings (-0.8%) lagged, as these purchases tend to be more decorative or occasion-driven and therefore more likely to be intended as gifts for others rather than immediate, utility-focused upgrades. Traffic to electronics stores also dipped slightly (-1.5%). Together, these trends underscore a consumer preference for spending that delivers direct, everyday value to themselves over more traditional, outward-facing holiday gifting.
Overall, location analytics for the 2025 holiday season suggest that consumers remained highly engaged despite ongoing economic pressure, but their spending behavior continued to fragment. Across apparel, superstores, and discretionary categories, shoppers consistently gravitated toward retailers that delivered clear value – whether through low prices, strong quality-to-price ratios, or products tied to personal utility and well-being. The outperformance of thrift, off-price, wholesale clubs, and self-gifting categories underscores a consumer mindset that is both pragmatic and selective, balancing budget consciousness with targeted willingness to spend.
Looking ahead to 2026, these patterns suggest that retailers should move beyond one-dimensional value messaging and instead sharpen their core propositions. Formats that clearly articulate why they are “worth the trip” – through pricing power, assortment differentiation, or alignment with everyday consumer priorities – will be best positioned to win share. As bifurcation persists, success will increasingly depend on understanding which consumer needs a brand serves best and doubling down on those strengths, rather than attempting to compete broadly across a squeezed and highly segmented retail landscape.
For more data-driven consumer insights, visit placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
Dutch Bros has long been a powerhouse in the beverage space, building its business with rapid expansion and securing a loyal following. But to maintain its growth momentum, Dutch Bros will likely need to look beyond its beverage-first identity. By strategically expanding its breakfast offerings, the brand can attract a new segment of morning diners while driving incremental spend from its existing loyal customer base.
Dutch Bros is still on an aggressive growth trajectory, with plans to continue opening new locations at a brisk pace. The company passed the 1,000-unit mark this year and aims to reach over 2,000 locations nationwide by 2029. However, recent data suggests that while the brand's overall footprint is expanding, its established locations are facing the typical challenges of a maturing brand.
Throughout much of 2025, total visits to Dutch Bros increased rapidly year-over-year (YoY), driven largely by new store openings. And while same-store visits – which measure the performance of locations open for at least a year – were also generally positive, the growth was somewhat uneven. So although the brand’s expansion is still meeting robust demand, the gap between total growth and same-store performance may indicate that Dutch Bros is reaching a level of saturation in its initial markets.
To sustain growth, the brand is targeting the morning daypart by introducing breakfast offerings, reaching approximately 160 stores by the end of September 2025 and plans to deploy the menu across its store fleet in 2026. This strategy appears to be paying off: November saw same-store visits surge to their highest levels of the year. While this spike was likely supported by holiday menu launches and Black Friday, it also suggests the breakfast initiative is gaining traction and successfully revitalizing performance at established locations.
Why is Dutch Bros betting on breakfast? Historically, Dutch Bros has seen a lower percentage of its daily traffic occur during the morning daypart than its competitors. And when comparing the chain’s hourly visit distribution to the wider coffee category, it becomes clear why the shift toward a more robust breakfast offering is a logical move for Dutch Bros. While the coffee category as a whole sees 43.1% of its total daily visits between 5:00 and 11:00 AM, Dutch Bros captures only 32.6% during that same window, according to the chart below.
To bridge this gap, Dutch Bros is evolving its menu to include more substantial food options. Food currently accounts for only about 2% of Dutch Bros’ total sales, a figure it hopes to increase significantly with the help of hot breakfast items. As Dutch Bros continues to roll out the expanded food lineup to more locations in 2026, the brand is positioning itself to compete directly for the morning commuter who currently heads to a competitor for a meal-and-drink combo.
And to further bolster its morning performance, Dutch Bros could lean into "functional fuel" trends that complement its popular protein coffee and are likely to appeal in particular to younger consumers who prioritize health-conscious menu options.
Dutch Bros is at a pivotal point in its evolution. While new store openings continue to drive visits, the brand is now focusing on deepening its relationship with customers through the breakfast daypart. If the recent uptick in same-store visits is any indication, the shift from a "beverage-first" destination to a well-rounded morning stop could be exactly what the company needs to sustain its long-term momentum.
For more dining insights, visit Placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
The first Lollapalooza – a four-day music festival – took place in 1991. Chicago’s Grant Park became the event’s permanent home (at least in the United States) in 2005, drawing thousands of revelers and music fans to the park each year.
This year, the festival once again demonstrated its powerful impact on the city. On August 1st, 2024, visits to Grant Park surged by 1,313.2% relative to the YTD daily average, as crowds converged on the park to see Chappell Roan’s much-anticipated performance. And during the first three days of the event, the event drew significantly more foot traffic than in 2023 – with visits up 18.9% to 35.9% compared to the first three days of last year’s festival (August 3rd to 5th, 2023).
Lollapalooza led to a dramatic spike in visits to Grant Park – and it also attracted a different type of visitor compared to the rest of the year.
Analyzing Grant Park’s captured market with Spatial.ai’s PersonaLive dataset reveals that Lollapalooza attendees are more likely to belong to the “Young Professionals” and “Ultra Wealthy Families” segment groups than the typical Grant Park visitor.
By contrast, the “Near-Urban Diverse Families” segment group, comprising middle-class diverse families living in or near cities, made up only 6.5% of visitors during the festival, compared to 12.0% during the rest of the year.
Additionally, visitors during Lollapalooza came from areas with higher HHIs than both the nationwide baseline of $76.1K and the average for park visitors throughout the year. Understanding the demographic profile of visitors to the park during Lollapalooza can help planners and city officials tailor future events to these segment groups – or look for ways to make the festival accessible to a wider range of music lovers.
Lollapalooza’s impact on Chicago extended beyond the boundaries of Grant Park, with nearby hotels seeing remarkable surges in foot traffic. The Congress Plaza Hotel on South Michigan Avenue witnessed a staggering 249.1% rise in visits during the week of July 29, 2024, compared to the YTD visit average. And Travelodge on East Harrison Street saw an impressive 181.8% increase. These spikes reflect the festival’s draw not just for locals but for out-of-town visitors who fill hotels across the city.
The North Michigan Avenue retail corridor also enjoyed a significant increase in foot traffic during the festival, with visits on Thursday, August 1st 56.0% higher than the YTD Thursday visit average. On Friday, August 2nd, visits to the corridor were 55.7% higher than the Friday visit average. These numbers highlight Lollapalooza’s role in driving economic activity across Chicago, as festival-goers venture beyond the park to explore the city’s vibrant retail and hospitality offerings.
City parks often serve as community hubs, and Flushing Meadows Corona Park in Queens, NY, has been a major gathering point for New Yorkers. The park hosted one of New York’s most beloved summer concerts – Governors Ball – which moved from Governors Island to Flushing Meadows in 2023.
During the festival (June 9th -11th, 2024), musicians like Post Malone and The Killers drew massive crowds to the park, with visits soaring to the highest levels seen all year. On June 9th, the opening day of the festival, foot traffic in the park was up 214.8% compared to the YTD daily average, and at its height, on June 8th, the festival drew 392.7% more visits than the YTD average.
The park also hosted other big events this summer – a July 21st set by DMC helped boost visits to 185.1% above the YTD average. And the Hong Kong Dragon Boat Festival on August 3rd and 4th led to major visit boosts of 221.4% and 51.6%, respectively.
These events not only draw large crowds, but also highlight the park’s role as a space where cultural and civic life can find expression, flourish, and contribute to the health of local communities.
Analyzing changes in Flushing Meadows Corona Park’s trade area size offers insight into how far people are willing to travel for these events. During Governors Ball, for example, the park’s trade area ballooned to 254.5 square miles, showing the festival's wide appeal. On July 20th, by contrast, when the park hosted several local bands and DJs, the trade area was a much more modest 57.0 square miles.
Summer events drive community engagement, economic activity, and civic pride. Cities that invest in their parks and event hubs, fostering lively and inclusive spaces, can create lasting value for both residents and visitors, enriching the cultural and social life of urban areas.
For more data-driven civic stories, visit Placer.ai.
The pandemic and economic headwinds that marked the past few years presented the multi-billion dollar hotel industry with significant challenges. But five years later, the industry is rallying – and some hotel segments are showing significant growth.
This white paper delves into location analytics across six major hotel categories – Luxury Hotels, Upper Upscale Hotels, Upscale Hotels, Upper Midscale Hotels, Midscale Hotels, and Economy Hotels – to explore the current state of the American hospitality market. The report examines changes in guest behavior, personas, and characteristics and looks at factors driving current visitation trends.
Overall, visits to hotels were 4.3% lower in Q2 2024 than in Q2 2019 (pre-pandemic). But this metric only tells part of the story. A deeper dive into the data shows that each hotel tier has been on a more nuanced recovery trajectory.
Economy chains – those offering the most basic accommodations at the lowest prices – saw visits down 24.6% in Q2 2024 compared to pre-pandemic – likely due in part to hotel closures that have plagued the tier in recent years. Though these chains were initially less impacted by the pandemic, they were dealt a significant blow by inflation – and have seen visits decline over the past three years. As hotels that cater to the most price-sensitive guests, these chains are particularly vulnerable to rising costs, and the first to suffer when consumer confidence takes a hit.
Luxury Hotels, on the other hand, have seen accelerated visit growth over the past year – and have succeeded in closing their pre-pandemic visit gap. Upscale chains, too, saw Q2 2024 visits on par with Q2 2019 levels. As tiers that serve wealthier guests with more disposable income, Luxury and Upscale Hotels are continuing to thrive in the face of headwinds.
But it is the Upper Midscale level – a tier that includes brands like Trademark Collection by Wyndham, Fairfield by Marriott, Holiday Inn Express by IHG Hotels & Resorts, and Hampton by Hilton – that has experienced the most robust visit growth compared to pre-pandemic. In Q2 2024, Upper Midscale Hotels drew 3.5% more visits than in Q2 2019. And during last year’s peak season (Q3 2023), Upper Midscale hotels saw the biggest visit boost of any analyzed tier.
As mid-range hotels that still offer a broad range of amenities, Upper Midscale chains strike a balance between indulgence and affordability. And perhaps unsurprisingly, hotel operators have been investing in this tier: In Q4 2023, Upper Midscale Hotels had the highest project count of any tier in the U.S. hotel construction and renovation pipeline.
The shift in favor of Upper Midscale Hotels and away from Economy chains is also evident when analyzing changes in relative visit share among the six hotel categories.
Upper Midscale hotels have always been major players: In H1 2019 they drew 28.7% of overall hotel visits – the most of any tier. But by H1 2024, their share of visits increased to 31.2%. Upscale Hotels – the second-largest tier – also saw their visit share increase, from 24.8% to 26.1%.
Meanwhile, Economy, Midscale, and Upper Upscale Hotels saw drops in visit share – with Economy chains, unsurprisingly, seeing the biggest decline. Luxury Hotels, for their parts, held firmly onto their piece of the pie, drawing 2.8% of visits in H1 2024.
Who are the visitors fueling the Upper Midscale visit revival? This next section explores shifts in visitor demographics to four Upper Midscale chains that are outperforming pre-pandemic visit levels: Trademark Collection by Wyndham, Holiday Inn Express by IHG Hotels & Resorts, Fairfield by Marriott, and Hampton by Hilton.
Analyzing the captured markets* of the four chains with demographics from STI: Popstats (2023) shows variance in the relative affluence of their visitor bases.
Fairfield by Marriott drew visitors from areas with a median household income (HHI) of $84.0K in H1 2024, well above the nationwide average of $76.1K. Hampton by Hilton and Trademark Collection by Wyndham, for their parts, drew guests from areas with respective HHIs of $79.6K and $78.5K – just above the nationwide average. Meanwhile, Holiday Inn Express by IHG Hotels & Resorts drew visitors from areas below the nationwide average.
But all four brands saw increases in the median HHIs of their captured markets over the past five years. This provides a further indication that it is wealthier consumers – those who have had to cut back less in the face of inflation – who are driving hotel recovery in 2024.
(*A chain’s captured market is obtained by weighting each Census Block Group (CBG) in its trade area according to the CBG’s share of visits to the chain – and so reflects the population that actually visits the chain in practice.)
Much of the Upper Midscale visit growth is being driven by chain expansion. But in some areas of the country, the average number of visits to individual hotel locations is also on the rise – highlighting especially robust growth potential.
Analyzing visits to existing Upper Midscale chains in four metropolitan areas with booming tourism industries – Salt Lake City, UT, Palm Bay, FL, San Diego, CA, and Richmond, VA – shows that these markets feature robust untapped demand.
Utah, for example, has emerged as a tourist hotspot in recent years – with millions of visitors flocking each year to local destinations like Salt Lake City to see the sights and take in the great outdoors. And Upper Midscale hotels in the region are reaping the benefits. In H1 2024, the overall number of visits to Upper Midscale chains in Salt Lake City was 69.4% higher than in H1 2019. Though some of this increase can be attributed to local chain expansion, the average number of visits to each individual Upper Midscale location in the area also rose by 12.5% over the same period.
Palm Bay, FL (the Space Coast) – another tourist favorite – is experiencing a similar trend. Between H1 2019 and H1 2024, overall visits to local Upper Midscale hotel chains grew by 36.4% – while the average number of visits per location increased a substantial 16.9%. Given this strong demand, it may come as no surprise that the area is undergoing a hotel construction boom. Upper Midscale hotels in other areas with flourishing tourism sectors, like San Diego, CA and Richmond, VA, are seeing similar trends, with increases in both overall visits and and in the average number of visits per location.
Though Economy chains have underperformed versus other categories in recent years, the tier does feature some bright spots. Some extended-stay brands in the Economy tier – hotels with perks and amenities that cater to the needs of longer-stay travelers – are succeeding despite category headwinds.
Choice Hotels’ portfolio, for example, includes WoodSpring Suites, an Economy chain offering affordable extended-stay accommodations in 35 states. In H1 2024, the chain drew 7.7% more visits than in the first half of 2019 – even as the wider Economy sector continued to languish. InTown Suites, another Economy extended stay chain, saw visits increase by 8.9% over the same period.
And location intelligence shows that the success of these two chains is likely being driven, in part, by their growing appeal to young, well-educated professionals. In H1 2019, households belonging to Spatial.ai: PersonaLive’s “Young Professionals” segment made up 9.6% of WoodSpring Suites’ captured market. But by H1 2024, the share of this group jumped dramatically to 13.3%. At the same time, InTown Suites saw its share of Young Professionals increase from 12.0% to 13.4%.
Whether due to an affinity for prolonged “workcations” (so-called “bleisure” excursions) or an embrace of super-commuting, younger guests have emerged as key drivers of growth for the extended stay segment. And by offering low–cost accommodations that meet the needs of these travelers, Economy chains can continue to grow their share of the pie.
The hospitality industry recovery continues – led by Upper Midscale Hotels, which offer elevated experiences that don’t break the bank. But today’s market has room for other tiers as well. By keeping abreast of local visitation patterns and changing consumer profiles, hotels across chain scales can personalize the visitor experience and drive customer satisfaction.
The past few years have provided the tourism sector with a multitude of headwinds, from pandemic-induced lockdowns to persistent inflation and a rise in extreme weather events. But despite these challenges, people are more excited than ever to travel – more than half of respondents to a recent survey are planning on increasing their travel budgets in the coming months.
And while revenge travel to overseas destinations is still very much alive and well, the often high costs associated with traveling abroad are shaping the way people choose to travel. Domestic travel and tourism are seeing significant growth as more affordable alternatives.
This white paper takes a closer look at two of the most popular domestic tourism destinations in the country – New York City and Los Angeles. Over the past year, both cities have continued to be leading tourism hotspots, offering a wealth of attractions for visitors. What does tourism to these two cities look like in 2024, and what has changed since before the pandemic? How have inflation and rising airfare prices affected the demographics and psychographics of visitors to these major hubs?
Analyzing the distribution of domestic tourists across CBSAs nationwide from May 2023 to April 2024 reveals New York and Los Angeles to be two of the nation’s most popular destinations. (Tourists include overnight visitors staying in a given CBSA for up to 31 days).
The New York-Newark-Jersey City, NY-NJ-PA metro area drew the largest share of domestic tourists of any CBSA during the analyzed period (2.7%), followed closely by the Los Angeles-Long Beach-Anaheim, CA CBSA (2.5%). Other domestic tourism hotspots included Orlando-Kissimmee-Sanford, FL (tied for second place with 2.5% of visitors), Dallas-Fort Worth-Arlington, TX (1.9%), Las Vegas-Henderson-Paradise, NV (1.8%), Miami-Fort Lauderdale-Pompano Beach, FL (1.8%), and Chicago-Naperville, Elgin, IL-IN-WI (1.6%).
The Big Apple. The City That Never Sleeps. Empire City. Whatever it’s called, New York City remains one of the most well-known tourist destinations in the world. And for many Americans, New York is the perfect place for an extended weekend getaway – or for a multi-day excursion to see the sights.
But where do these NYC-bound vacationers come from? Diving into the data on the origin of visitors making medium-length trips to New York City (three to seven nights) reveals that increasingly, these domestic tourists are coming from nearby metro areas.
Between 2018-2019 and 2023-2024, for example, the number of tourists visiting New York City from the Philadelphia metro area increased by 19.2%.
The number of tourists coming from the Boston and Washington, D.C metro areas, and from the New York CBSA itself (New York-Newark-Jersey City, NY-NJ-PA) also increased over the same period.
Meanwhile, further-away CBSAs like San Francisco-Oakland-Berkeley, CA, Atlanta-Sandy Springs-Alpharetta, GA, and Miami-Fort Lauderdale-Pompano Beach, FL fed fewer tourists to NYC in 2023-2024 than they did pre-pandemic. It seems that residents of these more distant metro areas are opting for vacation destinations closer to home to avoid the high costs of air travel.
Diving even deeper into the characteristics of visitors taking medium-length trips to New York City reveals another demographic shift: Tourists staying between three and seven nights in the Big Apple are skewing younger.
Between 2018-2019 and 2023-2024, the share of visitors to New York City from areas with median ages under 30 grew from 2.1% to 4.5%. Meanwhile, the share of visitors from areas with median ages between 31 and 40 increased from 34.3% to 37.7%.
The impact of this trend is already being felt in the Big Apple, with The Broadway League reporting that the average age of audiences to its shows during the 2022- 2023 season was the youngest it had been in 20 seasons.
The shift towards younger tourists can also be seen when examining the psychographic makeup of visitors to popular attractions in New York City. Analyzing the captured markets of major NYC landmarks with data from Spatial.ai’s PersonaLive dataset reveals an increase in households belonging to the “Educated Urbanites” segment between 2018-2019 and 2023-2024.
These well-educated, young singles are increasingly visiting iconic NYC venues such as the Whitney Museum of American Art, The Metropolitan Museum of Art, The American Museum of Natural History, and the Statue of Liberty. This shift highlights the growing popularity of these attractions among young, educated singles, reflecting a broader trend of increased domestic tourism among this demographic.
New York City’s tourism sector is adapting to meet the changing needs of travelers, fueled increasingly by younger visitors who may be unable to take a costly international vacation. How have travel patterns to Los Angeles changed in response to increasing travel costs?
While New York City is the East Coast’s tourism hotspot, Los Angeles takes center stage on the West Coast. And as overseas travel has become increasingly out of reach for Americans with less discretionary income, the share of domestic tourists originating from areas with lower HHIs has risen.
Before the pandemic, 57.6% of visitors to LA came from affluent areas with median household incomes (HHIs) of over $90K/year. But by 2023-2024, this share decreased to 50.7%. Over the same period, the share of visitors from areas with median HHIs between $41K and $60K increased from 9.7% to 12.5%, while the share of visitors from areas with HHIs between $61K and $90K rose from 32.1% to 35.8%.
Diving into the psychographic makeup of visitors to popular Los Angeles attractions – Universal Studios Hollywood, Disneyland California, the Santa Monica Pier, and Griffith Observatory – also reflects the above-mentioned shift in HHI. The captured markets of these attractions had higher shares of middle-income households belonging to the “Family Union” psychographic segment in 2023-2024 than in 2018-2019.
Experian: Mosaic defines this segment as “middle income, middle-aged families living in homes supported by solid blue-collar occupations.” Pre-pandemic, 16.0% of visitors to Universal Studios Hollywood came from trade areas with high shares of “Family Union” households. This number jumped to 18.8% over the past year. A similar trend occurred at Disneyland, Santa Monica Pier, and Griffith Observatory.
And like in New York City, growing numbers of visitors to Los Angeles appear to be coming from nearby areas. Between 2018-2019 and 2023-2024, the share of in-state visitors to major Los Angeles attractions increased substantially – as people likely sought to cut costs by keeping things local.
Pre-pandemic, for example, 68.9% of visitors to Universal Studios Hollywood came from within California – a share that increased to 72.0% over the past year. Similarly, 59.7% of Griffith Observatory visitors in 2018-2019 came from within the state – and by 2023-2024, that number grew to 64.7%.
Even when times are tight, people love to travel – and New York and Los Angeles are two of their favorite destinations. With prices for airfare, hotels, and dining out increasing across the board, younger and more price-conscious households are adapting, choosing to visit nearby cities and enjoy attractions closer to home. And as the tourism industry continues its recovery, understanding emerging visitation trends can help stakeholders meet travelers where they are.
