LONDON – It was not long ago that spending US$1,000 (S$1,300) a night on a hotel room was considered an extravagance, even among ultra-high-net-worth travellers. But lately that figure merely gets you in the door at luxury properties in major markets.

In 2023, the new Raffles London at The OWO, Atlantis The Royal in Dubai and the Bulgari Hotel Rome all opened with rooms starting at US$1,000 or more. At the Raffles, that buys you 31 sq m of space – just enough for a king-sized bed.

Online searches for reservations in Paris this spring revealed more than 20 hotels charging at least US$1,000 for entry-level rooms; in London, 13 hotels reached that threshold. There were a dozen in New York.

From 2019 to the end of 2022, luxury room rates rose 35 per cent in Europe and 28 per cent in North America, according to data from CoStar Group, a hotel market researcher.

The phenomenon is most pronounced among new hotels, but it applies to many established classics as well. The lowest price you can find for a night’s stay at the year-and-a-half-old Aman New York is currently US$1,530; nearby, at the 93-year-old Carlyle, rooms hover right around US$1,000.

In some cases, prices have snowballed after one new hotel tested a ceiling and did not meet resistance. Its neighbours will invariably follow suit, said Ms Fflur Roberts, head of luxury goods at Euromonitor International.

She pointed to the Raffles in London, which joined the Peninsula in opening above £1,000 (S$1,700) a night in 2023. In 2024, the nearby Emory, an all-suite hotel, will open with a starting rate of £2,000.

Another factor is a boom in luxury hotels: Many that were built or renovated in the past few years are passing on their high costs to patrons.

But the main culprit is, of course, inflation.

“We are all referencing 2019 in our mind,” said Mr Jan Freitag, national director for hospitality market analytics at CoStar.

“We’re all like, ‘Oh, pre-pandemic this hotel was $600, and now it’s $1,000’. Well, it’s also true that was five years ago. It’s not unreasonable to assume that hotels would increase rates just to keep up with their cost increases.”

Staffing, utilities and insurance expenses have all gone up.

“Inflation is having a massive impact,” Ms Roberts added.

But also, she said, the more something costs, the more aspirational it becomes. “If the price for a Chanel bag goes up, it won’t stop people from buying the Chanel bag. If anything, they want it even more.”

She added that demand remains sufficiently ripe among the world’s wealthy, but hotels such as the Peninsula host a wider set of visitors too, including travellers splurging on birthdays, anniversaries and weddings.

CoStar data confirmed that the audience for luxury hotels is growing: Despite higher room rates, occupancy has actually increased, reaching 67.3 per cent in the US in 2023, up from 64.5 per cent in 2022, though these figures are still lagging 2019.

Are the hotels also getting nicer? Not necessarily.

Mr Tom Cahalan, who as co-founder of Dorsia Travel books clients into some of the best properties in the world, cautioned that high rates do not always equal great service. These hotels should all have attentive staff, well-designed rooms, and spas and restaurants where guests want to spend time. Brand-new properties can take a while to get everything running smoothly.

That said, Mr Cahalan noted that some prices are justifiable.

“If you look at the Peninsula, for example, rooms start at 51 sq m, which would be a suite at some other properties,” he said. A 43 sq m junior suite at London’s much-loved Connaught goes for £1,800.

Inflation is slowing in the US, Britain and elsewhere – the US rate was 3.4 per cent in 2023, compared with annual rates of 6.5 per cent in 2022 and 7 per cent in 2021 – but many expect this new normal to remain.

“Demand for luxury accommodations will continue to rise, particularly among the newly wealthy,” predicted HotelPlanner chief executive Tim Hentschel. And “$1,000-plus rates will become more commonplace”.

In 2024, three establishments – the Mandarin Oriental Mayfair in London; The Surrey, A Corinthia Hotel in New York; and Collegio alla Querce in Florence, Italy – will all open with rates of at least US$1,000.

If these prices make you grit your teeth, consider that it could be worse: In mid-February, the Maldives will have record-breaking hotel prices when Soneva Secret opens. Its starting rate: US$3,140 per night. BLOOMBERG