Luxury Resorts and REITs: Capitalizing on the Wealth Effect in a Post-Pandemic World

The post-pandemic recovery has reshaped global travel and real estate dynamics, with luxury resorts emerging as a compelling asset class for investors. As high-net-worth individuals (HNWIs) and ultra-HNWIs (UHNWIs) increasingly prioritize experiential and sustainable travel, Real Estate Investment Trusts (REITs) focused on luxury resorts are leveraging the "wealth effect"-the spending power of affluent consumers-to drive growth. This analysis explores how luxury resort REITs are capitalizing on post-pandemic trends, supported by market data and investor behavior insights.

Market Resilience: Luxury Resorts Outperform in a Challenging Landscape

The global luxury resort market has demonstrated remarkable resilience, with the luxury hotel sector valued at USD 140.28 billion in 2023 and projected to reach USD 369.36 billion by 2032 at a 11.5% compound annual growth rate (CAGR), according to a Fortune Business Insights report. North America dominates this space, holding a 32.23% market share in 2023, driven by robust spending on leisure and business travel in the U.S. and Canada, per the same Fortune Business Insights report.

In the U.S., luxury and upper-upscale hotels have outperformed economy segments, with RevPAR (revenue per available room) growing 4.2% year-over-year in early 2025, compared to just 1.9% for economy-tier properties, according to a REIT.com analysis. This outperformance is fueled by a shift toward "experiential luxury," where travelers prioritize wellness tourism, all-inclusive packages, and eco-friendly stays. For instance, resorts with wellness facilities report 35% higher customer retention rates, while eco-resorts accounted for 23% of the global market in 2022, according to a resort industry report.

REITs in the Spotlight: Navigating Post-Pandemic Challenges

Lodging REITs, including those focused on luxury resorts, have faced mixed fortunes post-pandemic. While corporate and group demand remain strong, leisure travel-particularly for resorts-has shown signs of softness due to economic uncertainties and price sensitivity, per resort industry data. However, luxury resort REITs have retained their edge. J.P. Morgan Research forecasts 3% funds from operations (FFO) growth for REITs in 2025, with potential acceleration to 6% in 2026 as interest rates decline and borrowing costs ease, according to J.P. Morgan research.

Strategic investments in technology and sustainability are further differentiating luxury resort REITs. Properties with contactless services, biometric access, and green certifications are attracting affluent travelers willing to pay premium rates. For example, the global spa resort market, valued at $52 billion in 2021, is projected to grow at a 6% CAGR through 2030, per resort industry data.

Wealth Effect Momentum: HNWIs Drive Demand and Investment

The wealth effect-the tendency of affluent individuals to spend more as their assets appreciate-is a key driver of luxury resort growth. According to the Knight Frank Wealth Report 2025, 40% of UHNWIs prioritize property as a core investment, with luxury real estate seen as a hedge against inflation and a store of value. Nearly 50% of global consumer spending now comes from the top 10% of income earners, amplifying demand for high-end travel experiences, as highlighted in a Seeking Alpha analysis.

This trend is particularly pronounced in North America, home to nearly 40% of the world's millionaires, per the Knight Frank report. U.S. luxury resorts benefit from domestic travelers, as 58% of resort visitors come from within their own country, with the average guest spending $1,200 per stay, according to resort industry data. Millennials, who comprise 40% of global resort travelers, are also reshaping demand, favoring family vacations and wellness-focused stays, per resort industry data.

Investment Outlook: Strategic Opportunities for REITs

Luxury resort REITs are well-positioned to capitalize on these trends, but success hinges on location, operational agility, and alignment with consumer preferences. Properties in high-demand regions (e.g., coastal destinations, wellness hubs) and those with sustainable credentials are likely to outperform. For instance, eco-resorts have seen growing interest as 45% of resort bookings are for family vacations, and travelers increasingly seek environmentally responsible options, according to resort industry data.

However, challenges persist. The broader lodging REIT sector has seen subdued growth, with many companies trading at discounts to net asset value and prioritizing asset sales over acquisitions, according to REIT.com. Investors must carefully evaluate REITs with strong balance sheets and a focus on high-margin, high-demand assets.

Conclusion

Luxury resort REITs offer a unique intersection of the wealth effect, post-pandemic recovery, and evolving consumer preferences. As HNWIs continue to prioritize experiential and sustainable travel, REITs with strategic assets and operational innovation are poised to deliver strong returns. However, investors must remain mindful of macroeconomic risks and sector-specific challenges. For those aligned with long-term trends in luxury travel and wealth preservation, the sector presents compelling opportunities in 2025 and beyond.