The long-discussed "K-shaped economy" may be giving way to what Hilton president and CEO Christopher Nassetta calls a "C-shaped economy" — one defined by convergence rather than divergence in travel spending.
Speaking at the NYU International Hospitality Investment Forum in New York, Nassetta argued that travel demand in the US is seeing convergence rather than continued divergence between high-income and lower-income travellers.
“It’s not politically advantageous for people to be talking about things getting better – people want to talk about a ‘K’ economy because the political system is so divisive,” Travel Weekly reported Nassetta saying. “I’m just offering you hard data that says people in those other price points are traveling more.”
He added that travellers in non-luxury price segments are increasingly taking weekend and weekday trips for both leisure and business purposes.
Nassetta attributed the improving performance in the midscale and economy categories to several macroeconomic drivers, including large-scale US federal infrastructure spending, reshoring of manufacturing activity, and construction linked to AI data centres and other industrial projects.
For Hilton, that has translated into stronger performance across lower scale and midscale hotel brands, rather than demand being concentrated solely in luxury travel.
However, hospitality leaders at the forum remained cautious about external pressures that could disrupt the recovery.
Hyatt Hotels CEO Mark Hoplamazian warned that prolonged disruption to energy infrastructure and oil supply chains could place pressure on travel demand if fuel costs remain elevated. He estimated that structural impacts could take six to nine months to stabilise.
Accor chairman and CEO Sébastien Bazin noted that the group has greater exposure to the Middle East than many competitors, with the region accounting for around 10% of revenue. However, he said Accor's diversified global footprint has helped offset demand shifts.
"Half the customers that we lost who no longer go to Dubai, we'll be gaining them in Egypt, Morocco and other places," Bazin was quoted as saying.
IHG Hotels & Resorts CEO Elie Maalouf said the company's Middle East business, which represents around 5% of revenue, experienced a sharp downturn at its peak, though recovery is already underway.
"Business travel is coming back, leisure's coming back with good rates," Maalouf said. "Airlines are busy. It's going to be gradual, but there's no doubt, given the level of investment and leadership in that region, it will come back."