Developers are shunning luxury hotels in the U.S. as room rates fail to rebound to peak levels and profits are squeezed by the costs of offering swanky amenities such as spas and trendy restaurants.

Six luxury hotels are expected to open in 2013, the same as in 2012 and down from 23 just three years ago, according to Lodging Econometrics, a Portsmouth, New Hampshire-based research and consulting firm. Investors are instead focusing on the so-called upscale category, where new properties are forecast to climb 49 percent from last year to 131 hotels.

The decline in construction, combined with conversions of existing properties into cheaper options, signals there may be fewer five-star choices in the future for travelers seeking the highest-quality rooms and amenities. Lower margins for luxury hotels have made them less attractive for property owners, said Steven Goldberg, head of real estate investment banking at Robert W. Baird & Co. in McLean, Virginia.

“It’s nearly impossible to do a new five-star built in the U.S. that makes economic sense today,” Goldberg said. “The total number of luxury hotel rooms is very likely going to be less in five years from now as compared to today.”

Luxury projects currently under construction -- which include Marriott International Inc.’s Clock Tower Edition New York and the Loews Chicago Hotel, developed by Loews Corp. and DRW Trading Group -- are limited to six cities, according to STR, a Hendersonville, Tennessee-based research firm. The share of luxury hotel rooms as a percentage of the U.S. total fell to 2.2 percent last year from 2.6 percent in 2010, STR data show.

Less Willing

After the last recession, high-end hotels have had to reduce pricing to maintain occupancies because consumers are less willing to pay top dollar, said Nikhil Bhalla, an analyst at investment bank FBR & Co. in Arlington, Virginia. Luxury hotels’ revenue per available room, an industry metric of rates and occupancy, was $202 last year, down from the 2007 high of $213, according to STR. In the upscale segment, which includes such brands as Hilton Garden Inn and Wyndham, revpar has caught up to the peak at $84.

“There was a time when a hotel could super-charge the whole five-star experience to whatever they wanted,” Bhalla said. “That’s not the case anymore. Today, there’s a cap as to how much you can charge. After this last recession, things have changed. Consumers have changed.”

Net operating margins tend to be in the “mid-20 percent range” for upper upscale and upscale hotels, compared with the “mid-teens” for luxury, which have higher costs for employees and amenities, he said.

Restaurants, Spas

Luxury hotels, including such brands as the Four Seasons and Ritz-Carlton, and those rated as upper upscale and upscale - - one and two notches below the top, respectively -- are different in the amenities they offer. Luxury properties have valet parking, 24-hour room service, multiple restaurants and full-service spas, said Jan Freitag, senior vice president at STR. Higher nightly rates accompany the superior service.

A room at the Four Seasons Hotel New York in Manhattan starts at $895 a night during the week of April 15, according to its website. A stay at Starwood Hotels & Resorts Worldwide Inc.’s Westin New York at Times Square, considered an upper upscale brand by STR, starts at $499 for the same week, while the upscale Courtyard New York Manhattan/Midtown East by Marriott has $399 as its lowest rate.

Five Stars

A subset of luxury hotels, particularly those in the heart of big cities, qualify for five-star ratings, the highest in the U.S., by the Forbes Travel Guide. For that classification, hotels must provide amenities including fresh flowers in guest rooms, the choice of at least two complimentary newspapers and wine by the glass presented in the bottle and poured in room, for room service. If pool service is available, “guests are proactively greeted and escorted to their chairs, and set-up assistance is provided or offered,” according to Forbes.

Properties in the category include the Peninsula Beverly Hills in California, the Four Seasons Hotel Chicago, the Ritz-Carlton San Francisco and the Mandarin Oriental New York.

Some luxury hotels already in existence are being converted to a lower tier. After buying Manhattan’s Essex House hotel on Central Park South for $362.3 million in September, Strategic Hotels & Resorts Inc. and KSL Capital Partners chose to rebrand the property as a four-star-style JW Marriott rather than sticking with a luxury name.

Rates at the JW Marriott Essex House during the week of April 15 start at $509, while a night at Marriott’s five-star Ritz-Carlton New York, Central Park starts at $895.

Megan Hakes, a spokeswoman for Chicago-based Strategic Hotels with Reputation Partners LLC, declined to comment on the change.

Helmsley Hotel

Host Hotels & Resorts Inc., owner of Ritz-Carltons in San Francisco and Phoenix, in 2011 agreed to buy the high-end 775-room New York Helmsley Hotel in midtown Manhattan. At the end of last year, the Bethesda-based real estate investment trust converted it into a Westin.

Gregory Larson, vice president of corporate strategy for Host, didn’t return telephone and e-mail messages seeking comment on the conversion.

Properties ranked below luxury are preferable in many urban settings because guests tend to focus more on room quality than costly extra amenities, said Abraham Hidary, president of New York-based developer Hidrock Realty. His company is building three hotels in Manhattan, including Courtyard and SpringHill Suites properties, considered limited-service upscale brands.

Room Focus

“Spas and restaurants require a lot of personnel to run them, which is very expensive,” Hidary said. “That’s not what guests are really coming for. They want to go to eat at local restaurants, not at the hotel. They care mostly about the rooms and without all the extra things you keep expenses much lower, but the revenue on the room will be pretty much the same.”

Publicly traded real estate investment trusts find the low margins of luxury properties increasingly unappealing, since those companies are focused on dividend payouts to investors, said Monty Bennett, chief executive officer of Dallas-based Ashford Hospitality Trust Inc.

“The more luxurious, the lower the cap rate and margin,” Bennett said in a telephone interview. “These hotels are very expensive to buy and to run. You pay a high multiple on cash flow. If you expect to pay out some dividend, which a lot of REITs focus on, luxury isn’t good for that. Then you better go upper upscale and upscale or lower.”

Upscale Hotels

Ashford’s portfolio consists 95 percent of upper-upscale and upscale hotels, and includes such properties as the Hilton Boston Back Bay, the Hyatt Regency Coral Gables in Florida and the Sheraton San Diego Mission Valley. The REIT “opportunistically pursues” luxury when the returns justify the investment, according to the company’s website.

Luxury still has its place in high-barrier-to-entry key U.S. markets like New York, according to Mark Woodworth, president of PKF Hospitality Research in Atlanta.

“The U.S. is pretty saturated when it comes to new luxury construction,” Woodworth said. “The majority of development opportunities are absolutely abroad. But the limited nature of luxury here in the U.S. today can also make for a good argument to invest into the segment. In the right place where you have a customer base that is willing and able to pay high room rates.”

Investors such as Blackstone Group LP have focused on lower-tier hotels in recent months. The private-equity firm, owner of luxury properties such as New York’s Waldorf-Astoria and a majority stake in San Diego’s Hotel del Coronado, in November agreed to buy Apple REIT Six Inc., a real estate investment trust that focuses on upscale extended-stay and select-service hotels.

Best Returns

“What attracted us to these assets is that they generate 15 to 20 percent more revenue than the competitive set they compete against, they have higher gross operating profit margins and they offer very attractive cash-flow yields,” said A.J. Agarwal, senior managing director at New York-based Blackstone’s real estate division. “We’re just economic investors, focused on providing the best returns for our limited partners and these assets accomplish that.”

Apple REIT Six owns 66 properties, operated under brands including Courtyard by Marriott, Fairfield Inn and Hilton Garden Inn, according to its website.

“There’s no question investors like the Blackstones of the world -- when you look at the kind of assets they have been buying most recently -- seem to be moving away from property types that have lots of employees and high labor and operating costs,” said Woodworth. “That is because the upscale and midscale tiers have recovered very, very nicely. It’s the real sweet spot in terms of what we’re seeing in demand growth.”

Good Value

The upscale segment has benefited greatly from blended demand from groups, individual business and leisure users who seek “good value” and a “high-quality experience,” he said.

An extended drop in group travel, particularly in the financial industry, is also weighing on the highest lodging category, according to Ashford’s Bennett. Occupancy in the group sector in the U.S. last year was at 22 percent of the total, according to STR. That’s less than the 26 percent at the height in 2007. Revpar in the group category is down 12 percent from the peak.

“New luxury projects under the current circumstances are just not feasible,” said FBR’s Bhalla. “They make sense in boom times when margin growth is big, but in the last 11 to 12 years, it’s changed. We’ve been through two recessions -- this last one being one of the worst -- and that has in many ways shifted the environment.”