With California hotel rates steadily increasing by 6-10% for the last few years according to the D.K. Shifflet & Associates, recent analysis shows that travelers are now reacting by trading down and trading out. Data shows that, while the number of high-income U.S. households earning over $100,000 annually has been growing, and they pay the highest rates in each hotel segment, even these well-heeled travelers are trading down from high-end to mid-level hotels. In fact they are fundamentally responsible for the 2005 to 2006 share growth in the domestic mid-level hotel segment, putting downward pressure on high-end hotel rates. Mid-level hotels have an opportunity to increase rates and have done so in 2007. The findings are significant since high income travelers account for 1/3 of all domestic hotel room nights. Trends show travelers are taking shorter trips and have increased their “trade-out” to hotel alternatives, such as cruising, vacation rentals, B&Bs, and fractional ownership properties.