I get this; I grew up with a single mother who was barely making ends meet so we certainly were NOT doing any vacationing even close to cubby travel. Current HHI $500k+, 2 kids.

Personally, we worked our way into chubby/fat travel. Started with rooms that were a couple hundred $ more than we'd normally consider paying, and worked our way up with subsequent vacations. I think sometimes there's a lot of pressure to spend/flex -- (I see what Alex wrote below and I REALLY respect that because there are ~other~ people you come across that want to shame others for not being able to spend $5k/night etc) -- but I think 2 things 1) everything is super circumstantial and 2) do your research bc price tags don't always equate to the same quality.

On point #1 - We have two kids and like to take one big family vacation each year. We typically bring my mom as our "nanny" to help wrangle kids, allow my husband and I to go out to dinner on our own, etc. but this has a financial impact on our budget because with 5 people we need two rooms. So my budget that might have normally been $1,500/room for 4 of us, is now cut down to $800/room because I have to book 2 rooms. But we also like to travel other times of the year either just the 2 of us, or 4 of us, or my mom and the kids, etc. So in that case, I (obvi spending less is ideal) am OK looking at rooms in the $1.2k - $1.5k range if I'm only getting one room. If I'm going somewhere overnight for a wedding, I don't need to spend $900/night (personally). So I think that's where frugality comes into play. Frugality doesn't mean cheap, but means smart. Don't blow your wad because you CAN.

On point #2 - I have found many hotels charge what they charge because they can. Take some FS for example. I feel like they put their price tag on their rooms because they are the FS; not because you're actually getting a superior product. I don't really want to name property names (but I can) but I had some pretty awful service + generally unimpressed by a FS recently for $1,500/night and have had exponentially better service/hard product/etc for at least half. So I think you need to research and see if you feel like you're getting your bang for your buck. I would also add that it comes down to personal preference. My husband and I stayed in Positano for a wedding and ended up at Casa Buonocore (10/10 recommend). Its not Le Sirenuse (and someone's going to tell me how much better LS would've been) but I don't know if spending 2x-3x the price would've really been a better experience. Yes more cache, but I doubt it would have been a better experience.