The Future of Luxury Travel
Since the calming restrictions and availability of travel with ease again, people have enthusiastically and eagerly begun travelling and retaking trips. What appears to also be occurring is that people are showing a deeper appreciation for where they travel, why they are going there and what they want to experience, demonstrating a shift in behaviours after being unable to travel freely for so long.
It is as if a backlog in people’s lives has built up, whether creating memories with their loved ones, trying to achieve a lifelong bucket list that they are returning to, simply a desire for new experiences and holidays, or pressure from concern restrictions may re-emerge. Whatever the motivator, this manifests itself in a powerful need to make up for a lost quality time. The word “quality” is crucial here.
Despite new variants, the war in Eastern Europe, inflation, and everything else happening around us today, people are making long-term travel plans. It doesn’t look like Covid is going anywhere, but perhaps we are learning how to live with it. Clients are booking longer breaks and choosing luxurious destinations more than ever before; more villas, private transportation with chauffeurs, and chartering private yachts. In fact, the luxury travel industry is booming. However, it is not just luxurious settings and accommodations. People want experiences as the catalysts to create lifelong memories and strengthen and build bonds and relationships with their families and friends.
The above may sound anecdotal or very ‘top-line’ broad strokes about what may lie ahead; however, looking in detail at the industry and research around it, these are being reflected in forecasts and estimates for the coming years. In the below, I tried to concisely summarise the key points and signals of what is ahead for this market which makes for optimistic reading among our fellow industry friends and clients.
- As we further analyse the luxury travel market, we have identified three critical growth driving factors:
- Demand for a unique, personalised, and an exotic travel experience among customers forecast period (source).
- Also, an increase in the middle and upper-class disposable income and
- The interest of people to spend more time with their family.
- The global luxury travel market was valued at $946b in 2019 and is expected to grow at a CAGR of 11.1% from 2021-2027 to reach $1.2t in 2027.
- The market for Luxury Travel in Europe is the most dominant and fastest growing in Asia- Pacific Europe’s luxury travel market is expected to generate revenue of $452b (during the forecast period)
- The ‘absolute luxury’ segment is expected to generate $757b (during the forecast period). This segment represents those customers seeking peak luxury and comfort from their experiences. Various amenities like personalised entertainment, good food, lavish hotels, and on-demand service are offered to the customers, with adventure and safari, along with culinary desires, the top draws.
- ‘Adventure and safari’ have been identified as most in demand and expected to generate revenue of $544b (during the forecast period).
Looking at this, we can expect great diversity in experiences that await curious and most sophisticated travellers.
The Power of Wellness in Luxury Travel
In addition, luxury travel ensures a great deal of comfort and relaxation, which are crucial for maintaining an individual’s mental and physical health. This factor is expected to further bolster the market’s growth during the forecast period.
A boom in wellness tourism is expected to go hand in hand with this growth in luxury travel and become a key differentiator in the market and a primary source of competitive advantage. The wellness sector related to travel took a massive hit in 2020, but It is now expected that ‘wellness travel’ will be the sector delivering the most tremendous growth through to 2025, expanding 21% each year to reach a value above $1t.
The spa and thermal/mineral springs markets are specifically referenced. We’re entering an era of new traveller values (a quest for nature, sustainability and mental wellness), as well as a period of rapid recovery from utterly pent-up demand, not just for travel, but for some serious healing for mind body and spirit.
Whether explicitly or implicitly, wellness is the value people are seeking, whether through culinary experiences, safari, spa, seclusion and to attune with nature and reconnect with loved ones (source)
Wellness is a $4.7t industry, and hospitality businesses are trying to move into that space, making it a cornerstone of offerings. However, such a rush can dilute services to simply ‘get into the space’. The issue of “well-washing” has been written about whereby companies will advertise wellness as the foundation of experiences and trips while maybe only offering small pampering facilities. These are not meaningful in any profound sense, not profitable and managed in a manner suggesting it is a side thought or secondary aspect rather than an actual means of rejuvenating a person and empowering them in their life.
Then others acquire and buy brands or specific companies in wellness to quickly jump on the wellness bandwagon, but they do it half-heartedly. Since health and fitness have become a strong motivator and will continue to grow in this respect, particularly with those in target markets as well as destination resorts, occurrences of “well-washing” must be considered, with rushed or sub-par offerings able to do damage to this crucial area in the minds of consumers.
The Way Forward
We attended the virtual International Hospitality Investment Forum (IHIF) in Berlin in May, where Investors and developers met to forge new relationships and make deals for future hospitality projects.
According to developers and businesses like Marriot, Hilton IHG and GOCO/Horwath Hospitality, what will the future look like, and what are they talking about now? They are considering trends in consumer behaviour, design and sustainability and incorporating them into a blueprint for the future. Below are emerging consumer trends that will dictate the path taken:
- Luxury is defined by authenticity- local experiences are not enough for the luxury traveller. They want a hotel/property that reflects the true elegance and culture of the designation.
- Luxury as “3 Ps: “Personal, Private, Purpose”.
- Personal means that people don’t want the same experiences as other customers. They seek highly tailored, personalised itineraries.
- Private- Appetite for everything private grows from villa to island to the boat, where the other customers are not around.
- Purpose- here, luxury travellers want to know how their travel impacts the environment; again, they don’t want to be in densely populated places.
- Co-locations; seclusion in the middle of it all – luxury travellers will seek private accommodations but will want a resort to wander to when they want to be around other people, have dinner etc. This will mean even more standalone villas being co-located with hotels and resorts. A fusion of exclusivity and seclusion, with amenities, services and more within walking distance.
- The importance of wellness and the risk of “well-washing”.
- The length of the stay will grow. This is a lesson that the pandemic has given luxury travellers; if people go through the difficulties of organising it all, testing, trials and tribulations of getting to the destination, and the time dedicated to making it happen, people will opt to stay longer, especially with destinations more remote where flight times are longer.
Luxury travellers are getting younger, spending more money, and seeking ultra-luxury accommodations and amenities. This will impact everything from design, service and local experience.
In response, the hospitality industry has been re-evaluating and attempting to redefine luxury and its role as a service. To modify how we engage consumers, emotionally and physically, before, during and after their experience. As travellers looking for a luxury trip want their dreams to become a reality, they look for unique experiences and expectations to be surpassed. This includes privacy, exclusivity, and everything from relaxation to adventure.
If we were to define luxury with 10 different people, we would receive 10 other definitions, each uniquely influenced by that person, their circumstances, values, stage in their life and so on. The luxury of space and privacy, where you can have your family and your own services and facilities, are nevertheless seen as essential, but so is human connection. So, the sense of privacy whilst in a location where you can visit the restaurant and interact with people if you want to. You can go to the beach, but you can also retreat to your exclusive space.
From the ‘Affluent Sentiment Report’ conducted by Luxury Travel Advisor in April 2022, 63% of respondents who all sell luxury travel said their sales for 2022 will be on par with 2019 (before the pandemic). They also reported that clients booking longer holidays in more luxurious locations with plenty of extras upgrading where possible, using private air travel, chauffeurs, and yachts, consistent with research and forecasts. Everything ‘Private’ is becoming huge. People are willing to pay more for private and unique experiences that match their values and desires for growth.
I read a passage with a particular quote that struck me and resonated in my mind, “No one is waiting for tomorrow anymore”. Our time is precious, and quality use of that time is essential. I have so much passion for this industry, wellness, and creativity, and I am beyond grateful to be part of such an incredible renaissance after disruptions that would have been unthinkable a few years ago.