The 6 Big Trends That Are Reshaping Luxury Travel
In the luxury travel space, at a macro level, demand is growing for the accumulation of travel memories drawn from transformative moments that resonate deeply with the individual traveller’s ideal of personal fulfilment, and his or her best aspirational version of themselves.
During Virtuoso Travel Week — a luxury travel trade show held this month at Bellagio Las Vegas — two overused cliches kept inflecting every conversation.
One, luxury travel has shifted from expensive things to exclusive experiences. Can we stick a fork in that? The luxury consumer industry has been saying the exact same thing for the last decade, at least. Two, in this era of constant disruption and muddying generational proclivities, the definition of luxury now means many different things to many different people. We’ve been repeating that for the last five years, since the end of the recession’s darkest days. So how can the luxury travel sector evolve?
Many of the trends today in the luxury market are pointing toward one overarching theme: personalised fulfillment. At a macro level, demand is growing for the accumulation of travel memories drawn from transformative moments that resonate deeply with the individual traveler’s ideal of personal fulfillment, and his or her best aspirational version of themselves.
Time, then, is not the ultimate luxury. That’s too vague and overused, and it was overused at Virtuoso with abandon. Same with the concepts of success, satisfaction, happiness, and contentment. Fulfilment, though, speaks to our innermost motivations, and our awareness and alignment of our inner and exterior contexts. It speaks to who we are, or more accurately, who we want to be.
As an analogy, the luxury needle is moving from Maslow’s second hierarchical need, “Esteem,” where consumer luxury has traditionally lived, to the top spot: “Self-determination,” based on realising one’s full potential. Also, the commoditisation of experiential luxury travel, and the fatigue that engenders when everything is an experience these days, is driving more nuanced discussion around what luxury travellers really want, as individuals.
Delivering on that is easier said than done.
“What I see most is the changing nature of the bucket list, focusing more on personal goals and immersive experiences that people really want, instead of a specific destination,” says Jack Ezon, president of Ovation Vacations in New York. “So, within the travel advisor trade community, we need desperately to work on our service and the way we provide personalisation. Uber-personalized experiences are what we’re trading on, and we’re not always doing that great of a job at it.”
Ezon is adamant that technology will never replace travel advisors in the luxury space. Last year, 84 percent of his business transactions over $2,000 were closed offline. High-net-worth travellers will always want high-touch service.
However, he says travel advisors would benefit from an industry-wide consumer relationship management (CRM) platform enhanced with artificial intelligence (AI) to help match clients better with the explosive growth of upscale travel experiences in the marketplace.
“We need to work in collaboration with our hotel partners, and we need some technology that’s going to be able to translate our clients’ unique needs into functional bytes of information. So that we can action on it, and our partners wherever they might be, can action on it,” Ezon suggests.
“The next layer of that should be an AI piece that can add on all my specials, and all of the deals, promotions, and offers in the marketplace, to provide the best value to my customers,” he continues. “When someone calls me and asks for a place that’s cool, fun, and has great weather, I might have four specific ideas for that particular client, but this artificial intelligence component might come up with ten.”
Moving forward, in an attempt to provide somewhat of a benchmark for the luxury industry, here are six macro trends reshaping luxury travel that all align with the rising demand for personalised fulfilment.
#1: LUXURY RELATIVISM: REDEFINING THE RICH AND RICHER
As previously stated, everyone knows the luxury travel segment is much more bifurcated today due to the increasing diversity of consumer psychographics entering the luxury market. However, in an effort to sell to a moving target, travel companies and advisors are getting better at segmenting the luxury customer into three overarching profiles, which can then be further delineated considerably by personal travel interest, behaviour, and motivation. Those three are: Ultra high-net worth luxury travellers seeking the best of everything; high-net worth travellers who don’t necessarily always want to travel exclusively in a luxury bubble; and aspirational upscale travellers splurging for special occasions.
The last two profiles are driving the rise of “lean luxury,” or the so-called “high/low” trend in upscale travel, where creativity and innovation on any level are as enticing as luxury experiences and environments. There’s a clear desire among these high spenders to mix traditional luxury delivery with artisanal, craft, DIY, and singularly local experiences that deliver a strong sense of place and uncontrived engagement with residents. One example is Michelin recognising Singaporean food stalls to provide members with a wider breadth of immersive, destination-specific experiences. The $5 braised chicken at the Hong Kong Soya Sauce Chicken Rice & Noodle hawker stand in Singapore would have been sniffed at by the culinary elite a decade ago.
#2: GUEST CENTRICITY: PERSONALIZED JOURNEYS ARE THE NEW LOYALTY PROGRAMS
Personalised connectivity with luxury consumers before, during, and after the consumer luxury product experience drives loyalty. Ezon says loyalty points are primarily for business travellers these days. Therefore, luxury travel and hospitality companies are re-imagining their brands to fine-tune their value proposition, in relation to their competitive set, and laser in on a more defined customer culture. They’re also developing better online content platforms designed to engage the individual traveller throughout the entire customer journey, and throughout the entire year. That is supplemented with end-to-end messaging based on sophisticated data capture methodologies, including mobile tracking in-market.
According to Havard Business Review: “Companies are designing and refining journeys to attract shoppers and keep them, creating customised experiences so finely tuned that once consumers get on the path, they are irresistibly and permanently engaged. Unlike the coercive strategies that companies once used to lock in customers, cutting-edge journeys succeed because they create new value for customers. Customers stay because they benefit from the journey itself.”
#3 ACCESS IS THE NEW AUTHENTIC: THE NEXT GENERATION OF SOCIAL STATUS
Closely related to the above, the growing sophistication of omni-channel brand engagement, designed to increase lifetime customer value, also answers the demand among luxury consumers for heightened social equity. Today, social media is influencing travel decision-making across all budget and generational segments, and luxury travel brands are exceedingly better at cross-channel connectivity than just a few years ago.
Today, access is the new authentic. You are who your friends are. You are what you share. Next-generation luxury travellers are seeking access to people and places that elevate their social status among their online networks. The goal is to experience something that few people can, and equally important, be able to capture it and share it digitally. That’s a big opportunity for hospitality and tourism companies that can leverage user-generated content at any kind of scale.
Agile brands are also developing new partnerships with a wider range of independent contractors to provide customers with more travel customisation options for more customized social sharing. The more that luxury brands can align their products with the temporal and shifting whims of their customers — and provide a platform for sharing those whims — the more opportunity they have to drive growth and loyalty in the luxury marketplace. The fashion and retail sectors are way ahead of the travel industry in this regard, using machine learning and virtual/augmented reality to help customers personalize their entire purchase process.
#4 META LUXURY: ALIGNING BRAND ESSENCE AND EXCELLENCE
“Meta luxury” refers to the highest tiers of consumer luxury, or “luxury beyond luxury.” In the fashion world, according to Harper’s Bazzar: “[M]eta-luxury brands grow through uncompromising commitment to excellence and limitation. They make decisions around extension and expansion based on the long-term protection of the brand and health of the business. This is in sharp contrast to many brands that have fallen foul by chasing the immediate gratification of fast profits at the expense of sustainable growth initiatives.”
Many of the traditional luxury hospitality companies have ramped up their development pipelines in recent years to capture the globally expanding luxury travel market, but at what long-term cost? If scarcity puts a premium on the luxury experience, then it’s the ultra-uncompromising brands with long legacies and slow growth that will drive the highest revenue increases based on the demand for exclusivity.
In fact, for the first time last year, Ezon received more booking requests for independent properties than global luxury hotel brands.
#5 THE LUXURY RESET: WHAT’S MEANINGFUL IN THE ERA OF PERMANXIETY?
There has been an exponential surge of interest in wellness and multi-generational travel in the luxury space during the last two decades, but those are micro trends. The macro trend driving them is fear. Anxiety of permanent global disruption — from a convergence of social, political, and economic perspectives — is shifting traveller priorities toward long-term health and family/social connectivity. That kicked into high-gear following 9/11 and through the recession, and the only real evolution there from a trends standpoint, of late, is the growing demand for mental wellness programming.
Skift research, prepared for the International Luxury Travel Market this year, showed that the number one growing priority for luxury travellers is: “Experiences that show me a new perspective of the world.” In the same report, our top three luxury travel trends for 2017, from the perspective of shifting luxury consumer expectations, are: meaningfulness, simplicity, and transformation. In light of world events, such as the rise of terrorism and neo-nationalism, there’s a growing demand among luxury travellers for more meaningful experiences, simple user experience, and opportunities for personal growth.
Brand culture, then, is becoming the new brand differentiator. Modern luxury travel is about intangibles, and there’s a clear and present shift among high-end travellers’ priorities from “what you can do to who you can be” when exploring new destinations. At the same time, travel brands are elevating their messaging to embrace a bigger contextual message revolving around themes such as humanity, family, community, connectivity, perspective, diversity, and personal achievement.
The whole transformative travel trend is tricky though because there will be no shortage of brands that abuse the theme.
“My hesitation or trepidation is the overuse of the word ‘transformative,’ and how it’s going to be used and interpreted, and what will result with the dilution of the concept,” says Ezon. “Watch it happen. It’s going to happen. Everybody wants to use transformation — it’s the word of the year.”
#6 THE AIRBNB LUXURY EFFECT: THE RISE AND RISE OF ROOM SHARING
Airbnb sold more than 79 million bookings in 2016, up from 40 million in 2015. Value, local immersion, a smart seamless user interface, and customisation are driving engagement, and now, room-sharing in general is gaining traction in the luxury market.
The real value of Airbnb and other room-sharing companies is their platform architecture that offers mass personalisation at scale. Furthermore, as of August 2017, Airbnb topped four million listings. That includes 15,000 new boutique hotels added since November 2016, and another 4,000 villas following the company’s acquisition of Luxury Retreats in February, fuelling speculation of a new Airbnb Lux category.
Nothing gets under the skin of many old-guard luxury hoteliers like Airbnb, while others understand the futility of endlessly lamenting room-sharing’s incursion into the luxury arena. Airbnb still has a lot of work to do to win over many luxury travellers, although a new Airbnb Lux platform would likely include more intensive vetting, onsite personnel, and in-destination support services.
In response to that, we could see a growth of consortia like Luxury Lodges of Australia that cross-promote their “privilege of place” and one-off luxury delivery at each property.
Although, Ezon thinks that the new Airbnb Trips platform, providing personalised, locally-operated tours and activities, poses a potentially bigger challenge for the luxury travel advisor community.
“Airbnb is going to have, continue to have, a significant impact on my business, especially if they upgrade to Lux,” he says. “What concerns me even more than Airbnb Lux is Airbnb Trips. That, to me, is a complete game changer that can really engage my territory with unique insider experiences. It’s crazy. Sometimes their Trips are cheaper and better than my providers around the world.”
Tags: airbnb, guest experience, luxury, new luxury
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