NATIONAL REPORT—Luxury travel is changing. Hotel owners will have to change along with it. Once, luxury travel meant an elite experience for the few: plush accommodations, fine dining, and first-class transportation. But a new study shows that’s no longer the case.
The L.E.K. 2017 Luxury Travel Study of 1,972 US travelers aged 17 and older, conducted online during the first quarter of 2017, shows that luxury now has different definitions for different people.
Instead of seeking across-the-board pampering, travelers are more likely to define luxury travel in terms of experience. A luxury traveler might be a millennial on an eco-vacation who’s happy to sleep in a bunk bed. And, as more and more people book luxury travel, they are broadening the category. The survey indicates that a far broader range of people are eager to make trade-offs to fund the luxury elements that matter to them. They splurge on some items while scaling back on others.
Hotel owners are understandably eager to capture this new, broader swath of luxury travelers. What steps should they take?
- Offer a choice of luxuries. Providers must develop ways for more mainstream clientele to “toggle” into luxury elements. There’s a Goldilocks (or “just right”) level of luxury for each individual. In practice, that might mean Uber when you need it in place of a town car for the day. It also means embracing the age of the upgrade, overlaying better/best options on top of modest bases. The more experiential the element (for example, dining or activities) the more appealing it’s likely to be.
- Keep your brand front and center. The signaling power of brands has not diminished. A number of recent studies have cited the declining influence of brands, particularly with millennials. However, our survey suggests the opposite is true in the luxury travel space; rather, brand recognition remains a significant factor in luxury travel purchase decisions, and its influence is growing, especially among millennials. The increasing importance of brands is greatest among the elite traveler segment. Therefore, while there is an opportunity for unique experiential offerings to challenge established luxury brands, upstarts will have their work cut out for them.
- Provide convenience—but don’t compromise exclusivity. Given these findings on brand importance, what is it that today’s travel brands should actually be communicating? In the past, the watchwords were opulence, quality, and pleasure. But the modern luxury travel brand must also demonstrate two essential characteristics which are sometimes at odds. The first is convenience. People want life’s frictions removed. Luxury means seamlessness. The second is exclusivity. Instead of collecting objects, the affluent (and those who aspire to affluence) are collecting experiences. And to the extent luxury travel becomes a life-affirming action, people want to see that their investment distinguishes them. Their experience should be the envy of others.
- Give millennials prestige moments, and help them share. Members of the selfie generation want to capture their prestige experiences in the moment, and share them with their social networks to amplify their personal brands. Successful travel brands will help them do it.
Premium travel is in flux. There are tremendous opportunities for brands not traditionally associated with across-the-board luxury. But the same dynamic creates the potential for disruption of established luxury travel brands. Players lower on the brand scale will need to make luxury elements available to people who are willing to splurge selectively. Traditional luxury players should aim to update their offerings and provide a broader range of customers with a diversity of choice.
To learn more about what you can do to capture the new luxury travelers, click here.