The New Luxury

Keeping up to date on the changing luxury travel market By: Deanna Ting
Today's luxury traveler is more interested in the overall experience, not just luxury amenities. // © 2010 Andrejs Pidjass<br />
Today's luxury traveler is more interested in the overall experience, not just luxury amenities. // © 2010 Andrejs Pidjass

The New Luxury Travel Trends

- Active adventure
- Booking a private villa or private home instead of a hotel
- Exotic destinations (China, Vietnam, India, Africa)
- Family and multigenerational travel
- Hands-on experiences, especially of the culinary variety
- Sophisticated understatement, not over-the-top opulence
- Travel with a purpose, either through sustainability or community development

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Luxury travel may not be what it used to be, but that may not be such a bad thing, especially for today’s enterprising travel agent. Given the recent economic recession, the definitions of luxury travel — and the expectations that come with it — have changed dramatically and, quite possibly, for the better.

Because of downward shifts in suppliers’ pricing structures, there are more consumers seeking luxury travel experiences than ever before; those particular experiences, however, aren’t necessarily the same ones that the industry saw only five or 10 years ago.

“We are currently dealing with a situation where luxury travel represents a larger share of a smaller wallet,” said Matthew D. Upchurch, Virtuoso CEO. “There’s still a lot of wealth out there, but the definition of value is more important today. And while value is a major driver, value does not equal price. It’s about the overall life experience.”

And for the majority of today’s affluent travelers, their search for valuable life experiences is leading them directly to trusted travel specialists.

“Right now, there is a huge opportunity in the luxury travel market,” said Kleon Howe, CEO and president of San Diego-based The Art of Travel. “My luxury travel business has almost doubled from last year, and specialization has been key.”

Howe’s agency, in particular, specializes in travel to the South Pacific.  

Recent research supports Howe’s observations. According to the 2010 Portrait of American Travelers survey conducted by Ypartnership and the Harrison Group, affluent consumers with household incomes of more than $125,000 will lead the way toward economic recovery, with 20 percent of those surveyed planning to take more trips next year.

A recent Small Luxury Hotels of the World survey, conducted among members of its customer recognition program, echoed the Ypartnership/Harrison Group study, with 41 percent of respondents revealing that they are planning to travel four or more times this year. 

Last month’s American Express Business Insights Spend Trends Report showed that “ultra-affluent” consumers spent 114 percent more on business-class airfare in the second quarter of 2010 than in the same period last year, and that overall business-class travel spending rose 63 percent.  

But while analysts place their hopes for recovery in the pocketbooks of well-heeled consumers, it is crucial for them — and for agents — to understand that today’s luxury traveler is truly different. They are seeking different luxury experiences and booking those trips in different ways. Moreover, the very definition of what constitutes luxury travel has changed. Understanding those differences and learning to adapt them to an agency’s own business is critical to fostering growth in the luxury travel business.  

Luxury by Definition
Ask any agent to define “luxury travel,” and you’ll get a wide variety of responses. For Dan Ilves, vice president of sales and marketing for Los Angeles-based TravelStore, “luxury” is a relative term. “Luxury is in the eye of the beholder,” Ilves said. “The big question is how you define ‘luxury’ because it varies for each individual traveler.”

Wendy Burk, CEO and founder of La Jolla, Calif.-based Travel Dynamics Group Inc., said that while traditional notions of luxury travel are far from gone, the new luxury encompasses a more active lifestyle. “Five-star luxury still very much exists,” Burk said. “Most luxury travelers expect that, but now, it’s not about hanging out at the spa or on the golf course. It’s about having an authentic experience.”

David E. Lowy, president of Vancouver, B.C.-based Renshaw Travel, agreed.

“Luxury is no longer about fancy chandeliers, private butler services or a great pool,” Lowy said. “Now, it’s all about being simple but perfectly done, with incredible experiences, service, private access and seamless travel attached to it.”

“True luxury is about the quality and length of your experiences,” said Howe. “Before, you could measure luxury by the room or the cabin. Now, it’s not necessarily about the best cabin but about picking the best place — overall — to get away.”

In short, exclusive, authentic experiences are the cornerstones of today’s new luxury, not traditional price categories. That doesn’t mean that money doesn’t play a determining factor, however.

“Luxury travel is not driven by the rate but by the ability to deliver that which is of royal value to the customer,” said Upchurch. “When you create a true experience that matches itself to a person’s
individual tastes, that costs money.”

Just because luxury travel has become more accessible due to lowered prices doesn’t mean that its novelty of exclusivity has gone away, either.

“Now, people can experience more things because of the added value into the whole vacation, and that’s good for the travel agency community,” said Lowy. “Once a client moves forward, he or she realizes that the best travel experiences aren’t all about saving money but about valuing your free time.”

Many experts also agreed that the down economy has inspired travelers to travel more than ever and has made them want to make the most of their trips for the best value possible.

As far back as 2008, Virtuoso unveiled a consumer campaign titled “Return on Life” that celebrated “the idea that today, a rich life is not measured by personal possessions, but by time well-spent with loved ones on journeys to new destinations and the memories created by those experiences.” That sentiment, many agents observed, continues today, as the demand for luxury travel continues to rise.

The New Luxury Traveler 
As demands for luxury travel experiences grow, agents must be able to customize those trips to each individual client. If there is one shared characteristic among today’s new luxury traveler, it is that each one is different, and each one wants something tailor-made to suit their preferences.

Applying a basic set of demographics to the new affluent consumer is nearly impossible because, as the market for upscale travel has expanded and more travelers can afford to buy luxury, it has become even harder to pinpoint certain characteristic demographics among the group.

“Today’s affluent traveler is not defined by age or income levels, necessarily,” said Ilves. “They’re people who are willing to spend quite a bit more money on their travel because they see it as a necessary expense in their lives now, not just a luxury or indulgence.”

There are, however, a few common traits. For one, today’s affluent travelers tend to be much younger — both in age and in mindset.

“There’s much more interest among our clientele in taking active trips,” said Bruce Lowell Lazarus, vice president of marketing for luxury Asia FIT tour operator Remote Lands. As an example, Lazarus said that he has two clients planning to trek Mount Everest for their upcoming honeymoon.

“People are more health-conscious and fit than before, and they don’t want to be passive — they want to be active. What’s expected of a 60- or 70-year-old today is very different from what it was a few years ago.”
They are also more pressed for time.

“Many clients are working harder, so they expect to receive answers quickly and they want to find ways to optimize their free time to the fullest,” said Lazarus.

Lazarus said that, in order to save time and increase efficiency, many clients are willing to splurge on charted jets and planes when they travel within Asia so as not to waste any of their free time. 

Still, even as luxury consumer spending is trending upward, some residuals of “luxury shame” or “stealth wealth” still exist, and many clients are seeking sophistication rather than opulence, understatement rather than embellishment, when they travel.

“Luxury travelers aren’t talking about [how much they have spent] as much,” said Burk. “They’re keeping it in their own circle, staying low-key and getting the most value for what they are spending.”

Howe concurred, saying, “The luxury travel that I book is not at all flashy. It’s understated and sedate.”

How luxury clients are choosing to spend their travel time has also changed, with more wanting to give back to the local communities they are visiting.

“Many clients are traveling with a purpose,” said Burk. “Sustainability is becoming more in focus and there’s almost always some educational aspect attached to their travels; they really want to give back.”

One Remote Lands client, a doctor from St. Louis, for example, recently traveled to Cambodia where he helped build drinking wells for local communities. Lazarus said the doctor is planning to return next year to see the results of his efforts.

Today’s luxury clients also want to share those types of voluntourism efforts with their children and extended families, too.

“Family and multigenerational travel is becoming a huge trend that’s only growing more,” said Lowy.

In very general terms, the new luxury traveler most desires quality authentic experiences, relaxation and the ability to spend time reconnecting with loved ones, according to the 2010 Virtuoso Luxe Report.

“The new luxury travelers are interested in a personally enriching experience,” said Ilves. “They don’t just want to be a tourist or a visitor at some monument; they want real hands-on experiences.”

To get those kinds of experiences, more and more clients are seeking out both exotic destinations — India, Vietnam, Africa and China, for example — as well as tried-and-true favorites such as Italy or the South Pacific where they can go beyond their everyday lives and experiences.

Finding Trusted Travel Advisors
If there is anything that has not changed about today’s luxury consumers, however, it would be their growing expectations for excellence and the very best value and quality of experience that their money can buy. That translates to truly personalized service, instant communication, luxurious accommodations and flexibility in their itineraries. For those reasons, many choose to work one-on-one with travel agents to build their dream vacations.

Before they come to an agent, however, they are conducting their own online travel research. Affluent travelers are especially plugged into technology on a constant basis; at least 47.1 percent of iPhone users and 42.7 percent of BlackBerry users took home an annual income of $100,000 or more, according to a Pew Research Center study on mobile phone usage in the U.S.

“As the Internet grows, you need someone to wade through all of the options, and that’s where I come in,” said Lowy. “People are a lot savvier and worldly now, and they are more open to new things and more open to your suggestions, but they have to trust you first.”

Gaining that trust requires agents to invest in their own luxury travel experiences, as well as delivering unparalleled service and attention to detail.

“Luxury travelers want to talk to you as an equal,” said Howe. “They are coming to you as a consultant and they need to believe that you know what you’re talking about.”

During his interview with TravelAge West, Howe rushed to answer an emergency call on his personal mobile. The call was from one of his clients vacationing in the South Pacific, whose daughter had recently become ill during their vacation. Howe quickly made sure that his client and her daughter received the proper medical attention and care.

“These are the kinds of things that luxury travelers expect,” he said. “They expect you to have those kinds of connections, and they want to be taken care of.”

In addition to becoming a specialized expert, Burk tries to be more than just an agent to her clients.

“It is imperative to develop a relationship with your clients and, as you do, they become your friends and your friends become your clients,” she said.

Upchurch summed up the ideal agent-client relationship by saying, “When a customer is as concerned about being fired by his/her advisor, that’s when you know they truly trust you and value your expertise.”

Developing a relationship like this takes a strong commitment on the part of an agent. Serving luxury clients is a 24-hour-a-day job. However, especially when so many other travelers are staying home, arranging one-of-a-kind vacation experiences like these are worth every effort. 

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