Luxury Travel Goes Casual

The stock market is rising, the economy is picking up steam and the rich are making plans to travel, perhaps more than at anytime in the last three years. It’s good news for luxury cruise lines and tour operators, which are forecasting a strong year and have lined up more services, amenities and new itineraries.

“Domestic travel is going to increase considerably,” said Howard Waddell, a principal of American Affluence Research Center, a trend-tracking firm in Pinecrest, Fla. “And, the decline in international travel appears to be over.”

The center’s fall survey showed that, after three years of belt tightening, the affluent are spending again and they are spending on entertainment, recreation and travel, rather than expensive cars, jewelry and collectibles.

“People are saying ‘We’ve held back and now it’s time to reward ourselves and have fun,’ ” Waddell said.

The 11 million households in the U.S. with a net worth of at least $750,000 are the target market of dozens of upscale cruise lines and tour operators and savvy travel agents eager for their lucrative business.

Those households which represent 10 percent of the U.S. population also own 85 percent of the nation’s stocks and mutual funds. That is why the drop in the stock market more acutely impacted the affluent and caused the belt tightening, Waddell said.

And, it affected travel suppliers.

Tom Stanley, president of luxury tour operator Travcoa in Newport Beach, Calif., said the “old wisdom” that sellers of luxury products are insulated from economic downturns is no longer reality.

“When the stock market declined as much as it did, it affected luxury travel,” he said. “Now people are feeling wealthier, and confidence has come back.”

However, while the affluent are not budget shoppers, they do look for value.

“They are willing to pay a premium for a high-end product as long as they feel they are getting their money’s worth,” Stanley said. “They also want a more exclusive experience. We’ve reduced our group size to 15 to give more personal service. The destination is no longer the key they want special services and to be pampered.”

Travcoa is putting more emphasis on customized travel and on Intimate Journeys, 45 itineraries aimed at younger travelers that include exclusive offerings, such as private wine tastings in the Champagne region of France.

Abercrombie & Kent said 2004 is shaping up as the best year in three years because of pent-up demand. The operator is making its itineraries more flexible, including Signature departures, which offer travel by car and private driver and instant confirmation when the booking is made.

“The overarching key to luxury travel is flexibility,” said Pamela Lassers, a company spokeswoman. “Signature itineraries give the privacy and freedom of independent holidays, but with the support of a driver and guide. And we can confirm availability and pricing with one phone call, which is ideal for late bookings because we hold inventory close to departure dates.”

Even those who choose escorted tours want more time to explore on their own, Lassers said, and A&K has responded by adding more free time to escorted programs.

There is a growing middle-income group that is splurging on luxury travel, said Tim Irwin, president and chief executive of Pleasant Holidays.

“People don’t think of us when it comes to luxury travel but the fact is that the luxury end of our product line accounts for 60 percent of our revenue.”

In July, Pleasant purchased Hawaii World, a wholesaler that specializes in high-end resorts in Hawaii. It now is operated as a subsidiary, with luxury offerings.

“It was one of the reasons we were attracted to Hawaii World to get out from the umbrella of being thought of as a moderate, mass market company,” he said.

The decline in travel the last two years caused prices at luxury resorts to decline, making packages more affordable to more people.

“For a little more extra money people can experience an upscale property, and when they do, they generally don’t go back,” Irwin said.

Travel agents can play an important role in encouraging that market to move up. “They can show the middle-income traveler that they can experience an upscale resort for very little more money,” he said.

Meanwhile, some of the affluent are opting for private homes rather than resorts, said Dean Johnson, senior vice president of marketing and product development at Creative Leisure, which is expanding its private home offerings.

“We’ve significantly strengthened our core product to meet the desire to have more room and space in vacation accommodations and to be more independent than what a luxury hotel might afford,” he said.

“Some people are saying they don’t need spas, restaurants and services what they really want to do is cocoon and bond with their family. But if they want, we can bring masseuses, chefs and cooks to the private homes. The luxury traveler wants to decide what they want to do when they want to do it.”

Luxury cruise lines are also seeing an upswing for 2004 and are expecting a better year if world events stay relatively calm.

Richard Meadows, senior vice president of sales and marketing for Seabourn Cruise Line, said customers are looking for shorter cruises and flexibility.

“Many of the younger affluent travelers prefer to split their vacation time into smaller segments,” he said. The line’s new Mediterranean program offers one-week cruises that can be combined into back-to-back voyages with different itineraries.

A demand for more casual dining prompted Seabourn to open the Veranda Café for dinner each night. And, Seabourn is offering exotic new itineraries, including maiden visits to Papua, New Guinea.

“One big challenge of targeting an upscale clientele is exceeding their expectations,” Meadows said. “They expect you to be very good, and the challenge is to surprise them by how truly good you are.

“The same goes for agents. They need to provide expertise and add value. If they do that, they can create great profits for themselves and security in the long term,” Meadows continued. “The affluent are very loyal when they find someone who provides them good service. They have no problem paying for service.”

Crystal Cruises has put an emphasis on enrichment programs, with a Creative Learning Institute rolling out fleetwide this year.

The program includes lectures and interactive workshops on wellness, wine and food, arts and business and technology.

“Travel today is not only about embracing new cultures and destinations,” said Bret Bullock, a Crystal vice president. “It’s about taking time for yourself, to learn, to discover, to rejuvenate.”

Radisson Seven Seas Cruises, which is seeing a boom in demand for spa services, replaced its spa contractor with the renowned Parisian firm, Carita, to operate its onboard spas.

“Some of the services sell out within the first hour of boarding,” said a company spokeswoman. “People treat themselves and spend money to feel and look good.”

Among the most popular treatments is what’s called a nonsurgical facelift.

Also onboard at Radisson Seven Seas are Le Cordon Bleu culinary workshops and a beefed-up bridge program. Among new itineraries is the first Grand Asia Pacific voyage and circumnavigation of Australia, both on the Seven Seas Voyager. There are also 40 themed cruises wine, The Beatles, American chefs and well being among them.

Silversea Cruises is also expanding its onboard lecture program with a wine series.

“Destination used to be enough,” said Brad Ball, a company spokesman. “But people want to be enriched on their vacation.”

He said customization and flexibility is the key to serving affluent clientele, which is why the company offers a daily rate plan that allows customers to build their own itinerary.

“Cruising was considered such a rigid type of travel, and we’ve tried to change that so that people can choose their own departure dates and not feel herded,” Ball said.

Larry Pimentel, president of SeaDream Yacht Club, says the younger affluent are looking for a casual environment with many features included in the fare so they don’t feel they are “constantly reaching for their wallets.”

“Their definition of luxury is different from Old World money and decorum,” Pimentel said. “It is no longer a rigid environment of tuxedos. The idea of luxury travel for the new generation is doing what you want to do. A fly-fishing trip to Montana can be somebody’s idea of luxury.”

SeaDream has put greater emphasis on health spas, having six masseuses on staff for each of its 55-cabin ships. New itineraries include the Croatian coastline and the Greek islands during the summer Olympics in Athens.

The affluent can be a demanding clientele, but once you’ve earned their trust they are loyal, Pimentel said.

“They expect travel agents to be knowledgeable. A lot of retailers walk themselves away from the ability to sell to the audience because they don’t understand how someone can pay so much for a trip. But a knowledgeable agent will sell it because if an agent sells an affluent customer a cheap vacation it will be an expensive mistake.”

One luxury cruise product generating excitement this winter is Cunard’s new Queen Mary 2.

Deborah Natansohn, Cunard senior vice president of sales and marketing, said the ship “succeeds in raising the bar in passenger service. We don’t have just any spa, we have the Canyon Ranch. We don’t just any enrichment program, we have Oxford University. We don’t have just one top chef, but two.”

Natansohn said Cunard has tried to offer key ingredients that the affluent desire on a vacation.

“Excellent culinary dining is very high on the list, and they also probably more than anything else seek and appreciate the companionship of others who share their lifestyle.”

It’s well worth the effort for travel agents to court the high-end market, she said.

“Affluent travelers are demanding and expect immediate service and immediate answers, and the challenge is always to make sure to live up to their expectations. The main goal is to win their loyalty because they tend to be frequent travelers and they can be very loyal.”