They say rich people aren’t like me or you, but that doesn’t necessarily hold true in what they expect from their travel experiences and how they realize those goals. The luxury market has been the subject of quite a bit of research lately, and most of it has reached the same conclusion: Affluent travelers want personalization and unique, connected and exclusive experiences.
And while that’s not that much different than the travel goals for many people, the rich have the money, time and access to make those dreams come true.
For hotel marketers and revenue strategists, the challenge is going beyond the cookie-cutter to home in on the individual wants and needs of potential upscale guests. And while cost isn’t always a major concern for these travelers, value remains a key differentiator among competing offers from hotels and other luxury suppliers.
The worldwide market for all luxury goods and services, including travel, continues to grow quickly, exceeding €1 trillion in sales in 2016, according to a Bain & Company study. While the travel segment represents less than a fifth of total luxury spending, it rose about 4% last year to €183 billion. The travel category was a growth leader among 10 categories of luxury products tracked in the study.
While product-oriented luxury segments, such as fine art, designer furniture, yachts and luxury cruises, were flat or down, spending on experiential luxury, such as travel, was up.
Defining the luxury travel market isn’t easy. Some consumers travel with champagne tastes albeit with Miller Lite net worths. About 15% of households in the U.S., or 13.6 million people, have more than $1 million in net worth. So-called high-net-worth individuals—those with more than $10 million—account for 4.4 million residents. And in the stratosphere are billionaires, of whom there are more than 2,000 in the world, including 631 in North America.
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The Generational Divide
Some time this year, the millennial generation surpassed baby boomers as the largest consumer demographic in the U.S., a milestone that has or will have an effect on hotel marketing and distribution, including in the luxury market. As millennials approach their 40s, they’re advancing in their careers and are more likely to be married and have families and have more disposable income to spend on travel.
And while in some cases, they’re mimicking their parents and grandparents in vacation destination and accommodations choices, they’re generally seeking higher-octane experiences than are boomers. Resorts have had to revamp their programming and marketing strategies to accommodate this trend.
While millennials aren’t in general as wealthy as their parents and others in the boomer cohort, they also like the finer things in life, especially experiences more so than material goods. As a result, they are likely to forego some creature comforts to travel in a luxury style. They can’t do it on every trip, so it’s incumbent for hotel marketers to develop programs, packages and rate structures to lure them when they’re ready to go upscale. But again, the offerings must be personalized to each potential guest.
But as millennials mature, consumers from generations X and Z are taking their places as trendsetters. Significant differences exist in the shopping habits of Xs and Zs.
Researchers say Gen Xers are more likely to shop value brands, including for travel, due to their coming-of-age experiences during the Great Recession. On the other hand, members of generation Z (defined as those born after 1995 and who don’t know a world without the internet) are much more likely to buy luxury brands than and Xers.Luxury #travel is growing quickly, and it’s driven by #personalization Click To Tweet
There’s Rich, and Then There’s Super-Rich
The luxury-travel market has sub-categories, with the most coveted among marketers being the super-luxury consumer, that 1% of the population for which experience, personalization and opulence come with no price tag. Aside from some Silicon Valley wunderkinds, most consumers in this cohort are older with long-standing expectations when it comes to travel.
In general, the higher the wealth, the less likely an individual is concerned with material goods. Instead, they demand personalized experiences when they travel. For this group, luxury travel isn’t about the biggest and the most lavish. The rich have been there, bought that. Today, they’re spending their money on experiences rather than material possessions.
As Crown Group CEO Iwan Sunito said during a recent conference in Australia: “Luxury isn’t about glitz; it’s more about connectedness. Connectivity is the new luxury.” Crown Group is a Sydney-based developer and operator of commercial real estate, including hotels under the Skye Hotel Suites brand.
Luxury travelers, especially boomers, often rely on high-end travel agents, such as those who belong to the Virtuoso network, for recommendations and to plan their travel.
According to the 2017 Virtuoso Luxe Report, the wish list of luxury travelers is very similar to that of consumers of all wealth classes. The report, which is a survey of its nearly 400 worldwide travel agencies specializing in luxury travel, says affluent travelers “crave localized experiences wherever they roam.” This yearning for personalization encompasses adventure travel, local eating experiences and a trend toward multi-generational travel.
In a recent interview, the CEO of Virtuoso clarified these trends: “It’s become nearly impossible to profile the luxury client today because travelers are seeking deeper experiences, inspiration, personalization and self discovery.”
He also urged travel suppliers to employ data-driven, customer-centric strategies that shift their marketing focus from pure demographics to “psychographic profiles based on personal lifestyles.” In other words, consumers seeking luxury travel come in all shapes, sizes and even net worths, so it’s a little more involved to pinpoint who they are and what travel experiences they want.
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Tags: baby boomers, Bain & Company, Crown Group, Generation X, Generation Z, hotel distribution, hotel loyalty, hotel marketing, hotel personalization, Hotel Revenue Management, hotel revenue strategy, Iwan Sunito, luxury travel, luxury travelers, millennials, Personalization, travel agencies, Virtuoso