What do luxury travellers want?

With the economy in the doldrums and talk of a lingering recession on many lips, the industry will be interested to learn what, if anything, can be done to attract the big spending luxury market. Horwath HTL has published the initial findings of research entitled: “The Future of Luxury Travel, A Global Trends Report”.

The report is a qualitative and quantitative research project that is being carried out over three years from 2011 to 2013.

What follows are snippets from the report. A highlight is that Cape Town is listed as one of the two most popular cities (Dubai being the other) in the Africa and Middle East region.

“A clear distinction between ultra-luxury and affordable luxury has been observed, together with the development of personalised services, a move away from ostentation, the increasing importance of Web-based media, and progressively more attention to green/ethical social principles. Above all, as with the luxury sector in general, the demand for luxury travel is expected to grow, especially in relation to emerging economies, e.g. in the BRIC countries.”

Emerging destination trends include a demand for increased diversity, such as:

• More privacy/less ostentation: a quieter, more discreet style of luxury is now preferred, with private islands highly desirable.
• Increase in demand for open-range excursions, with spectacular landscapes and unspoilt nature.
• A growing interest in off-the-beaten-track destinations – some areas currently avoided for political or social reasons are expected to become more attractive to tourists.
• Destinations with appeal to environmentally concerned and culturally interested travellers, including destinations with fascinating cultures and traditions, and those actively working to protect nature and endangered animal species.

The report has revealed five key trends that will affect the luxury travel industry:

1.    Emerging destinations will gain in importance – authenticity, new experiences and exclusivity; moving away from “bling”

2.    The need for personalisation will continue to impact the luxury travel industry – amplified by growth of social media; demand for concierge-type services

3.    Simplicity and seamless service rank highly among the main expectations of travellers – time is considered the most precious commodity

4.    The luxury travel industry will continue to recover from the financial crisis – demand is expected to grow over the next few years, impacted negatively by political instability, fear of terrorism, and complex visa and immigration issues

5.    Awareness of value will continue to impact travel decisions – once again, internet and social media are a major influence on planning and booking

Luxury tourism can be segmented into three categories based on spending power: absolute luxury (ultra-high net worth individuals, estimated to be around 80 000 to 95 000 worldwide); aspiring luxury (affluent businesspeople and professionals, estimated to be around 10-million people worldwide); and accessible luxury (luxury considered an essential component of way of life, as these people reject mass-market destinations).

Luxury travellers have also been categorised to include: the super-active, independent-minded, educated customers; explorers; quality and comfort seekers; streetwise purchasers; standard luxury traveller looking for relaxation.

The Middle East and Africa is the third fastest growing region, representing 20% of cited favoured destinations (see chart above). Growth areas include Africa (55%), South Africa, Namibia, Tanzania, Zambia, the Seychelles and Uganda. In the Middle East, Morocco (although geographically this is part of Africa), Jordan, Turkey and UAE are gradually gaining in importance.

Travellers still look for the most popular of excursions: tours (art, history and shopping); sun and beach; and wildlife and nature.

An interesting trend, which has certainly been adopted by luxury accommodation providers in South Africa, is the demand for serviced villas. This follows the growth of multi-generational travel, together with increasing demand for privacy.

Resorts have responded by configuring a higher percentage of adjoining rooms with families in mind, and expanded space is a prime focus in villa design.

The report urges for greater partnerships between supplier, buyer and client, who when working closely together form a powerful team that can realise extraordinary luxury experiences. As the industry moves through to a post-crisis era, the value of partnerships is greater than ever before.

Robert Hecker, chairman of Horwath HTL says: “The report has been fascinating to produce because of the implications for travel in a post-credit crunch environment. The high end of the market is often seen as the barometer for trends that will be picked up in other areas of the industry.”

Debbie Joslin, exhibition director for ILTM adds: “The ILTM Global Trends report confirms there is a continued recovery in and demand for luxury travel, as shown by increasing lead times and rates. The role of the luxury travel buyer and their relationship with suppliers has never been more important as the demand for high-level personalisation continues to grow amongst luxury travellers.”