Not only has the definition of luxury travel changed, but travellers have completely different expectations of luxury travel experiences, and industry service providers have a job on their hands in attempting to understand and better service this new breed of luxury traveller.
Luxury travel is not what it used to be, or so it appears.
And this has much to do with how the traveller has evolved, off the back of a constantly-changing world increasingly influenced by technology and a different approach to finding meaning.
Consult any travel expert on the issue of luxury travel, and they will quickly point to buzzwords such as “personalisation” and “authenticity”.
So, what does this mean for the luxury travel industry?
A 2016 Amadeus-commissioned report looked at luxury travel trends until 2025 and was developed with data from Tourism Economics – a UK-based tourism consultancy – and dozens of expert interviews with global luxury travel experts across specialist travel concierge agencies, airlines, hoteliers and intermediary suppliers through Connections, a global networking event organiser for luxury travel providers.
What the report found was that global consumers are increasingly spending their disposable income on experiences rather than material goods.
“Consumers’ desire for life experiences is spurring a growth in luxury travel that is outpacing the rest of the travel industry,” said the report.
It went on to say that between 2011 and 2015, luxury travel, in terms of outbound flights on business or first class, saw a 4.5% compound annual growth rate (CAGR), versus 4.2% for overall travel. This trend will, apparently, continue to accelerate over the next ten years, with luxury travel trips projected to grow at a CAGR of 6.2% between 2015 and 2025, almost a third faster than overall travel at 4.8%.
The report,
Shaping the Future of Luxury Travel, revealed the fresh challenges and opportunities that the luxury travel market will face over the next decade, and some key findings included:
- We have entered a new age of luxury travel, where luxury is curated, real-time and experience-led
- North America and Western Europe account for 64% of global outbound luxury trips, despite only making up 18% of the world’s population
- From 2011-2025, Asia-Pacific’s luxury travel market will see faster overall growth than Europe’s, but this growth will decelerate from 2015-2025
- India’s luxury market CAGR of 13% is higher than any of the other BRIC nations, and is the highest of the 25 countries explored in this report
- A human desire for more rewarding experiences provides an essential catalyst to evolve and improve travel industry quality and service standards
- A hierarchy of luxury travel needs is identified, ranging from five-star quality and service standards to exclusive VIP privacy and security
“Luxury means different things to different people and this is especially true today,” says Rob Sinclair-Barnes, Strategic Marketing Director at Amadeus IT Group. “As emergent middle classes seek the material aspect of luxury travel, more mature markets are craving a new, evolved kind of luxury. This is why offering luxury customers a relevant personal and exclusive experience will become even more crucial than it is today – it will be a differentiating factor between old and new luxury.”
Hassan Ahdab, Starwood Hotels & Resorts’ Regional Vice-President Africa & Indian Ocean, seemingly agrees, when he says that “traditional luxury as we used to know it died many years ago and the concept of luxury has been completely redefined in the past couple of years. Understanding what luxury means begins by understanding the luxury consumer. What does he or she look like? What are his or her aspirations and motivations, and where do we find them?”
Along similar lines, Saurabh Rai, Executive Vice-President for Preferred Hotels & Resorts, points to the evolution of luxury travel.
“It is true that the definition of luxury travel has evolved,” he says. “Premium buyers are now seeking a true sense of ‘value’.”
What is luxury?
It seems that defining this market segment is key to understanding it and developing an offering – particularly if you’re a service provider – that best services this market.
So, if our understanding of what ‘luxury’ or luxury travel has changed, how do we define it?
“Today, ‘luxury’ remains one of the most elusive terms in the English language,” says Ahdab. “Conversations around what luxury means will range from the external to the internal, from statements of status to a deeper sense of discovery and learning, from the superficial and superfluous to truly unique products and experiences that will be treasured for a lifetime.”
So, how does one apply that to the luxury hotel industry?
“Leading luxury brands have always set the standard,” says Ahdab. “They have led the way. In their pursuit of perfection, in their quest for excellence, they break the rules, they challenge the norm, and they test the limits of innovation. To the consumer, the creations and experiences afforded by these brands represent an ultimate in desire and fulfilment.”
The African hotel industry is an interesting player in the luxury segment. As the continent retains a relatively ‘unknown’ element to it – particularly in the eyes of international, non-African corporates and travellers – this has allowed the branded hotel industry to flourish, as slightly ‘nervy’ travellers and employers default to the brands they know and trust.
This, in turn, has allowed the world’s international hotel brands to set up shop over the past few decades and win instant market share, thanks, in large, to loyal international travellers who would rather not take a chance with an unknown African hotel brand and would prefer booking into a Hilton or Sheraton, for example.
And, whilst the lay of the land may now be changing, with an opportunity for mid-market hotel brands to fill a distinct gap in the market that hasn’t ever been properly served, the five-star hotel market has up until now boomed, with those self-same international groups rolling out their premium brands and gobbling up those travellers who would rather go with what they know.
In that regard, it’s significant to note that for the majority of the international hotel brands with a presence in Africa, the strategy remains positioning the group’s premium or five-star brand in a new territory before perhaps following up with a lesser or reduced services brand, possibly in the mid-market segment.
In summary, the five-star hotel market in Africa, particularly for the international groups, has flourished over the past few decades, and even with a slight shift in focus towards the middle tier, the premium segment doesn’t look like slowing down any time soon.
Guillaume Durand, Group Director Sales & Marketing – Kenya, for Fairmont Hotels & Resorts, makes another interesting observation in this space.
“With the rapid growth of the middle and upper classes, the demand within the premium travel space is increasing,” he says.
So, it’s not just those international travellers filling up Africa’s five-star hotel properties. It’s also an emerging market of African travellers who now have the means to afford a premium product, and the expectations that go with it.
“The travellers expect high standards of service and products, as experienced in other premium markets globally, and hence pushing us to continually re-invent our offering,” says Durand. “This is experienced across the continent as evidenced by the increase in the use of private jets by premium travellers.”
Who are these people?
Off the back of Durand’s point, let’s delve a bit further into just who exactly we are talking about, when we talk luxury or ‘premium’ traveller, and what those expectations are.
“High-end hotel guests seek a personalised, memorable take on luxury travel through services and experiences that go beyond the physical hotel product,” says Rai. “Access to a dedicated concierge or driver, in-room check-ins, late check-outs, and meaningful ways to engage with the surrounding area and its local community are increasingly important.”
Again, it’s coming back to that theme of personalisation.
“The discerning business traveller requires efficiency, great service, unobtrusive security and a friendly atmosphere, and it is our job to ensure they have a positive and memorable experience,” says Axel Hauser, General Manager of the Moevenpick Ambassador in Accra, Ghana.
“It is upmarket, exclusive, unique and there is a great sense of privacy,” says James Chege, Director of Sales & Marketing at Sankara Nairobi.
How, then, would one take these features and apply them across an entire hotel group, as opposed to just the one, isolated experience at a particular hotel property? Durand is part of the team that runs the well-known Fairmont The Norfolk in Nairobi, Kenya, and has this to say.
“The premium traveller expects the same standards of service they would get anywhere else within the Fairmont network. This has been made possible by The Fairmont President’s Club, a global recognition programme designed around the traveller’s passions and what is important to them. As members, guests have access to benefits and privileges that provide added convenience during travel.”
Gen X and Y
Now, this may all be well and good, but aren’t we applying ‘old school’ definitions of what luxury travellers in the past may have expected of their five-star hotel stay?
What about the new generation of luxury traveller, and his or her wants and needs, as well as their expectations and desires?
“While other luxury hotel brands were designed for the wealthy ‘Western Baby Boomer’, Starwood saw a white space to create hotel brands with a new generation of global elite travellers in mind, whom we are calling ‘Generation LuXurY’,” says Ahdab. “Their approach to luxury is decidedly less formal, entirely more personal, and is defined more by their interests and mindset than their geography and demographic. Think about it, when was the last time you saw a billionaire in a tie?”
That’s a fair point.
So, if in the previous section we were asking who the luxury traveller is, perhaps we should now be asking who the luxury traveller of today is.
“This new global traveller is multi-national and cross-generational, mobile and jet-setting,” says Ahdab. “He or she is more comfortable moving across our portfolio of luxury hotels for business and leisure, but also demands more personalised service at every turn.”
Aah, there’s that word again – ‘personalised’.
No surprise that this keeps popping up, but let’s drill down a little further, as this is clearly something that Starwood Hotels & Resorts has devoted a fair amount of time and energy to, as not only its customer of tomorrow, but also its customer of today.
“This new class of globetrotters/global jetsetters brings a reshaped and personal mindset to the notion of luxury, with more money to spend than their predecessors, while living more digitally connected lives than ever. Generation LuXurY identifies themselves as individuals, expressing their own personal style in and out of the boardroom, and breaking the rules of tradition in many aspects of life.”
“This is the first generation that has earned their wealth (rising middle class) and continues to earn money, rewarding themselves with luxury goods and experiences while mixing business and leisure. They no longer see ‘my time, your time, downtime, work time’ but blur business with leisure.”
With all of what Ahdab has said, it’s only right that we move seamlessly on to arguably one of the most prominent features of modern times, and something it could be argued is a defining feature of generations X and Y.
That is the role that technology plays in the lives of these new age luxury travellers.
What’s interesting is the fact that whilst this market segment expects a certain kind of ‘luxury’, it also demands a certain standard of technology, in terms of the wi-fi facility on offer at the property in question.
“Recent reports show that good wi-fi is now a higher priority than hot water! So, we have invested to provide higher speeds, a back-up provider and the capacity to use multiple devices simultaneously,” says Moevenpick’s Hauser.
“Wi-fi remains a key requirement for these travellers,” says Kevin Clarence, Director: Birchwood Hotel & OR Tambo Conference Centre in Johannesburg. “They also require a quiet and peaceful environment and spacious rooms where they can work.”
Drop in spend?
Now, this may be all well and good, but there’s no doubt that the world of travel – particularly that of high-end corporate travel – is a different one from that of pre-2008 global financial crisis. Corporates were forced to take a long, hard look at their travel policies and the result was a tightening of these policies, particularly as it related to premium travel.
So, I’m interested to know if that impact was felt by those in the five-star hotel segment, particularly here in Africa, and whether the trend of a more austere approach to travel in the corporate market – as this is the bread and butter of these hotels – has remained?
“There’s actually an increase in the uptake of premium products,” says Sankara’s Chege. “There’s lots of investment, leading to a lot of business tourism and positive change in the (Kenyan) economy. People are also more aware of premium products, so therefore the demand for them is rising.”
That’s an interesting point about people being ‘more aware’, and I suppose that’s a given, with the huge increase in the amount of information now at the fingertips of all travellers, either on their mobile phones or a similar device.
“In Ghana, and indeed West Africa, the market is constantly changing, but it is not necessarily due exclusively to the global economic downturn and we have experienced some ‘boom’ years during this time,” says Hauser. “Demand for premium products such as our Executive Club Floor, executive rooms and suites remains.”
Across the continent in East Africa, Durand makes another interesting observation.
“We have seen a change in pattern in the traveller bookings,” he says Durand. “These now have a shorter lead time and we are getting a lot more last minute bookings. These could be attributed to various factors, but generally it has been good for business.”
“The corporate travel segment has been through a tough phase this past eight years, with shrinking travel budgets and severe cuts in five-star hotel spending,” says Rai. “However, purchasing trends over the past two years indicate an almost complete recovery, which signals the initiation of a new cycle. Premium luxury hotels have witnessed steady demand too, with the exception of regional socio-economical short-term impacts.”
The future?
So, what does all of this mean for the future, and the future of luxury travel in the hotel space?
Will the needs of the luxury traveller remain the same, and what will the key factors in retaining luxury travel business be?
In 2015, Amadeus released a report called
Future Traveller Tribes 2030, which identified six traveller tribes based on consumer behaviour, recognising that purchasing patterns change depending on the circumstances of each trip.
Using similar methodology,
Shaping the Future of Luxury Travel identified six luxury traveller tribes to help travel providers better target their luxury customer market:
- Always Luxury
- Special Occasion
- Bluxury
- Cash-rich, time-poor
- Strictly Opulent
- Independent Affluent
Adopting the Amadeus approach, the travel technology giant believes that if you can understand and work out how best to service these six groups, you’ll have a better grasp of how to make the most of the luxury travel of the future.
It’s also important to note, however, that a lot of the basics will remain the same.
“Travellers will be looking for a seamless, uncompromised service offering from hotels and speed and convenience of moving from point A to point B,” says Durand. “They will also seek recognition as individuals (irrespective of them being corporate travellers) and expect personalised service from their booking, stay and return home.”
Hauser believes that you can take that personalised service a step further.
“Extending the ‘brand experience’ is one such trend,” he says. “That’s through pre and post-stay communications to whet the appetite for pampering or trying out a new dish, long before arrival, and introducing lifestyle products so the guest can enjoy drinking Moevenpick wine at home and treating the children to Moevenpick ice-cream at the weekend.”
The basics of how best to service this market are perhaps best summed up by Birchwood’s Clarence.
“It’s our challenge to ensure that we provide premium travellers with as much as possible to ensure their stay is as good as ‘home away from home’,” he says. “Providing premium travellers with what they want at a competitive price will ensure demand continues to grow.”
The final word goes to Preferred Hotels & Resorts’ Rai.
“Today’s high-end traveller seeks a well-rounded, memorable experience rather than just luxury accommodation. They are showing a growing desire to experience the authentic, unique nature of each destination they visit through immersive activities and interactions – the presidential suite with dedicated butler service is no longer enough!”
2016 Luxury Travel Trends
Industry website travelmarketreport.com consulted a group of luxury travel professionals and other experts to see what trends are shaping up at the high-end of the market for the rest of this year and into the next.
- Doubling down on local
“Travellers want to be with locals,” said Jack Ezon, President of Ovation Vacations in New York. “They want to be immersed in a destination. Instead of guides who know a lot of facts, they want insiders who can really give them the lowdown. Or they want a nightlife host who can take them to the coolest bars and nightspots and tell the story from their own perspective.”
- Authentic, but maybe not too authentic
Authenticity can be taken too literally.
- Personalisation – it’s the little things that count
Personalisation doesn’t have to be a big deal. Matteo Della Grazia, owner of tour operator Fuoritinerario – Discover Your Italy, said, “we are seeing increasing demand for local and authentic experiences that allow clients to create their own local product. For instance, they can work for a day at a top Tuscany vineyard with a wine- maker to create a personalised wine, which will then be aged, bottled, and shipped to them.”
- Hip at the high end
Hotels brands like Ace prove that travellers will spend more to be around people and things they perceive as hip.
- Whimsical wandering
It may be a generational thing, but there are travellers who like to arrive at their destination without any plans beyond their first hotel stay.
- Speaking meaningfully
“Access is one thing,” said Susan Farewell of Farewell Travels, “but an experience that satisfies a greater sense of purpose is the ultimate luxury.”
- Unexpected pairings
Travellers are combining destinations and experiences that are very different from one another. Farewell is working on one trip where the couple is spending five days doing a cooking programme in Tuscany and then moving up to Lake Garda for a few days of sailing lessons.
- Fun with food
Everybody talks about cooking lessons or meeting the local chefs, but some want to go further. Farewell notes that in Ho Chi Minh City, you can take a Foodie Tour by Vespa, where a driver takes each traveller from one food venue to the next.
- Long-term trip planning
“I work with clients long-term,” said Farewell, “seeing their travel needs in terms of five-year chunks. We develop a five-year travel plan for them, which we revisit every year.
- Destination roulette
While everybody tries to figure out the “hot destinations,” sometimes it’s just random or based on a magazine article or news event, or even a shift in currency.
- Exotic emerges
Milton Pedraza, CEO of The Luxury Institute, notes that younger travellers are heading for more exotic places, like Cambodia and Bali.
- Convenience is king
Luxury clients are flocking to buy ancillary services that make their travel experience easier.
- The human touch
“Even young people don’t just want to be digital beings,” said Pedraza. “They want to engage with other people—whether it’s tour guides, people on the street, or other travellers.”
- It’s nice to share
The quality of sharing accommodations—whether it be Airbnb or sharing options introduced by hotel companies — is improving.
- Art is the new cuisine
While food has taken a central place in luxury travel, says Ezon, so too has art. “So many properties are recruiting an artist-in-residence and turning their public spaces into evolving galleries from local artists.”
Airline industry
In its July-August 2016 Airlines Financial Monitor report, the International Air Transport Association (IATA) pointed to the fact that growth in premium international passenger traffic had continued to lag behind that of economy.
“However, premium fares have held up better than those in economy on most of the top-10 premium routes,” said the report. “In fact, premium’s share of revenues has risen slightly so far this year on the North Atlantic and Europe-Asia markets (which accounted for nearly two-fifths of industry-wide premium revenues combined in 2015). In the current environment, the high-yielding premium segment offers an important buffer for airline financial performance.”
It seems that some of the international airlines flying into and out of Africa would agree.
“Premium traffic from the United States into Africa remains strong, and we have been successful in attracting new premium traffic, in part due to our emphasis in providing a truly premium business class product – having invested more than $3 billion,” says Jimmy Eichelgruen, Delta’s Sales Director for Africa, Middle East & India.
“Virgin Atlantic has seen a large increase in travel to and from the United Kingdom this year in both our Upper and Premium Cabins,” says Darrin Thomas, Manager, Marketing and Communications South Africa for Virgin Atlantic. “The Johannesburg route continues to perform extremely well.”
That all sounds pretty good, as there was some concern that the airline premium travel segment would continue to suffer post-2008, with corporates reviewing their travel policies and opting for a more ‘cash-conscious’ approach. Gone are the days when a corporate traveller would automatically be booked into business class, regardless of the flight time and time of day. Now, you have a situation whereby corporates have amended those policies and taken a closer look at just who needs to fly in a premium cabin and when. For example, it’s not unusual today to see a corporate travel policy dictate that only flight durations over a certain number of hours qualify for a business class ticket on the company.
It goes without saying that the premium cabins drive the profitability of those airlines offering a range of classes, so it’s important that these airlines get that premium product and offering right, in order to turn a decent profit and sustain themselves in an industry notorious for its small margins.
“Premium customers are the key revenue driver of every full service airline, so it’s important to maintain your market share,” says Eichelgruen.
Delta has invested a lot of money in the experience it offers its customers both on board and on the ground. The airline offers full flat-bed seats in Delta One, its business class, on each of the routes it flies to Africa from its base in Atlanta – Lagos, Dakar, Accra and Johannesburg. The layout creates ‘cubes’ of personal space for more privacy. All seats are forward-facing and turn into flat-beds at the touch of a button. Combine that with full-size pillows and luxury duvets created exclusively for Delta by Westin Hotels & Resorts, and you have no excuse for not getting a decent sleep.
Delta also received a lot of credit earlier in the year for the implementation of its new
Delta One Suite – the first business class cabin in the world to feature a sliding door for each suite, which is something usually reserved for first class passengers. The doors are a key part of Delta and Factorydesign’s collaborative efforts to improve customer comfort and privacy. The industrial design consultancy worked in close partnership with Delta and seat manufacturer Thompson Aero Seating throughout the design, development and engineering process to achieve this.
“People like to have some privacy, and the feeling of ‘owning their space’, and this is exactly what the door provides,” said Ryan Graham, Factorydesign’s Senior Designer. “It is a major step forward in business class travel.”
Graham touches on that element of ‘personalisation’ that appears to be the buzzword in not only luxury travel, but just about all forms of travel. It’s about knowing the customer and anticipating his or her needs.
“We’re constantly striving to improve our premium offering, whether that’s fitting wi-fi on our entire fleet, serving local and seasonal menus so ingredients are always fresh, or even partnering with luxury brands, such as Westin Hotels and Resorts, TUMI and Kiehl’s to enhance on board comfort,” says Eichelgruen. “Today’s travellers, particularly Millennials who are happy to shop around, want more for their money, so Delta has to ensure we stay ahead of the competition with our product offering.”
No surprise that there are those in the industry who believe that personalisation is just as important to airlines as it is to hotels and hotel groups.
“Most premium travellers are interested in airport lounge access and personalised handling,” says Abel Alemu, Ethiopian Airlines’ Regional Manager for Southern Africa.
Ethiopian Airlines is another carrier to recently make big strides in its premium offering, thanks to the relatively recent delivery of two new A-350 XWB aircraft. The A350 XWB is one of the most comfortable, technologically innovative and fuel-efficient aircraft in the market today, providing exceptional levels of luxury and reliability, combined with the latest technology.
“Ensuring that the aircraft is designed and configured to surpass the expectations of customers, Africa’s first A350 provides new features such as wider seats in both business and economy classes, the lowest twin engine noise level, advanced air conditioning technology, and full LED mood lighting,” says Alemu.
All the A-350’s seats are fitted with the latest high-definition touchscreen personal monitors and a greater selection of movies, TV series and audio channels. Ethiopian plans to make inflight wi-fi connection available on this aircraft in the future. Arguably more importantly, from a premium travel point of view, the A-350 business class cabin, Ethiopian’s ‘Cloud 9’, is outfitted with 30 state-of-the-art diamond seats that convert to fully-flat beds in a 2-2-2 configuration.
Another airline making a significant change to its offering is SWISS International Air Lines. Earlier this year it took delivery of the first of six Boeing 777-300ER aircraft. The cabin of the SWISS 777 seats a total of 340 passengers and is a leap forward in comparison to the interiors of the Airbus A340-300s it is replacing. The eight individual cabins in first class boast the largest video screens in the industry, measuring 32 inches, and electro-mechanical window shades, serving all three windows per seat at once. The 62 seats in business class are configured either 1-2-2 or 2-2-1, creating a total of 12 single “throne seats” with extra storage space and armrests-cum-tables on both sides of the seat. The current SWISS business offering has been refined and enhanced, with more storage space and better privacy.
The biggest novelty of the aircraft, however, is the Panasonic eX connect IFE system, with SWISS as the first major European carrier to allow voice calls on its 777 fleet.
“This function will be disabled after the inflight service on night flights”, said Frank Maier, Head of Product and Services at SWISS, at the time of the launch. “We will test it for one year, but expect to keep it on with not too many people using it, although it is something you have to offer as an airline these days.”
Online access is also being offered in three different data packages.
Ahead of the SWISS launch of this new product, SWISS CEO Harry Hohmeister said that, “with our new Boeing 777-300ERs we will be setting new benchmarks in terms of our guests’ overall comfort and travel experience.”
Ultimately, that’s what airline premium travel is all about.
But, beyond that, it really is about understanding the customer’s needs. That’s something British Airways has done with the launch of its On Business product – a programme designed specifically for SMEs, with flexibility its hallmark.
Further to that, BA has also just completed a major makeover of 18 of its Boeing 747s, giving them the same interior look and feel as its newest aircraft. Each 747 now features a refreshed interior and state-of-the-art entertainment system – as well as additional Club World seats. The new IFE system provides a choice of over 1,300 hours of entertainment, including 130 movies and 400 TV programmes on larger hi-resolution screen with touch and swipe functionality.
The upgraded Boeing aircraft have 34 more Club World seats than the aircraft they replace on the Johannesburg route, and from 30 October, BA will add more A380 services to the Johannesburg schedule. It already flies a daily A380 service between Johannesburg and London and from 30 October this will increase to 10 a week.
“Lounge access, priority boarding and fast-track are important premium benefits, as is the ability to freshen up in the arrivals lounge and be ready to do a day of business,” says Ed Frost, BA Commercial Manager: South and East Africa.
Sounds simple, doesn’t it?
“Today’s premium travellers are savvy with fares, but remain focused on value for money, reliability and convenient and comfortable travel,” says Eichelgruen. “Non-stop flights to their destination, or short connections without a circuitous routing is also important, recognising that time is money.”
