Shaping the Future of Luxury Travel [Amadeus Report]

We are entering a new era of luxury travel. New affluent citizens are popping up across the globe, and the travel industry is expanding to meet their needs. How can travel brands cater to these customers while still maintaining exclusivity? 

About this and many other topics in today’s article. We encourage you to read on, or you can discover more information here.

Executive Overview

There is faster growth in luxury travel than in overall travel. 64% of global outbound luxury trips originate from North America and Western Europe, although they only make up 18% of the world’s population. From 2011 to 2025, Asia Pacific’s luxury travel market will grow faster than Europe’s, but it will slow from 2015 to 2025.

Luxury is no longer just about understanding what luxury means to a particular traveller – it’s about knowing what luxury means right now to that traveller. Travelers’ perceptions of luxury can change not only throughout their lifetime but also during a single holiday. In the new era of luxury travel, brands need to monitor their customers’ expectations and adapt accordingly continuously. Thus, new luxury is real-time.

Luxury travel: Now vs. The Future

Luxury travel trends and regional hotspots

Source: Amadeus report

According to Tourism Economics data measuring outbound flights, a Compound Annual Growth Rate (CAGR) of 4.5% was recorded for luxury travel from 2011-2015, exceeding that for overall travel with a CAGR of 4.2%. Despite challenging economic times, travel demand has remained stable.

Source: Amadeus report

According to the graph above, business-class bookings in Europe have been declining steadily since the recession and austerity measures began. The opposite has been true in North America, where business-class traffic has continued to grow despite the recession. Business-class flight bookings increased the most in Asia during this period.

The growth rate of outbound luxury trips is projected to be 6.2% over the next 10 years, almost a third higher than the growth rate of overall travel (4.8%).

Source: Amadeus report

From now until 2025, luxury trips from Brazil, Russia, India, and China (BRIC) will increase. Luxury travel will also increase in Western and Eastern Europe, North America, and Southeast Asia (including Singapore, Thailand, and the Philippines). Global investment in luxury travel is being driven by growing ultra-wealthy classes that are becoming increasingly mobile.

Serving the new era of luxury travelers

Material goods vs. experiential goods

Luxury does not mean one thing to all. It is clear, however, that luxury has become increasingly associated with experiences rather than objects in mature markets. Rather than saving up to buy luxurious possessions, people are choosing to spend their money on experiences, driving the future of luxury travel.

Source: Amadeus report

As this trend continues, brands will appeal to luxury travellers by offering more than just material goods. Luxury customers may reject prepackaged and inauthentic travel – they prefer exclusive, one-of-a-kind experiences.

Luxury travelers of tomorrow: who are they?

Travelers are divided and defined into different groups based on their behavior and intentions, as well as different levels of wealth. 

A distinction can be made, for example:

  • Always Luxury – 4% – money is no object for them
  • Special Occasion – 20% – Luxury travel is a treat rather than a given for them, and despite their relative wealth, they seek experiences that wow them.
  • Luxury – 31% – Although they have a business objective, they will have the seniority and salary to extend their trip for some luxury leisure activities.
  • Cash-rich, Time-poor – 24% – they won’t necessarily have an objective they need to fulfill during their travel, but they will have responsibilities that dictate when they can and can’t travel.
  • Strictly Opulent – 18% – Sharing a luxury holiday on social media is a big part of this experience – they want to appear to be having fun, enjoying life to the fullest, and being indulgent.
  • Independent & Affluent – 3% – They turn to luxury travel when they want to pamper themselves or try something new.

Always Luxury vs. Special Occasions

In addition to affecting travelers’ perceptions, the frequency with which they experience luxury travel also affects the difficulty of providing a comprehensive luxury experience. By comparing the Always Luxury and Special Occasion Luxury Traveller groups, you can explore the topic more thoroughly.

Source: Amadeus report

Achieving a balance between high-touch and low-touch

One of the most important aspects of the luxury travel experience is how well the travel provider understands the traveler’s needs and preferences. The goal is to strike the right balance between respecting their independence and not being intrusive, which may shift at different points along the trip cycle. Checking in to provide additional elements or assistance might enhance their trip. The sweet spot represents modern luxury.

Source: Amadeus report

What can brands do to cater to these polar-opposite travelers? Identifying the six luxury traveler groups and understanding how their behavior and preferences change throughout their journey cycle is the starting point.

Business and luxury blend in Bluxury

In contrast to Bleisure travellers (those who combine business travel with leisure travel), luxury travellers (those who combine business travel with luxury leisure travel) in senior positions may have greater autonomy in extending their travel for some leisure time. 

Even so, they may still be somewhat restricted until corporate travel policies incorporate Bleisure or Bluxury practices. Although it hasn’t spread widely yet, the industry will need to address it in the future.

If businesses wish to convert business travelers into luxury consumers, they need to identify and satisfy travellers’ leisure needs and create a bespoke itinerary that can be adapted to how they feel at the end of a business trip.

What is required for industry collaboration?

In the new era of luxury travel, passengers are expected to have an end-to-end luxury experience from the time they get into their taxi to the airport until they arrive back at their front door. There is a need for greater collaboration between parties in the industry. How does that translate into practice?

A major stepping stone would be technology that can collect passenger data from the point of booking and pass it through the luxury travel supply chain as the traveler moves through the phases of their journey. A real-time update that affects the luxury element of the trip could be a call to action for the baggage handler, the chauffeur, or the hotel’s front desk staff.

Even if mistakes and unpredictable circumstances cannot be eliminated completely, they can be reduced, and brands can have a chance to recover.

Over to You

Luxury travel trends show what customers expect in the new era of high-class holidays. It’s essential for many companies, as if they want to attract travellers, they must offer truly unique, relevant, and niche services that can be adapted as the traveler progresses.

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