There has been comments that the bottom end of the luxury travel market will suffer with company’s reporting a slight downward trend.

We noted there has a slight change in people looking for “best value” (not the same as cheapest), rather than choosing the hotel they like best not matter the cost. For some customers this means paying more for items like Half Board, but will save them money overall.

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Or has it already suffered? From my US perspective, 2011 is already showing improvement over 2010. There is still a struggle, but it’s the climb back up. I think that if you’re talking about the very high-end sector of luxury travel, the consumers with that kind of money to spend on their travels are still spending it. Quality is more important to them than price. The struggle for luxury brands is to resist temptation to cut corners in their standards and service, but rather focus on greater reward incentive for loyalty. It’s the “something extra” that sets luxury apart in the consumer’s eye.

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Darren the luxury market always had offers. Now customers are taking note and using them. Without naming the hotel (5 Star) here is 50% of their deals
Book before 31 March 2011 for stays between 1 May-21 August 2011 and save between £10-£14 per adult per night or book before 31 July 2011 for stays between 22 August-31 October 2011 and save between £10-£22 per adult per night (min 7 nts)
Free night offer between 1 May-31 October 2011 receive 2 free nights in 7-13, or 4 in 14-20 nights.
Singles guest room sole use no supplement for stays 1-31 May 2011.
Complimentary room upgrade to a deluxe room or from a deluxe to a deluxe plus room for stays between 1 November and 30 December 2010 and 2 January and 31 March 2011 (minimum stay 7 nights)
Complimentary entrance to hydro spa 1 May-30 June 2011 and 1 September-31 October 2011.
There is a range of Offers out there for example:
Half Price dinners if pre-booked
A Child eats free with parents
Book one grade of room, get the next grade for free.
Free Spa treatment worth up to £200 for guest staying 7 nights or more
Free VIP Airport Lounge
Free up grade to Valet Airport Parking
These are the kind of deals that have been out there, now the difference is customers are looking for them.
Another thing we have seen is customers are now building relationships with Travel Agents as the “add extras” we give the luxury customer is starting to count. Agents that deal with this market have built up great contacts and know what there selling.
All this is nothing new just now we are seeing customers look for them and makes choices between holidays based on the offer. On a parting note, the agents I have spoken to this week all say they are very busy.

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If anything I would say that this sector will be ok. Most of the people on higher incomes have been mostly untouched by the recession with pay freezes being the height of it. On the VAT side of things I don’t think that will have a massive impact apart from perhaps pushing more people abroad for more value.

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I don’t think it will at all. People talk about being frugal with their money in January, but after 6 months of hard work they’ll all be booking top quality hotels in exotic locations. Sometimes you just have to get away, and nothing less than perfection will do.

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Although I am not familiar with the luxury travel sector, I can speak to the changes in consumer behavior I have seen around me in San Francisco. Walking down Post Street this past Sunday in the financial district toward Union Square, you couldn’t tell there was a recession. The Gap across the street from the bank where I used to work had been replaced by a Charles Schwab ; the Ralph Lauren store was still there, as were the really high-end jewelers and the top fashion houses. Around Union Square, there were people with shopping bags everywhere, though it was a big day for after-holiday sales, so for all I know it was people being more “frugal” by buying what they wanted after the holidays instead of before.

Of course, Union Square, with all of the tourists that go there, is not the best gage for the health of the economy, as it will always be a busy retail area. Although – I do remember,when the economy was worse, seeing some empty storefronts in the streets surrounding Union Square that are no longer empty. Hum.

Based on my interactions with other Bay Area locals, I have noticed that people have gone skiing for the weekend less often this year than they did a few years ago, and a lot of them are taking vacations closer to home – maybe exploring parts of wine country they hadn’t had a chance to before. I think it’s too optimistic to say that people’s values have fundamentally changed in the long-term as a result of the recent bad economic times, but I do think that losing their job or having to save in case they lost their job did force people to forgo certain luxuries they had previously considered necessities, making them realize (if only on a subconscious level) that those luxuries weren’t so essential after all.

What does all of this mean for luxury travel in the coming year? I’m not sure, but I do think that people will need more persuasion than they did before the recession to spend larger amounts. And I think they while they still might go on a luxury vacation, staying at a luxury resort, they might spend less than they did before, just because the sting of the really bad times is still there.

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The luxury travel market targets a completely different market, and a niche one at that, compared with travel as a whole. Therefore I don’t think you can draw conclusion that since economy (in UK and elsewhere) is struggling that luxury travel will also be struggling.

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I’m still planning to travel, but I’m looking for ways to make it more cost effective by doing a multi-leg trip instead of returning to my home base and then going again. I live in a place that relies on tourism and I’ve certainly seen the numbers drop off this year.

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Well, certainly their will be less money going around for some UK tour and worldwide holiday providers, air travel businesses and the local tourist industry. However, much of what is spent on holidays will depend on the kinds of ‘product’ we’re measuring the decline of ‘luxury’ holidays in 2011 by.

I’m certain that the same amount of people will spend some money on a break or holiday in 2011. Whether ‘luxury’ wins the day will depend on the high-rollers – and presumably, most of them will be able to afford the same things as always.

From a business point of view – the luxury market may have a better time of it in 2011 – perhaps the industry should try and offer a little bit of luxury at a reduced cost – to make those with less feel special in these difficult times!

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Darren,

I think that the luxury travel sector will be largely unaffected in 2011, due mainly to the recovering levels of employment.

Personally I couldn’t justify spending out on a 5 star hotel, perhaps that’s a personal preference.

But, it is the the norm for wealthy individuals. They will keep the luxury travel agents in business.

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I have always been more of a ‘budget’ traveler, but lately I have chosen to travel to the countries with lower average yearly incomes in order to stay within my budget. In years past, I would have considered a long stay in Costa Rica, for example… nowadays, to get more bang for my buck and a less touristy experience, I head to places like Honduras and Nicaragua.

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If you are buying a holiday with a UK tour operator with a destination outside the EU, there isn’t any VAT on it. So longhaul luxury holidays shouldn’t be impacted by a VAT rise beyond consumers having less money in their pocket generally.
Actually, that is a simplification as If you buy the trip from a travel agent, then there will be VAT on the commission that the tour operator pays the travel agent so that will be passed onto the consumer, but that will be a relatively small amount.
And of course, there’s no VAT on flights, though of course there is APD instead.

I don’t think the real luxury end of the market will be impacted as much as the mid market. Not the 2 weeks in Maldives etc anyway, definitely expensive hotels are suffering, but that’s more to do with corporate budgets, e.g. the emptiness of the may 5 star hotels in Beijing as business travellers either not visiting as much and doing conference calls or visiting but being told they have to stay in a 3 or 4 star hotel.

And I’m not sure if in the mid market, people will change what they do on holiday or whether they will for example skip taking a holiday that year. For example, in 2008/9 we had a fall off in family bookings but they came back last year. We’re not luxury, well not in price anyway (I like to think what our style of travel is is the real luxury not an anonymous five star hotel lol).

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