Young, affluent travelers disavow luxury defined by older generation
A new generation of travel buyers is embracing definitions of luxury that pose significant challenges to some of the world’s most revered high-end brands.
Suppliers and buyers alike are beginning to realize that travelers younger than the 45- to 55-year-olds who make up the bulk of the market bring with them a different set of standards than their elders. Such travelers are concerned less with opulence and pampering and more with value, authenticity and truly local experiences.
“They’re so value-based driven,” Ellen Bettridge, vice president of American Express Retail Travel Network, told agents and hoteliers attending the 2011 International Luxury Travel Market conference in Cannes, France, last month. “They just know more. Everything’s at their fingertips.”
But simply knowing the values and preferences of this new generation of high-end traveler does not mean that accommodating them will be easy. The overall message from the panelists boiled down to a distinct challenge to agents: If you want to cater to the growing legion of younger luxury travelers, you have your work cut out for you.
Destinations such as South America’s Patagonia region and New Zealand are expected to benefit from younger, wealthier travelers looking for one-of-a-kind, nature-based experiences, while accommodations such as Moroccan riads (traditional Morocco houses with interior gardens or courtyards) and Costa Rican eco-lodges are also expected to gain favor.
In a separate presentation at the ILTM conference, Chris Sanderson, co-founder of the Future Laboratory, a London-based brand-marketing firm, asserted, “It’s not about ‘fly and flop.’ It’s about ‘find and seek.’”
What makes serving this group tricky is that agents can’t fall back on tried-and-true brands, at least when it comes to accommodations. Many among this younger contingent are first-generation luxury travelers from regions such as Asia and South America.
As a result, unlike many younger travelers from the U.S., they feel no allegiance, for example, to a hotel chain that their parents might have frequented. Moreover, they were born into a world in which communications are dominated by Internet platforms and are thus much more likely to be swayed by social media or hotel-review sites such as TripAdvisor.
Panelist Jennifer Fox, president of Fairmont Hotels & Resorts, observed that in emerging source markets, these affluent youths are “the first generation with disposable income, and they’re getting all of their influences through media. Their parents didn’t travel.”
The subject is especially topical because younger travelers are expected to account for an increasing proportion of the upscale buyers on whom hoteliers and other suppliers are counting to drive growth during the next few years.
Globally, the number of international trips made by tourists — most of whom are in a high income bracket — rose 6.6% in 2010, according to the United Nations World Tourism Organization. And for international trips made from what the organization classifies as emerging economies, that number grew by 8.3%.
Meanwhile, Sanderson said, spending by the so-called millennial generation, whose age range is roughly between 20 and 35, will surpass baby boomer spending by 2016. And while those under 45 currently comprise just a third of worldwide luxury travelers, that contingent is the fastest-growing luxury demographic, ILTM said in its June “Future of Luxury Travel” report.
Such younger travelers, especially overseas, already appear to be making their mark. While the number of international tourist arrivals to tradition-heavy Western Europe rose by just 3.4%, they surged 23% to Argentina.
In the Asia-Pacific region, Cambodia, Fiji and the Maldives were among the destinations that experienced a 15% or better jump in international tourists last year, according to the UNWTO.
As for branding, companies such as Marriott International and Hilton Worldwide appear to be gearing up for the younger group of luxury travelers by launching or expanding newer luxury brands that focus on either accommodations that tie in the local flavor or offer a more modern, less traditional sense of luxury.
Marriott, which launched its Autograph Collection of luxury boutique hotels last year, has since added 27 properties to the group, including a Nashville hotel that was formerly a train station and Las Vegas’ edgier Cosmopolitan.
Early next year, Brazil’s Hotel & Spa do Vinho, which sits on 45 acres of vineyards, will join Marriott’s Autograph Collection as that company’s first South American hotel.
Hilton Worldwide, meanwhile, is bifurcating expansion plans for its luxury brands to appeal to both the older and younger contingent. Hilton plans to boost the number of hotels under its Waldorf Astoria flag next year to 30 from its current 22 to appeal to more traditional luxury guests. Hilton will expand the number of its Conrad-branded hotels at an even faster clip — to 31 from 17 within the next 18 months — to cater to a younger U.S. and overseas contingent that is less awed by legacy brands. New York’s first Conrad opens in Battery Park early next year.
“Most of the Waldorf guests don’t go to a Conrad,” Olivier Chavy, international head of global brand performance for Hilton Worldwide’s luxury and lifestyle brands, said in an interview at ILTM. “And most of the Conrad guests don’t go to a Waldorf.”
Either way, younger luxury travelers, like more modest travelers under the age of 45, are likely to get as much or more of their travel content from destination-review sites and social networks as they are from travel agents. Similarly, they will be more easily swayed by a good or bad review than the older group.
While that trend has been the source of consternation among hotel companies, U.K.-based hotelier Rocco Forte said such habits provided more of an opportunity to connect with travelers than a nuisance.
Speaking as an ILTM panelist last month, Forte observed: “Guests don’t want mistakes made. Some hotels are very defensive about it. You’re lucky if a guest complains. Most customers don’t, and simply say, ‘I’m not going to return.’”
