More People Than Ever Seek and Spend More on Luxury Travel, and They're Changing What "Luxury" Means
More people than ever are seeking – and spending more on – luxury travel. And they're changing what the term "luxury" means – they're likely to look for experiences instead of pampering, and they're more likely to be mainstream travelers who add luxury elements to their trips.
Today's "luxury traveler" is just as likely to be a Millennial in search of an eco-vacation who is willing to sleep in a bunk bed – but spend significant dollars on, say, a supplemental adventure trek – as it is to be wealthy globetrotter seeking comprehensive amenities and services. People are spending their luxury travel dollars on a more diverse array of choices.
To respond, the travel industry will need to broaden its traditional definition of luxury offerings and create menus of a-la-carte items on which travelers can choose to splurge.
Those are among the insights in the L.E.K. 2017 Luxury Travel Study. The survey of 1,972 U.S. travelers aged 17 and older, conducted online by global management consulting firm L.E.K. Consulting, shows that across-the-board pampering is no longer everyone's ideal, and "luxury" now has different definitions for different people.
"While luxury travel once meant first-class transportation and plush accommodations, today's luxury travelers are just as likely to seek out life experiences," says L.E.K. Consulting Managing Director Dan McKone. "And instead of being solely affluent, they're as likely to be mainstreamers who pick and choose the luxury elements they want to add to their trips."
The survey shows that:
- Most travelers will now spring for some luxury, some of the time. In increasing numbers, people are gaining access to at least some elements of luxury travel. While fewer than 10 percent of survey respondents consider themselves luxury travelers, nearly 85 percent say they indulge in travel luxuries at least once in a while.
- They're spending more on luxury travel than on other indulgences. Modern luxury travel is the leading category for discretionary spending – across all luxury categories tested, travel is now the top outlet for indulgence. Nearly half (49 percent) of U.S. travelers indicate that they are likely to splurge on travel. That's ahead of such categories as dining out (43 percent) or food and wine at home (36 percent). Traditional luxury categories like apparel and accessories (30 percent) and jewelry (20 percent) trail travel by a considerable margin.
- The definition of luxury has changed – it's increasingly measured by less tangible measures of the experience. Across the travel spectrum, luxury has traditionally been defined by "product quality." But many of the defining characteristics of luxury now center on "experience quality," which often have as much to do with personalized service facilitation as they do with the characteristics of a travel supplier's core product.
Millennials are leading the charge for luxury
The survey also measured the growing impact of Millennial travelers (aged 18-34), who are leading the way in the luxury travel transformation. More than three in five (61%) Millennials surveyed say that they either choose full or selective luxury travel, compared with 48% of Gen Xers and 35% of Baby Boomers. These trendsetting Millennials are more likely than older travelers to look for experiences and adventure, to indulge in luxuries on occasion and to add luxury elements to an otherwise non-luxury trip.
The travel industry must create "just right" levels of luxury for different customer segments
To capture the opportunity, the travel industry should:
- Offer a choice of luxuries. "Providers must develop ways for more mainstream clientele to toggle into luxury elements," says L.E.K. Consulting Managing Director Alan Lewis. "There's a 'Goldilocks' or 'just right' level of luxury for each individual. In practice, that might mean 'Uber when you need it' in place of a town car for the day. It also means embracing the age of the upgrade, overlaying better/best options on top of modest bases. The more experiential the element - for example, dining or activities - the more appealing it's likely to be."
- Keep the brand front and center. Brands still matter. But the priorities of what a luxury brand needs to communicate is evolving a bit – perhaps focused less on opulence and more on convenience. Today luxury increasingly means removing frictions – and exclusive experiences.
- Help Millennials identify and capture prestige moments. Members of the "selfie generation" want to log their exceptional experiences in the moment, and share them with their social networks to enhance their personal brands. Successful travel brands will help them do it.
"By getting to know each segment of the bigger, more diverse luxury travel market, and tailoring offerings for each segment, the industry will be better able to change with the times and capture the new luxury travel opportunity," McKone says.
For more information or to speak with Dan McKone and Alan Lewis of L.E.K. Consulting, please contact Katarina Wenk-Bodenmiller of Sommerfield Communications at +1 (212) 255-8386 or firstname.lastname@example.org.
About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public sector organizations, private equity firms and emerging entrepreneurial businesses. Founded in 1983, L.E.K. employs more than 1,200 professionals across the Americas, Asia-Pacific and Europe. For more information, go to www.lek.com.
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