A strong economy prevails over concerns about global instability, according to Strategic Vision’s 2020 Pulse of the Industry Survey. At the same time, travelers have become more conscious of their impact on the places they visit.
Political and economic instability are no match for the insatiable drive to travel, according to a recent survey of top luxury travel executives, who predict yet another banner year for the segment. In its annual Pulse of the Industry Survey, travel consultancy Strategic Vision reports that 70% of respondents forecast an increase in revenues in 2020, while 50% described their clients’ attitudes as “optimistic” about both domestic and international travel. That positive sentiment largely overrides concerns about potential disruptors such as natural disasters, political unrest, and economic hiccups from Brexit or trade disputes.
Luxury travelers’ optimism is increasingly paired with a growing sense of responsibility and a clear-eyed perspective on travel’s impact on the planet. “Once again, we are seeing that the desire to explore the world, make connections, and find self-fulfillment through travel remains strong at the high end of the market,” said Peter J. Bates, President and Founder of Strategic Vision, which services the luxury travel and lifestyle industries. “At the same time, travelers are expressing concern about the impact of overtourism and climate change, and they recognize the need to ensure that their own travel behaviors are sustainable.”
The Pulse of the Industry Survey is conducted annually by Strategic Vision and includes executives from the top travel management firms in the United States, which plan and book leisure, business, meetings, and incentive travel for some of the world’s largest companies and wealthiest individuals. For the first time, the 2020 survey also included top executives from the hospitality, cruise, and destination marketing segments. This provides a more comprehensive outlook for the luxury travel industry and allows for different points of view to come through, on both general questions and segment-specific issues.
Among the other key findings of this year’s survey:
- 88% of respondents said their company’s overall revenues increased in 2019.
- Clients’ personal financial standing has the strongest positive impact on their travel decisions, whereas concerns about terrorism and crime had the greatest negative impact.
- Japan, Portugal, and Iceland are among the top “trending” destinations for 2020, according to luxury travel advisors. Respondents foresee negative trends for Hong Kong, France, the United Kingdom, Turkey, and South America.
- Four Seasons Hotels & Resorts, Crystal Cruises, and AmaWaterways are the luxury travel brands the respondents admire the most.
Despite their diverse perspectives on the industry, the respondents shared an overwhelmingly positive sentiment about the year to come. Growth predictions for 2020 were high across the board (including 67% of travel advisors, 70% of hotel executives, 71% of destination marketers, and 100% of cruise executives), and all segments reported that their 2019 revenues exceeded those of the previous year (91% of travel advisors, 70% of hotel executives, 86% of destination marketers, and 100% of cruise executives). The forecasted growth is led mostly by leisure travel, with 78% of respondents expecting that segment to increase in 2020, compared to 38% for corporate travel and 42% for meetings and incentives.
The survey found broad consensus on the factors, both positive and negative, that will affect their business this year. Concerns about terrorism and crime were the most frequently cited negative factor at 61%, followed by the overall political climate in the United States (56%); other economic issues (50%); the U.S. presidential elections (48%); and the overall political climate outside the U.S. (47%). On the positive side, 50% said the personal financial standing of their clients and guests would have a beneficial impact. Other top factors named as helping to boost business—the environment and sustainability; other economic issues; the potential impact of Brexit; and the U.S. presidential elections—are evidence that what may be a hindrance for some is an advantage for others.
Which destinations will benefit the most from the sustained demand for luxury travel experiences? Japan, the site of this summer’s Olympic Games was cited as the top “trending” destination by travel advisors. Other top locations where advisors are seeing rising interest: Portugal; Iceland; Italy; Egypt; Australia and New Zealand; Croatia; St. Barths; and Rwanda. Advisors are also seeing a release of pent-up demand for the Caribbean, with 79% saying they have planned or are planning trips to the region as it recovers from past storms; that’s up from 68% last year. On the flip side, Hong Kong, France, the United Kingdom, Turkey, and South America were cited as the destinations that will see the most negative impacts in 2020.
There was consensus among respondents on the major trends in luxury travel. Nearly nine out of ten (88%) said they see more interest in experiential travel, followed by a focus on local experiences (86%); multi-generational travel (81%); adventure travel (77%); and once-in-a-lifetime or “bucket list” trips (67%). Last year’s survey found similar results, signaling that the experiential travel megatrend is still on the rise. “There’s a newfound consciousness among luxury travelers,” says Bates. “People are seeking out transformation and wellness in all aspects of their lives, and they see travel as a way to improve themselves and increase self-worth. That includes spending their increasingly precious time with extended families, and engaging intelligently and respectfully with the places they visit.”
That movement goes hand in hand with the growing emphasis on how travel affects the environment and local communities. Forty-two percent of respondents said that concerns about overtourism—the problem of too many visitors—had a negative impact on travel decisions. “Sustainability is clearly rising to the surface as a new concern that didn’t exist a few years ago,” said Dan Ilves, Senior Vice President of TravelStore. When asked which sustainability issues had the most influence, overtourism was chosen by 58% of respondents, followed by plastic usage by hotels, cruise ships and other suppliers (51%); the impact of tourism on natural environments or wildlife populations (39%); and its impact on local cultures and communities (37%).
Largely, however, overtourism and similar concerns don’t seem to be stopping people from traveling altogether; rather, it shifts attention away from destinations perceived as being too crowded, and toward the undiscovered and underappreciated. “Clients want to travel and they’re over all the issues,” said Anne Scully, President of McCabe World Travel. “They don’t want to cancel their dream trips or vacation plans.”
Some industry observers have cited the influence of social media as a factor in overtourism, because it drives demand so effectively. Indeed, 65% of travel advisors say that clients have asked them to book a trip based on a discovery they made on social media. In turn, executives from all industry segments report that they are planning to spend more of their marketing budget on social media than in the past. Hoteliers in particular were nearly unanimous in agreeing that social media is an effective channel for both awareness and booking.
Technology in general poses additional challenges to the luxury travel industry. Nine out of ten of the travel management executives surveyed said they face competition from suppliers and other partners who are marketing directly to their clients, while 86% said their advisors need to search more sources than in the past for rates and/or information. Other complications include having to match rates that clients found online (reported by 84% of respondents); clients’ expecting immediate responses to questions and requests (84%); and having to explain misinformation that clients discovered online (77%). A related challenge: 40% of respondents said it is taking more time to convert business because clients are spending time researching their options online.
Despite their rosy outlook on 2020, travel advisors do face multiple impediments in reaching those lofty goals. Asked about the top issues facing their business, most cited various global matters—everything from the threat of economic slowdown or political unrest to natural disasters or disease outbreaks. “Clients are more well aware of what is going on in the destinations, due to social media or news in general,” said Monica Varri, President of Lake Forest Travel Bureau. On the other hand, personal wealth can act as a bulwark against current events. “Strong investment markets, low unemployment—folks are ignoring impeachment, world chaos, and other potentially destabilizing news,” said Scott Milne, President of Milne Travel. Jack Ezon, Founder and Managing Partner of Embark Beyond, concurred: “I think there is an optimistic outlook on traveling. The big factor is going to be the economy and the shift from conspicuous to conscious consumption.”
The flip side of a strong economy is that it makes hiring more of a challenge. While 70% of travel advisors reported plans to increase their headcount in 2020, 30% said that a shortage of qualified talent is the top challenge they face in hiring, followed by demands for higher compensation (23%). Added Stacy Fischer-Rosenthal, President of Fischer Travel Enterprises “The level of affluent clients we service requires a 24/7 presence and the ability to balance work and life and shift between them with a minimal amount of stress. Compensation is a large component but not the ultimate motivation. You need a strong support system and most of all, a love of the job.”
For the first time ever, the Pulse of the Industry Survey asked all respondents to indicate the luxury travel brands they admire the most. The results provide an exclusive ranking of the top names in hotels and ocean and river cruises by their industry peers, rather than by consumers. Here are the brands that received the most votes in each of the three categories:
1. Four Seasons Hotels and Resorts
2. Aman Resorts
3 (tie). Oetker Collection
3 (tie). Rosewood Hotels & Resorts
5. Montage International
6. Dorchester Collection
7. The Peninsula Hotels
8. Six Senses Hotels Resorts Spas
9. The Ritz-Carlton Hotel Company
10 (tie). Belmond
10 (tie). Mandarin Oriental Hotel Group
1. Crystal Cruises
2. Silversea Cruises
3 (tie). Regent Seven Seas Cruises
3 (tie). Seabourn Cruise Line
5. Lindblad Expeditions/National Geographic
7. Oceania Cruises
8 (tie). Celebrity Cruises
8 (tie). SeaDream Yacht Club
8 (tie). Windstar Cruises
2. Crystal River Cruises
3. Uniworld River Cruises
4. Aqua Expeditions
5. Viking River Cruises
About the Pulse of the Industry Survey:
The Pulse of the Industry Survey was sent in December 2019 to CEOs, presidents, and other senior executives of the leading luxury travel management firms and meetings & incentive buyers; these firms, members of Strategic Vision’s research panel, arrange travel for luxury leisure clients, corporate executives, and high-end meetings and incentive groups. The survey was also sent to top executives of luxury hotel and cruise operators and destination marketing organizations. The survey garnered a response from 64 industry influencers.
If you wish to learn more, click here to access the full deck containing the findings: Pulse of the Industry Survey Results