How Luxury Travelers Are Feeling (and Spending) Right Now

Our new survey takes the consumer’s temperature at a crucial time for the industry…

We are entering a pivotal moment in our industry’s recovery from the pandemic, with both good and bad news across the board. Vaccines have unleashed a huge amount of pent-up demand. Airplanes and hotels are packed, prices have risen, and employers are struggling to fill vacant positions. On the other hand, corporate and MICE still lag far behind the leisure recovery. And the delta variant (and others) are threatening to put a halt to all our progress.

As travel advisors and industry executives plan and implement their Q4 initiatives and refine their 2022 forecasts, I wanted to take the temperature of the luxury traveler consumer at this critical juncture. What trips are they planning now? Where do they want to go? What will they spend? How are they going about the trip-planning process? Above all, what are the opportunities for us in the industry, including advisors and suppliers?

To that end, I commissioned Affluent Consumer Research Company, headed by Chandler Mount, to survey affluent U.S. consumers. He targeted those with incomes $250K and up, ages 25 to 74, and fielded the survey in July. The resulting sample represents 5 million affluent U.S. households, all likely to take a luxury trip for their next vacation, and with an average household income of $721K.

We segmented the sample further by their likelihood to be luxury travelers, based on wealth, number of trips planned through 2022, and probability of consuming luxury goods and services (including hotels, cruise lines, etc.) on their next trip. Those with a high probability we’ll call Ritzy Regulars, those with moderate probability are Deluxe Dabblers, and those with a low probability are the Sometime Splurgers.

I’ve shared a few of the key results below — as well as the opportunities they present. If you want to learn more about the survey, please get in touch with me directly!


Luxury Travelers Are Ready to Spend

A recent study showed that Americans put away as much as $3.7 trillion in savings during the pandemic, with much of that concentrated among the wealthy. Indeed, the survey respondents had a high level of confidence (81.7%) in their financial situation for the next two years.

That means they’re willing to spend generously on luxury travel: 55% said their travel budget hasn’t changed compared to before the pandemic. The Ritzy Regulars are particularly ready to splash out: 57% are planning to spend even more than before. And the asset-rich are more comfortable with spending higher amounts. 44% of those worth $5MM or more say their budgets have risen, vs. 23% of those whose net worth is lower.

The prospect of tax increases in the U.S. hasn’t changed these consumers’ thinking: If taxes do go up, they’re more likely to cut spending on other categories (luxury jewelry and watches; apparel; donations to political causes) than on those related to travel.

With that much money budgeted for luxury trips, it’s no surprise that 57% of respondents said that travel insurance is top of mind. The number is even higher among Ritzy Regulars, who tend to spend more and therefore put more money on the line.

The Opportunity: Target your marketing to areas with higher home values, where you’re more likely to find consumers ready to splurge on travel. And consider including travel insurance as part of your product offering.


Planning Multiple Trips … But Closer to Home

American travelers are mostly staying in America for the time being. Survey respondents reported an average of 5.7 trips planned between August 2021 and December 2022. Of those, 3.8 will be within the U.S. and 1.9 will be international. The prospect of further restrictions on entering the EU may dampen demand for European trips in particular.

Those domestic trips are already happening: 14% of all planned domestic trips started in summer 2021, and as the chart below shows, with domestic plans in gradual decline through the end of 2022. Luxury travelers are more likely to wait until next year to head overseas (14% of trips are planned for spring 2022, 19% for next summer, 12% for next fall), versus 11% on average starting from fall of 2021 through winter 21-22.

The most popular destinations were domestic; Florida (45%), California, (34%), Hawaii (19%), and Colorado, Texas, and Arizona (all 17%). Americans headed abroad were focused on Europe, with France at the top of the list (15%), followed by Italy (13%), Germany (10%), the U.K. (10%) and Ireland (8%).

Opportunity: Advisors and suppliers should continue to push domestic destinations to American luxury travelers. But international trips haven’t entirely lost their luster: Focus on getting travelers to book now for next spring and summer.


More Value Placed on Travel Advisors

All luxury travelers said they are much more likely to use an advisor now (60%) than before the pandemic (40%). I believe there are two reasons for this: the complexities of traveling during COVID (more on that below), and consumers wanting to be wiser about how they spend their larger-than-ever travel budgets.

What are they looking for in an advisor? There are three main drivers: Most important is that the advisor represents a wide range of travel types and activities. Two, that the advisor’s presence is authentic and positive and their planning is creative and colored with their own experience. Third is that they demonstrate that they are reliable, responsive, and trustworthy.

We’re also seeing that prior use of an advisor is a strong predictor of future intent: If they’ve worked with one in the past, they’re more likely to do it again. But even the Sometime Splurgers are looking for professional advice, which suggests travel agencies will see a groundswell of “newbies.” These consumers are more likely to value the fundamentals of reliability, trustworthiness, and responsiveness (as compared to Ritzy Regulars, who are more interested in creativity, insider access, and other “style points”).

Opportunity: The rising demand makes this a good time for travel agencies to staff back up, and even accelerate new recruitment (as some are already doing). As they do so, they should match their advisors to the client’s expectations: Assign the less experienced advisors to first-time users and save your more practiced personnel for the Ritzy Regulars.


COVID Causes Confusion

The vast majority of survey respondents have been fully vaccinated, which may be one reason why health concerns largely take a backseat to logistical issues when it comes to planning international trips. Exit/entry issues, quarantine requirements, and changing protocols all scored as high as or higher than concerns than public health in the destination.

For Ritzy Regulars, the most common concern was having a plan if the return home is delayed (76%), followed by protocols observed at the hotel and other places visited (65%), getting accurate info before the trip (61%), and finally, safety in the destination (58%). For all travelers, nearly two-thirds said they have (or will have) a Plan B if their vacation is disrupted. And 59% said they are completely ready to book a last-minute vacation, once COVID protocols are understood. (Both numbers are even higher for Ritzy Regulars.)

Opportunity: Advisors and suppliers alike need to help with contingency plans, provide accurate information to potential customers, and offer last-minute availability in conjunction with COVID safety assurances. 


Private All the Way

The age of social distancing has accelerated interest in private experiences, a trend that the survey bore out. Ritzy Regulars are more likely to consider private villas, private islands, private yachts, and vacation rentals/Airbnb’s than the other segments. Private aviation in particular is hot among this cohort, with 44% likely to use it in the next year or so (compared to 7% for Deluxe Dabblers and Sometime Splurgers). Additionally, 39% said they’re likely to book a private jet vacation package that visits multiple cities on a single trip.

Opportunity: Find opportunities to integrate private experiences, such as jets, yachts, and villas, into your offerings. For example, both Aman and Four Seasons have recently incorporated private jet and similar services into resort packages. 


Taking Things Slow 

“Revenge travel” suggests, among other things, making up for lost vacation time by packing more experiences into a trip. But for the luxury set, the “slow travel” trend — spending more time in search of more meaningful impacts — doesn’t seem to be, well, slowing down. More than half of respondents (58%) agreed that it’s appealing to spend more nights in fewer places on vacation. And 54% agreed that vacations are meant to be full of rich, deep experiences.

Luxury consumers also want to travel responsibly, both towards themselves and those around them. “I act responsibly toward the environment when I travel” was a statement that 61% of respondents agreed with, while 49% concurred that “Being mindful or self-aware helps vacation feel more impactful.”

We found a significant connection among Ritzy Regulars between the desire to spend more nights in fewer places and acting responsibly toward the environment: That contingent had a 72% probability of agreeing with both statements, compared to significantly lower rates among Deluxe Dabblers and Sometime Splurgers.

Opportunity: Downplay splashy, crowded “revenge travel” itineraries and focus marketing on experiences that are “slower” and more meaningful, with a positive impact.


Technology Has Its Place 

Luxury travelers are coming to appreciate tech solutions that speed logistics and minimize interactions with staff. Ritzy Regulars in particular want hotels to offer a digital room key for their smartphone or smartwatch (37%), as well as the ability to check-in on mobile and go straight to the room (43%). They also were far more likely to agree with the statement “My smartphone is my travel agent.”

That said, some analog rituals remain desirable: 43% of all respondents said they miss perusing a physical menu at restaurants, instead of having to scan a QR code.

Opportunity: If you aren’t creating mobile solutions that ease the traveler’s journey, you’re behind the curve. But you should also offer non-digital alternatives, such as paper menus or face-to-face interactions with staff, for those who prefer things old-school.


A Variety of Interests (Even the Final Frontier) 

When asked what activities they most want to do on vacation, all of the respondents listed the expected vacation fundamentals first: For all segments, Sightseeing, Islands & Beaches, Food & Wine, and Walking & Biking ranked at or near the top. Beyond that, we found that the higher the probability of being a luxury traveler, the more specialized the interests. Cruises & Water Tours; Culture, History & Arts; Adventure; Festivals & Events; and Wildlife & Nature all ranked higher for Ritzy Regulars and Deluxe Dabblers than for Sometime Splurgers. The graphic below shows how some of these activities are more strongly associated with specific groups.

Ritzy Regulars were naturally more interested than the other two groups in the most exotic of all trips: a journey into space. But the stated intent to undertake such a journey was surprisingly high across the board: 59% (a number no doubt influenced by this summer’s space flights by Jeff Bezos and Richard Branson).

Opportunity: Even if space travel isn’t among your current offerings, upsell Ritzy Regulars and Deluxe Dabblers with specialty experiences that appeal to their yen for discovery and exploration. Sometime Splurgers’ more “vanilla” ideas represent a chance to surprise and delight them with experiences they hadn’t thought of.

I hope you’ve found this sampling of survey results useful. I’m curious to hear if your own experience reflects (or contradicts!) what the data show. And again, let me know if you’re interested in seeing more of the results. Let’s keep the conversation going!