Pulse of the Industry 2024: Will Anything Stop the Surge in Luxury Travel?
We recently conducted our first Pulse of the Industry Survey since 2021, and the results confirm what most of us know instinctively already: We’re living in boom times for luxury travel. But there are asterisks. Growth is slowing. Consumers are showing resistance to high prices. And the challenges of managing growth and integrating technology are not getting any easier.
The World Travel & Tourism Council has predicted that our industry will have a global economic impact of $11.1 trillion this year, a record. Experts are forecasting that U.S. outbound tourism, accelerated by events such as the Olympics, Euro 2024, and Taylor Swift’s Eras Tour, will boost European economies this year (even as inbound tourism to the U.S. lags). And the results of our survey — which collates the responses of CEOs, presidents, and senior executives of top U.S. travel management firms — largely reflect that optimism, predicting that revenues and bookings continue their meteoric post-pandemic rise.
Luxury travelers are driven by emotional needs like curiosity, fulfillment, and self-care, and they are willing to spend large sums to reach those goals. At the same time, they express concern about the price-to-value ratio and the quality of service. Managing client expectations requires significant effort.
There are challenges when it comes to managing their own businesses as well: hiring and retaining talent; navigating technologies such as NDC, artificial intelligence, and social media; understanding the impact of virtual meetings on both their clients and themselves.
But these difficulties are playing out against a fairly rosy backdrop: The market has emerged from the pandemic with a renewed love for travel and how it makes them feel — and, for the most part, the means to pursue what inspires them.
Here are a few top takeaways from the survey results.
Business Is Booming, Albeit at a Slower Pace
Nine out of ten (91%) respondents said 2023 revenues were up year over year. But only 63% expected an increase in revenues this year (28% forecast no change, while fewer than 9% expected a decrease). Six out of ten said they expect their 2024 revenues to be more than 20% higher than they were in 2019, on a like for like basis. Leisure is leading the charge, with 83% of advisors saying they expect their leisure business to increase, vs. 28% for corporate and 17% for MICE.
Cruise business is full steam ahead as well, with 74% saying their 2024 bookings would surpass 2019 levels, compared to 13% who expected it to level off, and a mere 2% whose cruise business is still lagging 2019’s numbers. More than 80% report increased client interest in expedition cruises, and 50% are seeing more interest in river cruises
That’s not much of a surprise: Cruising is still largely seen as a good value, especially at a time when consumers perceive many luxury hotels to be overpriced. It also aligns with consumer interest in multigen trips and discovering new destinations. The good news for consumers and advisors is that the increased demand isn’t impacting availability — not a single respondent said that finding berths for clients is an issue for them.
Asia is also back, and bigger than before: 43% said their Asia bookings will surpass 2019 levels, and another 33% predicted they would be at around that level. “The mad rush will start to decrease in the next year but for now, wow!” commented Amy Furie, Director of Leisure for New Act Travel in Los Angeles. Japan, the #2 most booked destination by survey respondents, is driving the surge. And advisors cited Southeast Asian destinations like Vietnam, Laos, and Indonesia’s Raja Ampat and Sumba islands as “emerging” hot spots. China business, however, remains moribund.
Other insights from the survey results:
Corporate and MICE business is growing, but slowly.
The strongest motivators for leisure travelers are those that focus on personal connections and emotional well-being.
If anything is giving luxury consumers pause, it’s high prices, especially when contrasted with subpar service delivery.
Security and political instability are a concern, but sustainability, overtourism, and public health issues (including COVID) are not.
Given the opinions of our respondents on NDC, American’s recent about-face seems like the right choice.
The results of our survey reveal that it’s the post-pandemic shift in priorities — rather than pent-up demand — that is driving the tidal wave of travel these days. Affluent consumers want to spend more time with the people they love, discover something new about the world or themselves, and savor some much-needed “me time.” The customer has changed since COVID, becoming more demanding, less forgiving, more entitled. And as generations shift (the very youngest boomers are in their 60s; Gen Xers are well into their 50s), attitudes and offerings must shift along with them. Experiences and individuality are in — the era of shore excursions for 40 on a luxury cruise is over — and customers at the top of the market will pay significant sums for travel that is genuine, well executed, and customized to their preferences.
Our market intelligence with cruise lines, hotels, event planners, and travel advisors suggests that high net worth consumers — armed with swelling portfolios and savings accounts — are not slowing down. They may be adjusting and reassessing, but our research shows that business will remain buoyant for the rest of this year.
For full survey results, please download our presentation using this link.
Are these results in line with your own experience? Let's keep the conversation going!