How luxury clients' needs are changing

01-Aug-08

Uncertain times won't lead to a downturn for the luxury market, but there will be a shift in travel patterns, say two major surveys. Alyson Cook exclusively reveals their conclusions.

Two major research surveys into the luxury holiday market share similar conclusions about what clients require from agents and operators, Luxury Travel can exclusively reveal.

Research firm Mintel recently undertook a survey among consumers which sought to define what luxury means to the consumer, what luxury holidaymakers are looking for and what luxury travel buyers should look for in the future. In the second survey, premium operator Kuoni also carried out its own "Insights into luxury" research among its World Class customer base, seeking to find what luxury consumers really want from their dream trip.

According to Mintel, the hallmarks of a luxury holiday in the new millennium are "unique experiences, privileged access and a once-in-a-lifetime aspect to the trip." However, the definition - and thus the essential elements of a luxury holiday - varies by consumer lifestage.

The younger generations are seeking new, exclusive experiences and are happy to forego the plush hotel, says the report; but older generations are looking for traditional notions of luxury. The good news for luxury travel agents is that this is defined as comfort, hand in hand with access to exclusive events and experiences requiring expert organisation.

Having a real taste of indigenous culture and including an element of learning is increasingly on the luxury traveller's wish list too; so "the real challenge for the luxury travel provider is not just keeping up with trends, but setting them", says the research firm.

Top luxury holiday destinations worldwide

According to Mintel, most luxury holidays (defined as those costing in excess of £2,500 for two and invariably long-haul) are to destinations such as the USA, Australia/New Zealand and the Caribbean. The up and coming regions are the Far East (China and India in particular), Africa and South America. The report also claims that the Middle East, which has shown an increase in popularity, will continue to attract interest owing to huge investments in the region.

Thailand comes in at number one for Kuoni's World Class travellers, with the Maldives close behind in second place. Both destinations have "the boutique hideaway experience as a key strength," offering privacy, cited as a key criteria by the wealthier respondents to its survey. Dubai came third, matching the results of the Mintel report. Other destinations performing well for Kuoni are Egypt, Malaysia and the USA, as well as Sri Lanka and Morocco.

Two-thirds of the consumers interviewed by Mintel believe a luxury holiday to be about doing something different (especially in the 20-44 year-old age range); a feeling matched by the Kuoni sample. Service and unique experiences were both cited as key ingredients to making a luxury holiday truly outstanding and cost is not the issue.

According to Wendy Kenneally, head of long haul at Kuoni: "Consumers are not driven simply by status, or keeping up with the Joneses, they are looking for holidays which will satisfy their own personal aspirations."

Luxury is being redefined as experiences because consumers are overloaded with products, says the survey. "Today's increasingly well-travelled individuals want new and exciting experiences to intrigue, entertain and enlighten them. They will spend top dollar to be the first to the experience."

Kuoni's report concludes that their clients' definition of luxury was a combination of the tangible and the intangible; "quality goods or services that left them with an enhanced frame of mind, not just something that costs a lot."

Economic downturn will have little impact

The current economic downturn is not predicted to impact significantly on the luxury market, which Mintel states is "insulated" from the credit crunch; growth in holiday expenditure is predicted to be around 20% over the next five years.

"The aspirational mind-set among UK holidaymakers has meant that consumers prioritise holidays, especially the wealthiest, who are not prepared to downgrade or cut-back on what has become essential spend," says the report. Nearly a third of consumers claim to have been on a luxury holiday and a similar proportion plan to go on one in the future; this equates to a target market in the region of 15 million consumers, all with different needs, aspirations and expectations of a luxury holiday.

However, "suppliers should be aware that increased choice has brought greater price consciousness, customers with money to spend on luxury holidays are looking for value," says Mintel. Kenneally argues that although "the credit crunch is curbing spending, albeit in some cases marginally, consumers are seeking products which they know to be high quality, reliable and value for money."

For most of those surveyed by the research firm, seeking out experiences that are difficult to organise and interaction with indigenous people, all packaged around superb service and privacy mean that luxury travel buyers need to "think big, imagining how to turn any product into a life-enhancing experience." And increasingly this means satisfying multi-generations, as luxury holidays are often based around special occasions and older generations are often included.

The Mintel report also concluded that there will continue to be a need for personal booking services for the cash-rich, time-poor luxury holiday buyer, despite the fact that the sector has more savvy travellers.

"Consumers in this market will become more knowledgeable and demanding and providers must adapt to the needs of those who want to take control, yet offer the same degree of assistance for those customers who appreciate concierge levels of service," says Mintel.

Mintel report, price £1,500; contact Tabitha Dudeney on +44 207 606 6000. For Kuoni's World Class Report, tel: 01306 744008

KEY POINTS FOR BUYERS IN THE MINTEL RESEARCH

- Luxury trips are still most likely to be booked via a travel agent: 54% of the 25,000 adults surveyed used a travel agent to book their last luxury holiday.

- In the luxury market, the tour operator is maintaining its share with around third of all bookings.

- Despite a fluctuating performance, the volume of luxury holidays has risen by an impressive 18% since 2003, compared with just 4% for the market overall.

- Luxury trips now account for 3.8% of the overall market: a tiny proportion, but "one that will continue to grow".

- The fastest growing UK social group is the wealthier ABs, who are the key demographic for the luxury market. This group grew by more than 8% from 2003 to 2007 and is predicted to increase by nearly 17% by 2013.

- The most important element of a luxury holiday is warm weather (64%); travelling in comfort (50%); doing something different (43%); a four or five-star hotel (42%); having a once in a lifetime experience (39%); fine cuisine (38%); being pampered (21%); privacy and seclusion (21%); flying first/business class (15%). (Base: 1,977 adults aged 16+)

- 12% of the 910 adults surveyed by demographics had spent more than £5,000 on holidays in the past 12 months; the biggest spenders were in the 25-44 year-old age range.

- 33% of those surveyed who had taken a holiday in the past 12 months said it was a luxury break; 31% said they planned to go on a luxury break in future; 27% said they would be happy to mix low-cost flights with a luxury hotel; 20% would like to go on a nature trip (safari, etc). (Base: 1,197 adults)

- 21% of those who went on a luxury holiday in 2007 used a hotel on a full or half board basis; 17% did B&B; 18% went all-inclusive; 12% went room only.