Strategic Insight Sessions: Luxury 2.0 - English
- Welcome everyone to the WTTC's virtual sessions. Now, this panel will look at the future of luxury travel post-pandemic, how has it changed, and are those changes and trends here to stay. Well, in 2019, we know that the global luxury travel market was worth some 9046 billion USD. And its forecast to hit 1.2 trillion by 2027.
Yet, even as COVID-19 derailed the industry, it helped push more travelers to seek to create their own bubbles while on holiday. And it's made elements of traditional luxury more mainstream from paying extra to have an entire villa or luxury safari lodge to themselves as a family vacation, or hiring a private car or small yacht. Travelers seem willing to spend more per holiday. So how is this trend changing the definition of luxury tourism, and what are the implications for the travel and tourism business? Well, please welcome our panel of experts here today.
We have Desirée Bollier, the Chair of Value Retail Management and the Global Chief Merchant of Value Retail, the Creator and Operator of the Bicester Collection. And we have Keith Barr, the Chief Executive Officer of InterContinental Hotels Group. Caroline Beteta, the President and CEO of Visit California, and Matthew Upchurch, the President and CEO of Virtuoso. Welcome to all of you. Well, let's start with a quick introductory overview.
Now, could each of you give us some context on luxury travel and how the pandemic has impacted travel tourism as you see it, Let's start with you, Desirée. - Well, that's (laughs). Good morning, everyone.
How has luxury travel changed? Well, particularly, in our business as we were depending on long haul for a long time, and we saw this vaporize completely. We thought our business with the traveling luxury consumer who's actually at home. And, in many ways, we re-engineered the entire business to really be addressing that luxury consumer who usually would travel around the globe to shop, or to be entertained, or to be spoiled. During the two year of lockdown in Europe, on and off, clearly, she and he and the family were expected in an open air environment. Something that is absolutely safe, and really in top-end quality.
They were searching for quality, safety and good experience while they were wanting to shop. And that's during the pandemic. So things are starting to change, and there is definitely light at the end of the tunnel because I'm sure Matthew, Caroline, and Keith will articulate the changes they are seeing, but we certainly are seeing double digit growth in certain pocket of traveler. The Middle East is definitely robust and beating all the expectations for us.
So they're definitely traveling again. The youth generations and of that part of the world is hungry to travel. And South America. Big traveling numbers, double digit growth. So there is definitely silver lining in coming out of literally two years of very difficult experiences. - Well that's- - But the overriding.
- Go on. - Need or expectation of everyone is over quality, Very, very demanding in terms of services. It feels like, "I've survived, I deserve." - Absolutely. I mean, I think you said it the sense of,
you know, revenge spending this pent up demand that everyone is feeling for wanting to get out there to travel again. So, Keith, let's move to you next, is that something you are seeing as well from the InterContinental Hotel Group? - I think everyone was shocked at the pace at which luxury travel returned. And, you know, somebody said to me, you know, "No two crisis are ever the same," and everyone expected, you know, the top-end of travel's gonna be structurally impaired for an extended period of time, as we saw after the financial crisis, it couldn't be further from the truth. I mean, we're seeing, probably, the greatest revenue growth and pricing growth at the top-end of luxury resorts. And as markets reopen, it has just been incredible to see, just the demand for travelers. And I think it inherently it's the, the strength of the consumer, in general, and many, many markets is quite healthy.
And at the top-end, in particular, where they may have had two or three trips planned per year and they canceled them for a year or two, they're saying it doesn't really matter what it costs. You know, "I want to take my family, I want to go to this location. I want that bespoke service that." And so, we are probably seeing pricing growth on the top-end of luxury resorts, stronger than any other segment globally right now. And, on the other side, too, in terms of demand for new projects, we're seeing just incredible demand for new hotel projects in the resort space, and also tied into residential as well, too.
So there are markets that aren't reopened. There are markets that are struggling because they're dependent upon a lot of international long haul, but the ones that have airlift and that are open are just seeing incredible results for the most part. - Wonderful. So two very optimistic viewpoints. Caroline, let's move on to you. Is that something you are seeing in California as well? - Absolutely. I feel particularly qualified or briefed
to be speaking to this subject because, yesterday, I had a speech in Santa Barbara, California. Spent about a day there with the industry and their annual conference. And it, the, just to put a fine point on what Desirée and Keith are saying, our numbers in California, for some of our luxury destinations, like Napa and Santa Barbara, for example, have surpassed 2019 numbers just last year. This March, for example, I was staying at the Hotel California, and their numbers for the first few days of Mar, maybe 10 days of March, had surpassed the whole month of March for last year. So yes, pent up demand, super important.
I think you asked a little bit about kind of what's changed for us in California, where we're a country essentially, you know, fifth biggest economy in the world. And so, those folks that couldn't go overseas, now, all of a sudden, were rediscovering California. There was a joke in California about all of Beverly Hills actually moving into the Rosewood Hotel in Montecito, for example.
So, you know, yes. Yes, yes, yes. (giggles) - Well, that is a resounding yes from you. So finally, Matthew, is that something you're seeing from Virtuoso's point of view? - Yeah. I mean, such wonderful things have been said, so I don't wanna repeat a lot of it.
I'd like to start with something I've been saying throughout the whole pandemic, that nothing motivates human behavior, like having something taken away that you took for granted. So, just think of this as the biggest recoil, you know, ready to shoot out the canon. I mean, it's incredible. And we're seeing exactly that. Everywhere that's possible to travel, the demand is incredible. The other thing I said a lot during the pandemic, this coming true is that disruptions accelerate trend. So in 2019, we were already seeing the top-end of the market at a level that we've never seen it before.
And then, all of a sudden, you, you take this away. Well, what was driving that? Couple of things. Number one, we've never, in the history of the planet, have had five generations of people all traveling at the same time in the numbers. (stammers) they're doing. I happened to turn 60 last week, and I'm owning it and I'm saying it, but what's interesting about that is that when the last baby boomer turned 60 in 2024, it'll be the first generation in the history of the planet where 80% of that generation is expected to live an additional generation, which is roughly 20 to 25 years, which comes from a friend of mine in California, Dr. Ken Dychtwald, the founder of Age Wave, and 80% of those people in relative health.
So we've always had 80 year olds, we just not bound to have as many of 'em. Then you go to the other end of it, and you have the, the trend of the prioritization of spending on experiences, rather than on goods, that had already been happening. This disruption has actually just turbocharged that, right? I mean, it has just made it.
And then of course, Generation Z. So now we have, actually, six because the Gen Zs are actually really influencing their parents. The other thing that happened is something that I've never seen in all the disruptions I've been in this industry my whole life. I've never seen so much wealth created during the disruption.
So let's be clear. This was a travel disruption, but the equities markets and the real estate market were off the charts. I mean, so the amount of wealth that was created (stammers) in the developed economies and the wealth that was created in the growing economies was fantastic. The other thing I think is important with this is the one thing I wanted to say about luxury travel. Well, I was born in Mexico. I did a speech for Mexico.
Luxury travel is very important, even though it may only represent a small percentage of total arrivals. It's a very important part of the market because they are opinion leaders in their communities and their travels influence overall travel. And the other thing that I think is interesting today is the ability of the today's psychographic of a luxury traveler is closer to a backpacker than let's say, 40 years ago. They're curious. They go to more places.
They stay longer and they spend more. - Hmm. Some really great points there. And, in fact, some fantastic points from all of you. And I should say, happy belated birthday as well, Matthew. - Thank you.
- But let's, I mean, let's explore the definition of luxury tourism and luxury travel, and you know, just, let's take a look at how it's starting to change, because really from what I've heard from all of you, the pandemic has really made elements of luxury travel become more mainstream. So, in what ways has the definition of luxury travel changed? And I'll let whoever wants to hop in first on this answer. - Well, linking California, we're just quickly, we're seeing a lot more smaller groups in this space. And, those include, you know, multi-generational families, Short-term coming out of this pandemic, a lot of those groups are for social gatherings, those missed opportunities Matthew was talking about. So we're not seeing, necessarily, in our luxury space, particularly high net worth product, large groups coming back.
It's more let's, you know, make up for lost time with socially, with close friends and family. - Yeah. I could articulate that from a, what? The shopping behavior. Right. I agree with Caroline. So we're, we really are seeing a fundamental shift. So we, through the pandemic, you know, we had in apartments that we would have just strictly for our VIP top client, and we rolled out those throughout the entire collection.
The number of appointment per day increased exponentially. And it was the mom, the grandma, the daughter, and the granddaughter wanting to be together, not just for shopping, but for a day out together. Right. And they wanted the space for themselves, and they wanted their personal shopping person for themselves.
So they could really, you know, discuss things about their lifestyle, their customization of the taste of the curation of they want it, which is a fundamental difference from the transaction behavior that we used to see sometimes. And that really is across, you know, I've seen it behave in China, in Europe, and, actually, even through our, the arena we just opened, the high end suites were gone in a second. You know, they wanted their own private spaces, so they could entertain their friends.
- And to build on Desirée's point, I think one of the interesting things that happened with, again, it's disruptions accelerate trends, one of the problems is the word "luxury" itself. The diversity of the luxury traveler, and which is why we also say experiential, we now talk about luxury and experiential, because quite frankly, the diversity of this market space is amazing. Not only with high net worth and ultra high net worth individuals, but the aspirational market. So you have a lot of people that may not be in the high net worth or ultra high net worth, but they are disproportionately spending on experiences and experiential everything. And I think that's one of the things.
So, the ability to translate value is becoming very nuanced. And it's very difficult to come across with a kind of one size fits all kind of a thing. And there's a lot of, I mean, there are multiple trends inside this whole luxury, experiential thing.
One of them, by the way, is purpose-driven travel. I mean, like making sure that wellness, purpose-driven, how do I make my children global citizens? I mean, there are a lot of very interesting psychographic drivers that make it that really, I think today, you know, there was a, the World War II generation would've looked at luxury as a luxury, right. And, today, it's viewed by a lot of people as a necessity. It's a necessity for the way I'm gonna raise my children. It's a necessity in the way that, how do we make it? So, there's a lot of drivers there, and a perfect example is, and I'll pitch it over (laughs) to Keith 'cause it's like a perfect example, is Six Senses.
I mean, I think, you know, they can't build 'em fast enough, but there's a sort of essence around it. And while you can say that Six Senses is a luxury product, the way in which they do it is so meaningful. Right. And it's just, it's, it belies the typical luxury moniker. - I mean, so I mean, Six Senses is our highest price brand within the portfolio. And you look at it and it's very purpose-driven in terms of how we think about that brand.
And what I think has changed, what Matthew's hitting on, is luxury used to be like conspicuous consumption, and I think it's now moving to being like conscientious consumption. - Absolutely. - I think people, people are thinking about with Six Senses, it's about wellness. It's about sustainability. It's impact on local communities.
It's being able to have a luxury experience, but feel as if you are, you're a better person from doing it. And you're giving back to the community, and you're understanding the values and the ethos of what this brand stands for. I think that's begin to permeate more and more across luxury brands, particularly, as luxury begins to skew younger. When you see how big Gen Z and Millennials are gonna be in terms of the luxury market. In fact, by 2026, it's over 50% pushing 60% of consumption, they're projecting.
And so, and that generation thinks about it quite differently. And you're gonna have to be able to show up as a purpose-driven brand that is having a positive impact on the community and the planet, the people around you. - Absolutely. - Hundred percent. - Yeah, go ahead, Desirée. - No, no. A hundred percent.
We see it from our end as well. They, the generation that is definitely purpose-driven. I see it with the sustainable fashion brand they ask for, and they really spend time on. They're not necessarily big labels.
They just have a purpose, a story authenticity that that generation will, you know, relates to. So, you know- - You know, one of the things, one of the things that I think is the biggest challenge though, since we're talking about this as a WTTC topic is, you know, I'm in London right now. I was in Lisbon and we are all over, but the number one problem is also the, the issue of attraction of talent. We lost a lot of people and I wanna make sure, I think one of the commitments that we're starting to think about is how do we make sure that the people delivering the experiences are as financially and personally, feel as financially and personally rewarded as the people experience them.
And I think that the whole industry is gonna elevate this because, at the end of the day, if you look at what's happening in, you know, it's particularly at this level where there's a lot of customization, there's a lot of interaction with human beings, that's what makes that feeling (stammers) of authentic connection is such a big piece of it. And I do think that that's gonna be one of the more interesting things to see how we do that. And, you know, there's a, I mean, we have the lowest unemployment rates in the United States that we've ever had, but it's an issue all over the world. And I do think we just had our symposium in Lisbon, and I think travel offers one of the most interesting opportunities for cross-generational collaboration. There are a lot of aging baby boomers who don't wanna work for 40 or 50, 60 hours a week, but they're very open-minded. And this is a, this is an industry that could attract people that have that kind of desire to have that kind of authentic, you know, purposeful job.
We just need a, we need to better market it, quite frankly. - Yeah. Matthew, I'm glad you mentioned that, 'cause I feel like all this is connected within this ecosystem.
And even, yesterday, for the first time, Santa Barbara Tourism, the local DMO, for the first time in history, is actually conducting a job fair to this point of workforce. And that is connected in terms of what we were talking about that the younger generations are in this luxury market, the Z generation, you know, around sustainability. I think the word sustainability has to encompass this, you know, social responsibility in terms of the win and the outcome for these experiences. And what we're seeing is that to your point, that it's, you know, as Keith said, more about conscientious experiences, that they, that the Z generation, particularly, wants a local for, you know, these bespoke types of experiences and that's the opportunity to your point of that mutual benefit that they can become an expert just by being a resident, for example. So we're seeing a lot of that here in California. - Yeah. So what-
- It's interesting you say that, Caroline, because we have an advisor in Santa Barbara, who's a wonderful advisor, been here the last few years. She goes, "You know, we say, we sell travel, but we really sell stories." - Yeah (group laughing) - Exactly. - Here, jump in here with a question. I love this conversation between all of you, but I'm gonna have to ask a question here. Really does sound like, you know, purpose driven travel is a trend that is here to stay, and it's coming about, as you say, because of this rise in consciousness and conscientious travel as opposed to conspicuous travel.
I love that phrase you used, Keith. So, what are some of the other trends aside from that sense of, you know, sustainability, this purpose-driven travel. What are some of the trends do you think are going to stay for the long term in the luxury travel space, specifically? - I'll just jump in. I think it's a trend that we're gonna have to figure out how to better serve, which is there's an increased level of personalization and bespoke-ness that's expected, and that you should know everything about me. And I think the way that the industry uses data and analytics is gonna have to continue to evolve, probably works very, very well for certain brands and certain companies, but more and more, they want to know you, you know, everything about them and their past trips, and their preferences and what they are. And then how does that get brought to life in the experience in the hotel and leveraging technology.
So I think it's sort of where they're seeing in other industries and saying, "How is that gonna spill over into luxury travel," and doing a better job at it. Again, Matthew probably do a great job at it at Virtuoso, but I mean, it's the, it's becoming more, kind of almost the entry level expectation, and at the top-end of luxury, that you're gonna be able to build the bespoke experience, knowing my preferences, and being able to deliver that. And we're gonna have to use technology more effectively, not to replace service, but to enhance the service experience. - Right. It's like, you know, in our world, I would call that client telling. Yeah?
You know, client telling is when you have your own black book, and within it, the, you know, the adage of 30 or 40 years ago, the old, you know, shop owner who knew the, every single one of his customer on a first name basis. He knew the wife's birthday, the children's, you know, cetera. And, you know, that data was entered personalized in a black book.
And that, you know, and client telling is essentially today, you know, a very broad term, you know, used in the fashion industry, in the luxury industry, you know, to really spoil each of the, I call them the guest, but it's really the customer, not in a robotic AI spit out way. Yeah. You know, you like that book, I'll send you 20 titles of the same book.
No, no, no, no, no. I'm more than one dimensional. You customize what I like. Right. And that's the client telling really at its core, and its essence, be it for fashion or travel or hotels. Today, that's the expectation. Yeah. Beyond the storytelling and they become your story tellers when they live that client telling personalized, that's gonna be their dinner conversation with their friends, "By the way, I can't believe it.
They remembered they actually, I don't know. I loved (speaking French), you know, instead of (speaking French). You know, that small little detail because that's really what's gonna touch them. - I also think mental health is something that is talked about top of mind, that was something that was more repressed that, we as humans, would seek.
But now we talk about it. So wellbeing is a trend I believe that's here to stay. It's transformative. People in this category want to come back restored, not depleted, which I think were some of the type of vacations that were experienced in the past, even in this category. I will say also as part of that, that's that adventure, I think it was you, Matthew, that talked about the backpack people are getting, you know, out into, you know, outdoor experiences. And, I've worked with Matthew for a long time.
I think he's, for example, seen our brand come along and now is our time because that's the type of "laid back luxury" that California was always about. And now it's really starting to become mainstream because of the Z generation. But this mental health issue is, it's just a great time because people can be transparent and not in of itself, is something that's restorative.
So, we're seeing a lot of that, particularly with our farm dev work experiences and culinary. They want healthy cuisine that is outstanding. And then to, you know, also focus on other areas of mental wellbeing. - Yeah. And the only thing I would add to that is that this is, obviously, one of my favorite subjects because I have become convinced that the only thing that will maintain a margin in a world with constant commoditization pressures is how did you make me feel? That's what maintains a margin. And in, and to Keith's point, you know, our North Star with technology has always been that there's two basic ways of using technology, one to remove as many human beings from the process, and others to augment them.
So, we've always said, "Automate the predictable so that you can humanize the exceptional." So you can create that, so you can create that human connection, and, you know, and we're doing and we're seeing, for example, Virtuoso advisors who are now using video conferencing because they're sending somebody to Santa Barbara, or to Istanbul or to Bhutan or to wherever, and they get on a Zoom call, and they have a conversation with the people that are welcoming them, and it's like a whole different level of, and people end up spending more, right? They end up because they're aware of it. They're (stammers) they get excited, but then, the people that they're gonna deal with are there. And that's one of the reasons why, if we want this market to get healthier and healthier, we've gonna have to make sure that the people who are delivering their experiences are earning the kind of compensation, and are being personally fulfilled and looking at how their job connects to a greater purpose, which is what WTTC's always been about. - Fascinating. I mean, I'm gonna move on to the next question, because, I mean, you've talked about lots of different things here, mental health, you know, client telling, using data analytics to provide a more personalized service.
So these are really interesting trends and opportunities, but how do these, you know, emerging new trends really provide for the sector, and how are you all adapting to it? - Well, I- - One of the, Go ahead, Matt. - Go ahead. Go ahead, Keith. - Actually, one of the interesting trends that we didn't expect to see, and we should have was, and, you know, we talk about pleasure and the blending of the two, it is a real thing now where people are choosing to go to a luxury destination for a longer period of time because they can work remotely now.
And so, which I, we just hadn't thought about, truthfully, as this was happening and, you know, and this demand has come back. 'Cause I remind everyone that we talk internally, you know, COVID was a demand suppression event, not a demand destruction event. And so, it just, it constrained it.
Now, it's opened up and the floodgate have happened and people are thinking I can travel differently. You know, "I'm gonna go on a longer trip with my family on holiday 'cause I can work remotely three days now." And (stammers), or I'm also gonna be staying up. So, it's really brought into this really unique customer behavior of longer trips or tagging on a leisure piece with work because they can do it now and it's acceptable. Right. 'Cause, in the past, saying, "I'm working remotely, you know, when I'm in someplace exotic," wasn't accepted, right? You're basically, "No, you're not. You're actually basically just taking an extra day off and pretending you're working."
Well, in fact, you know, I was, you know, traveling with the family recently, and I did two days of board meeting, and we were staying in a luxury resort and, you know, they were off having fun, doing great experiences. And I was sitting doing video calls for eight hours, but I was able to be with them when, in the past, I couldn't have been there. And so, I think it's a real, real interesting thing about how do we make it easy for people who want to do that, to be able to work in our hotels, in the luxury space, when they're traveling for business. - So Keith, just one tactical drop in on that. And, of course, this is stating the obvious with your product, but I think some of the interesting conversation about how to cope with this is Wi-Fi is paramount.
And I know that's stating the obvious to you, Keith, but a lot of these products, that is something that they're now trying to bridge the gap. We're seen it in our, you know, remote destinations that could be seemed as luxurious, but that's something that we're addressing right now. Technological.
- Yeah. It's basically table stakes. That's funny, you know, people in the past weren't asking about it because, sort of, I'm going to switch off. - Yes. - I'm actually,
and now it's in there. I want to be there longer, but I need to be able to be on. And so, making sure the quality of the experience there.
- Now, and I will say there is that sliver (stammers) of that moment. I spent 13 days in Antarctica with no communication, just some satellite phone. And I will tell you that my 13 year old son's essay to get into his high school was about what it was like to not have Wi-Fi for 13 days and what he learned. It was pretty amazing. - And, I agree with you, Matthew. I was speaking to what I find fascinating is what Keith brought up as a trend.
- Yeah. - That now people are starting to spend a month working. You know, it's really interesting. We're seeing a lot of it too. - So actually what you are saying, both of you are right.
What you're saying is Wi-Fi is like running water. It has to happen no matter what, but it's our choice to run the water or not. - Yeah. - And today, it's a luxury when you decide to switch off from a digital device. Yeah. It's almost, I would say, you know, brain rinse, you know? (laughs) You stop there, but that becomes your choice as a guest. Not because the hotel is really not capable of offering you such a thing.
It's like not offering electricity or running water. This is as basic as that. So the infrastructure is what pieces really raising has to absolutely upgrade itself.
Even in any type of hotel, having a remote office mindset, you know, in some of the spaces, as an offer plus for executive that are traveling with their families is now actually almost expected. Yeah. - Let's take a look at that trend now because you know, it's called pleasure or workcation. You know, these are things that, you know, to some extent, it's a challenge to try to cater to it. So how is everyone in the luxury space, particularly, having to adapt to this? - That's a perfect, that was perfect for what we were just about to say, because as the people who market and deal directly with the customers, I was gonna say that I think that the future is what we are doing is we see so many of our products and our partners. When you say, what are the trends? There's so many. There are generational,
There are passion points. There are, I mean, one of my favorites is skip gen, you know, you heard of MultiGen? Skip gen is when the grandparents leave the parents behind and take the grandkids. So that's another one. So there's so many of 'em that what we're doing is the ability to understand what of our, what of the products that we deal with, are able to attach themselves, and configure themselves to all of these different trends, right? And then, we're able to present those products in the language and the imagery that attaches to that specific thing for that moment.
Today's consumers, you know, in the '80s, you know, we were doing CRM like, "You like sun and sand?" Now I have to show you 30 pictures of different types of beaches, because there's a difference between Copacabana beach and, you know, Rio and the, and some remote place. So I think the ability of our partners to configure themselves to the ability to attach, and the other big one, the other really big one is we call it "conscious sustainability," but the ability of the partner to be a conduit into the community, like, "You're my guide. You're the person," rather than kind of separate from the community. It's like, no, no, no, no, no. If you, if you're a product that helps me really infuse myself into that community, whether it's nature or people or culture, whatever, that's huge too. - Absolutely.
- Oh, sorry. I was gonna toss in. It's not really a trend, but it's a trend in experience that, to your point, I think, is gonna stay post-COVID and that's weddings. Maybe I'm stating the obvious, but I've been invited this summer to a wedding in Italy, to an island off the coast of Florida, to the remote coast of California. I mean, all in one summer, that has never happened. I'm obviously not wedding age, but this is an amazing trend that I think, finally, it, COVID gave people the excuse to do destination weddings for they were a special niche.
Now I see them as mainstream, I guess. - Yeah. I wanna go back to what Matthew just said. And of course,
you know, I think Caroline like have 10 weddings. I mean, it's incredible. I never realized how weddings are still, actually, a very, very trendy thing when you're not in the age of weddings. It's just, it's incredible. But Matthew said, touched on something that is really important. When we really think about tribes, yeah? You know, in each tribe, today, has its own reference points, and they really trust only their own tribe.
Yeah. And so, the content relevancy for each of the tribe differs quite dramatically, and it is tough for any business today. It used to be one size fits all, guess what? Not at all.
It's a per tribe per taste, and they really trust each other extremely well. So microbites of messages, and then really doing the psychoanalysis of each of those strands, and really breaking down the relevancy of content per try is critical for any business point. You know, that's one of the biggest change in evolution in the complexity of how to run a business.
- Yeah. And complexities seem to be a thing, don't they, because we we've talked about all these rising trends, the things that are really happening, the things that you're all adapting to, but we haven't really talked about, you know, what has fundamentally changed as a result of the pandemic, and that is health and hygiene. You know, that's created a whole level of complexity in terms of just making sure hand sanitizer and various things are available.
So, give us a sense of how the luxury traveler, I mean, how have they changed through this pandemic in terms of their new expectations of what's considered safe travel, and in what other sense have they remained the same? - I'll give you- - Experiential stuff? Go ahead. - Yeah, go ahead, Keith. - I think from experiential standpoint, it's really interesting in that I think, I'm gonna say it this way, the mainstream consumer now understands that, "You know what, we're probably not gonna have housekeeping services every single day in a hotel," in many markets around the world, and can get their head around that and accept it going, "Okay."
The luxury travelers' expectations are back to where they were, if not having gone up in terms of, and so, it's in, and there's zero tolerance right now. I mean, 'cause, especially, 'cause of pricing, right, we're actually record pricing in the luxury segment, and they're going, "I expect everything to be back the way it was, and if not better." And they will trust the biggest and best brands as well, who can know they consistently deliver a great experience and a safe experience.
I also think, though, that in general safety is expected, but it's becoming a little bit less of a consumer decision point today than it was like six months or 12 months ago. I think we're kind of learning to live with COVID. So it was top of mind, and we had to be explicit about what we were doing. We're now seeing consumers going, "I expect you as a good as a brand company, to do the right things." But the services are, "I want to everything back, I want everything back the way it was, if not better than before, and I'm willing to pay for it." And, which is what, how you know, which is great for this industry.
And I think the one thing I would say to build on that, the companies and the brands that make it easier for the consumer to find what they want and get what they want and experience it, are the ones that will win out. 'Cause consumers have, you know, the ability to spend here. We have to make and they just, "Just make it easy for me, make it easy for me to find what I want, to then experience it. And I'm willing to pay you for it." If it's too hard, they will go someplace else. 'Cause the rarest commodity people have today, is time, I think. It sort of it's they just, they are.
And this consumer expects me, "Make it easy for me," and I'll, I will do it. - Frictionless. Frictionless. It's really critical. And I think Matthew touched on something that really Keith is alluding to as well is, you know, you are expecting your destination, no matter what it is, you know, hotel, restaurant, food, whatever, to be absolutely connected to the community and know the larger addresses. "You know me, you know my taste level, recommend fun things for me to do while I'm there."
And that kind of cross community collaboration is extremely important (stammers) for the guest. Yeah. That trust your, your knowledge of the community, for your role in the community, for the do good of everybody else. You know, it's hard to get these customers to fly all the way there, share the love (laughs).
Share the love with all your other destinations. And it really actually, we find that that it's paying off a lot, you know, for us as a matter of policy. Yeah. - Well, I never wanted life to be more complicated, but I can't sit here and pretend like it hasn't helped our sector. The desire for having a trusted travel advisor is off the charts. And, so, it's amazing.
I think since we're talking about WTTC here, and as somebody who has team members in quarantine in three countries as we speak, in Portugal, in Italy and in the UK, I will tell you that sensible laws by the destinations are gonna play a huge role. Right? And, as we go into, you know, as of tomorrow, the UK is no longer paying for tests, for example. So, you know, the laws in Portugal, the laws in Italy, everything was interesting. Now, you do know it's normalized when you can buy, you know, when you can buy COVID insurance and your travel insurance now, and if you get quarantined, well, let me tell you what. I have two executives that are quarantining at the Londra Palace in Venice, with a beautiful terrace with a view of the lagoon.
I mean, so quarantining in a Virtuoso hotel, it's not the worst thing in the world. I, it's not the best, but you can insure. But I do think that, that, you know, the same thing is happening with the normalization around some of this that happened after 9/11, because we've always had clients on the spectrum that, oh my God, somebody stubbed their toe on the London tube. I'm not going.
Oh, there was a military coup attempt in Istanbul yesterday. Now's the time to go. So you've got this psychographic group of people that are all over the place, and it's really about their own choice.
But I did wanna say something about time. Another thing that's a trend, you know, we've been saying for a long time, why would you have a wealth advisor in your life to help you optimize your money, but not have somebody in your life to help you have a conscious, well thought out plan on how to optimize your most valuable non-renewable asset, your free leisure time. So, a lot of really good advisors and their clients have already been doing this thing. 'Cause remember when we were in high school, when in middle school we had that thing where we had a jar and we had rocks and pebbles and sand, and it all fits in there. A luxury customers, today, what they're starting to do is they are starting to plan two, three, four years in advance, putting huge milestone trips out there.
Those are my anchor. Those are my big rocks. And then, the midsize run, you know, (stammers) they're and then the sand is the discretionary, you know, kind of like, oh my gosh, there's an offer. So it's very interesting to see how sophisticated travelers are actually to do that. You know, we had the world cruise of Oceania, a you know, a cruise, cruises got maligned totally inappropriately, but we had a, the world cruise of Oceania, three weeks ago, with the entry price being $45,000 per person, not per cabin, sold out in 32 minutes. For 2024.
- So we're telling all of our customers on the world is if you think you're gonna wait 'til the last minute and get good space, don't come cry to us. We warned you. - Well, to bring that full circle down to the tactics 'cause I think you originally asked, also, about kind of health and hygiene practices, and I think all this fits into that space. I think it's interesting, actually, just pulling in your last comment, Matthew, about demand is we're seeing in our luxury properties that those customers want to check out later, and also check in later. But, at the same time, they want to see more space between reservations because of cleaning protocols, for example. So, that's another challenge that the operational component of the, of our proprietors, like Keith, are having to be challenged by. I mean, for us in California, because we're running now over 90%, you know, capacity, seven days a week.
So, it's making that a little bit harder. We're seeing it with our, you know, individual lodging experiences where they want a whole house, for example, to stay in that bubble. - Well, we've just got a few more minutes left, and you've all made such incredible points. I mean, in terms of the rising trends that we're seeing, this huge pent up demand, the fact that, you know, the luxury traveler still wants luxury. You know, the frictionless experience that Desirée mentioned, as well.
So this is the point where I ask my final question, which I guess is, you know, what do you think is the future for luxury travel? How is it going to be evolving from this point in time? And let's start with Keith. - I think, if you look at, when we talked earlier about the demographic shift to Gen Zed and millennials, and what's important to them, I think we shouldn't underestimate, and we've talked about this topic earlier, wellness and sustainability and, but it will become increasingly needed to be embedded throughout the experiences. And they are much more socially conscious than the previous generations too.
They will pick and choose the brands and the experiences where they feel that they can tell the story with friends over dinner and feel good about it and not not, and so that that conscientious consumption, and that's definitely where things are headed and gonna continue to accelerate, I think, going forward. - All right. Desirée, over to you. - Yeah. (clears throat) I subscribed exactly to what Keith is saying.
ESG is here to stay. Social green, you know, kind of social green is critical in whatever we touch, whatever we do. A sense of purpose, sense of story, sense of authenticity. The second thing is, no matter what scale it is, it needs to feel intimate. So, scalability shouldn't be stopping the feel of intimacy of one-on-one, of curation.
You curated this for me. And that's something that we have to figure out, no matter what, through AI, through people, the talent we hire, how do we scale and yet remain boutique, curated, high-touch, experience-driven. - All right. Caroline, over to you. - Well, the future is Gen Z. So, everything we do has to be put through the filter of what their definition of luxury is. And, Desirée and Keith have touched upon some of these issues around their, we know, right now, just as a general scale, that 80% of Gen Z buyers will pay more for a brand that's sustainable or conscientious and means something to them.
We also know intuitively that a 100% of Gen Z will do this in the luxury space. So, as we're looking at this in California, I think we have some leads around product, there's high demand for electric vehicles, for example. For the luxury audience, we're creating that portal gateway throughout California.
So that's accessible, and that generation is demanding that type of transportation, as a matter of fact, Hertz and Enterprise now offer Tesla rentals in California, for example. So that's one example, and hotels also, you know, that sort of development, as Keith said, has to fit within that sustainability filter that moves, not only in your vehicle or your lodging, but then that moves out into the community, as Matthew mentioned, and to put a nice tiny bow on that, of course, as Desirée said, it all has to be perfect, bespoke, and customized. - Absolutely. A very nice bow, indeed.
And, Matthew, your thoughts. - Well, first of all, so much good has been said, so I would just say that I do think that, in general, I think that, you know, there's this, there's this thing called the commoditization of quality, and as overall base quality has gotten better and better and better and better, it's harder to, it's harder to define. It's harder to tell the difference. And so, we actually did some research, consumer research, on that. So, therefore, I'm going to give my money to brands that somehow connect with me. I think sustainability is one of 'em, but I also think it's, I think one of the big, since so much has been said here that the ability of a luxury product to configure itself to a vastly accelerated variety of personalities and drivers and cultures and whatever, that's gonna be a key piece of it.
But I think one of the things that I'm really, now that I'm coming out of the, we're coming outta this pandemic, I think, I hope to see that the luxury sector in hospitality and in travel becomes the pinnacle of, quite frankly, even better paying jobs and even more fulfillment. Because if we can do that, I mean, that's been the mission of our, you know, travel agents used to be viewed as a clerical, low paying job. We have travel advisors, today, that start their careers, and in three years, are earning six figures. That was not the case 25 years ago.
And they do it because they go after a particular customer. I wanna see us complete that, and I want the luxury experiential side of the business to create that draw that creates better paying jobs that are more personally fulfilling, and that they, themselves, get the same out of it, that the people that are buying it. - Wonderful.
Well, thank you to all of you, our extraordinary panel of experts, who have taken us through this journey of where luxury travel is headed to next. I hope you all enjoyed this panel. I certainly learned a lot. So let's hope that we do hit that 1.2 trillion mark
by 2027 for the luxury travel market. Thank you for watching. - Thank you. - Thanks. - Thank you. - Thank you.
2022-05-31 23:14
