Analysis: Outlook for the luxury sector

may once have been the preserve of only the most wealthy and adventurous clients.
But according to the Aspire Advisory Board, which met recently at the Jumeirah Lowndes Hotel in London, they are now very much a standard demand for luxury customers.
Other topics of discussion included lead-in times, savvy agents and an upturn in business.

Experiential Travel

The demand for experiential travel shows no sign of abating. WIN chief executive Neil Armorgie, who attended on behalf of Advantage, said clients were not content to just fly and flop.

Kuoni’s national sales manager, Amanda Darrington, revealed the operator’s top-selling products included the likes of the Cheetah Safari and Vietnamese experience.

“These have come out of nowhere, with places such as South America, Peru, Vietnam and the Far East coming into vogue. Twin-centres are increasingly popular too.”

W&O tour operations director Kerry Golds said most of the growth for the operator in 2010 had been in the experience market, with Africa and South America leading the charge.

She added: “Some discerning clients place their focus on gold tap luxury and care most about the resort, its star rating, the high-end surroundings and services. The other group of people with just as much money care more about the experience than the accommodation.”

Experiences are worldwide

Agustin Garcia, the Spanish Tourist Office’s head of promotions, pointed out that demand for experiences is not limited to long-haul. He said people with money to spend travel to Spain, some in search of a traditional luxury experience, others looking to embrace a “way of life” experience.

Armorgie agreed, saying that while off-the-beaten-track destinations take the experiential limelight, traditional destinations have things to offer too.

And Golds revealed a surge in demand for the Mediterranean in recent months.

Garcia said: “The luxury market is the future for Spain; hotels that are not at least four-star must be small and have great service to survive – otherwise they can forget it.”

Escorted tour revolution

Insight Vacations sales director Paul Melinis said demand for experiences from luxury travellers was reflected in the demand for escorted touring.
“The problem escorted touring has had is that the coach has always been deemed downmarket – but that is changing,” he said.

“People are after an experience and on these tours, with professional guides and access to things those travelling on their own don’t get, aspirational travellers who want to touch, taste and smell the reality of a destination get a far better insight.”

Adventurous families

Melinis and Golds spoke of an increase in demand from families and Melinis revealed that they were one of Insight Vacations’ fastest-growing sectors.

“Families are booking escorted tours to places like South Africa and lesser-known areas of the States,” he added.

Jumeirah leisure sales director Philip Dickinson said he had seen a good pick-up in family business to Dubai.

“They don’t mind putting their hands in their pockets if they know they get a lot for that,” he added. “Families will spend big money but want value and want to budget upfront.”

Dickinson reported a growing trend for families buying twin-centre holidays linking Dubai with the likes of the Maldives and India.

Amanda Matthews, co-founder of Designer Travel, added: “A lot of families want to go farther afield but are not keen on flying for 12 hours in one go. We get loads of bookings from families who add a couple of nights in Dubai on the way out and back.”

Value for money

The panel felt consumer confidence was returning after a period of uncertainty.

Travel Bureau commercial director Jeanne Lally said: “It affected everyone. If you have money in the bank, you’re not earning on it; if you are in work, you are doing two people’s jobs, so you are time poor; and even those who could still afford to travel were deferring because conspicuous consumption was not considered a good thing. But people are spending again.”

Lally said spending had picked up well in the last quarter of 2010, with numbers up and training having to be postponed to deal with all the business.

Dickinson said Jumeirah had seen a surge in business in the last quarter of last year and that this had continued into 2011. “We have been full and people are paying top dollar for the rooms.”

David Parker, Emirates’ business development manager, revealed fares were “way above the level of a few years ago but the bookings keep coming”.

Melinis said even top-end spenders wanted a deal in the recession because they felt they had a right to it.

This desire for value was something all members of the board had noticed, with ‘added value’ in terms of things such as free meals and upgrades becoming important sales tools.

Matthews said clients who believed they could get good deals by waiting were increasingly finding that that was not the case. “So luxury bookings are getting earlier again as they want to ensure they get what they want.”

Dickinson said luxury travellers were now comfortable booking further out. “The key is not to give crazy rates at the last minute,” he said.

“About 70-80% of our bookings come in more than 90 days out.”

Parker added: “There is a decent trend towards long-term bookings. We see a lot of initial activity and then it goes quiet. If we hold our nerve then it tops off at the last moment.”

Savvy agents

Golds said a lot of W&O’s top bookings seemed to be coming from the trade.

She added: “In the last six months especially, people are going back to agents because they are becoming more savvy about the financial protection and help in a crisis offered by them.”

Garcia said trade business to Spain has increased enormously, adding: “A variety of factors have led to people not being worried about paying a little extra for the security.”

Matthews said agents have been fighting back without knowing it for a long time. She explained: “For so long they have been beaten down by the net but, as a result, they have become smarter. They know how to tailor-make trips and they know how to play suppliers against each other, while all the net has been doing is getting cheaper and cheaper.

“It’s not often that you can’t compete with the net on high-end bookings, but agents are now smart enough to tell customers to go and book it online if the margins ar