People are shifting away from desiring things and are looking to have enriching life experiences more and more instead. We call it the Experience Economy and it’s exploding globally as people realize having experiences is much more gratifying to the soul than buying yet another thing at the mall.
The luxury sector is leading the way regarding this emerging economy as more than half of all luxury spending – about $1 trillion per year – is being spend on experiences such as dining and travel according to Boston Consulting Group. This market is continuing to expand at 3.4 percent annually, which is two and a half times the growth in our country’s GDP.
So people are feeling rich again, and why wouldn’t they? Global personal wealth is at an all-time high as is the U.S. stock market and real estate values are climbing up sharply from the lows experienced during the Great Recession.
But this time around instead of buying a fancy car many consumers want to become deeply embedded in local culture while traveling, or learn a new skill such as winemaking. When it comes to food dining with a family they’ve never met in an Asian country is more appealing than having another meal at a gourmet restaurant.
At this week’s BITAC® Luxury we investigated the changing nature of luxury and how it’s changing how hoteliers should adapt the guest experience to make it not only highly personal but emotionally enriching as well.
BITAC® is of course the industry leading one-on-one meetings and relationship building event. This week marks the 47th BITAC® meeting, which is attracted the luxury lodging executive elite representing leading and forward thinking companies. And they’re all here to come together at BITAC® to problem solve, network, sign deals and exchange ideas to move forward the quality of experiences for hotel guests, while adding profits to the bottom line. There’s even time to cut loose, be social and network in a luxurious and relaxed environment.
According to the 2013 Survey of Affluence and Wealth in America luxury level "vacation spenders" on resorts and fine hotels are spending lots of cash to the tune of $4.716 per trip. And those one-percenters are spending even more cash every year on vacations totaling an average of $14,548 per year. That’s pretty heady numbers.
So it’s no surprise hoteliers are looking to capture this exciting and potentially profitable audience. To get an even better idea of the pulse of luxury in the lodging industry we utilized our amazing real time polling system.
Here’s what our experts think:
By what percentage do you see luxury travel demand rising?
1-2% - 3.4%
3-5% - 46.2%
5-10% - - 34.5%
More than 10% - 14.5%
What group do you see as the primary luxury tourism traveler?
Retired people - 10.1%
People in their 50s - 45.3%
People in their 40s -23.0%
People in their 30s - 13.5%
Multi-generational family travel - 8.1%
Do you see luxury travel trends as an accurate bellwether of the overall economy?
It is a leading indicator - 29.8%
Luxury stats are in concert with the current state of the economy - 34.0%
No, luxury hotels are not related to state of economy - 36.2%
What continent do you think will generate the most luxury travelers during the next 10 years?
Africa - 6.5%
Antarctica - 0.7%
Asia - 60.1%
North America - 12.3%
South America - 20.3%
Which region is the most powerful current supplier of luxury travelers?
Brazil - 6.5%
U.S.A. - 28.3%
China - 61.6%
India - 3.6%
What is your perception of U.S.A.’s ability to keep up with luxury lodging offerings?
The industry is shifting overseas - 11.8%
USA losing ground and splitting global luxury audience - 67.7%
America is the predominant luxury destination - 20.4%
Are you seeing an influx of a new luxury class of traveler coming to your hotels?
Yes - 76.5%
No - 23.5%
Which region do you feel has the most opportunity for new luxury hotel development?
Asia - 31.3%
Middle East - 16.5%
Europe - 2.6%
Africa - 7.8%
North America - 11.3%
South America - 30.4%
When you are developing a luxury hotel what is the business mix you expect?
Domestic travelers mainly - 5.0%
International travelers mainly - 18.0%
An even mix of domestic and international travelers - 77.0%
What is the main motivating factor that gets a guest to book your hotel?
Location - 38.3%
Price - 9.3%
Amenities - 11.2%
Experiences - 33.6%
Style - 7.5%