The Business of Travel


As travellers start having new whims and fancies, it becomes the responsibility of the industry to make it a reality. Here's what you need to know

By: Luca Franco, Managing Partner, Luxury Frontiers

Posted on: September 16, 2014

As travelers start having new whims and fancies, it becomes the responsibility of the industry to make them a reality. Here’s what you need to know. 
 
Travel is no more just about catching that flight and entering your hotel room. With travel being recognized as one of the best ways to unwind, learn and broaden your horizon at the same time, the least you can do is give an experience that a traveller will remember forever.
 
As per a 2014 report, ‘The Rise of Experiential Travel,’ the travel research company Skift concluded, “Arguably the most significant, systemic trend in worldwide tourism today is the demand for ‘experiential travel’, typically meant to convey the idea of more immersive, local, authentic, adventurous and/or active travel.” Going further, research has also shown that consumers are increasingly signaling social status through consumption of experiences rather than material goods. Over 72 per cent respondents in a 2013 American Express survey said they would rather spend money on experiences than material goods. Further, 88 per cent said traveling to new places ranked as the number one dream on their life’s bucket list, ranking above family or wealth.
 
Signaling a global phenomenon, the MasterCard Affluent Report 2014, which surveyed affluent consumers in select key markets in the Asia Pacific Middle East and Africa regions (China, Hong Kong, Japan, Singapore, South Africa, South Korea, and UAE) found “a shifting tendency among the affluent to seek and discover authentic experiences as opposed to purchasing and owning physical luxury items.... Wealth is perceived to be a means to experience the world and to truly live life, with travel being the best medium to explore the world.”
 
With such a huge shift in preferences, it becomes imperative to understand the audience and factors determining travel trends today!
 
Meet the traveller  
Millennials [generally considered those under 35] want unique and special experiences which they can share online. According to HVS, when it comes to accommodation, millennials look for ‘something extra’ and the ‘cool factor,’ because these tech savvy consumers ‘do not wish to Instagram a photo of a boring room to share with their friends.’ It is quite understandable since social media is affecting our lives in a big way! While millennials like adventure, findings from a 2014 Bruan Research Study for Chase Card Services also showed that more than any other demographic group, millennials are willing to splurge on luxury services while traveling.
 
Quite surprisingly, boomers (falling under the age group of 55+), are also demanding newer experiences. Holding an astounding 76 per cent of disposable income in US by 2017, armed with newfound time, and harbouring an “inexorable desire for new sensory and life experiences,” boomers have become “the most potent and profitable travel consumers in history” according to the Resonance Report 2013: US Affluent Travel & Leisure.
 
Along with new experiences, luxury travelers are also demanding authentic travel ideas immersed in local culture, simplicity and environmental care. Exclusivity, privacy, personalized products and unique destinations are factors that everyone is looking for.
 
Age is just a number
And boomers are proving that too! According to The Resonance Report 2013: US Affluent Travel & Leisure report, 59 per cent wealthy boomers agree that retirement is “a time to travel and explore new places.” Adding to that, 42 percent wealthy boomers plan to take an international vacation within the next two years, with 33 per cent wealthy boomers wanting to visit a rare or remote landscape. At the moment, 32 per cent wealthy boomers said they enjoy “once in a lifetime” experiences on vacation, with another 18 per cent wanting to try them. 
 
Taking a broader consumer picture, 46 per cent wealthy travelers consider exotic vacations to be one of the most desirable luxuries with 47 per cent of affluent seeking natural or scenic features when choosing a destination. This percentage is even higher for boomers.
 
What do they want?
Seeking to escape the stress of everyday life by experiencing new cultures and adventures, luxury travellers are quite clear on the quality of service they want. Travellers can also be categorized to understand the kind of vacation they desire. LOHAS (Lifestyle of Health and Sustainability), explorers, experimenters, eco-tourists, family travel, socially conscious, technological, foodies, wellness, sports/fitness, multi-generational travel, trend setters, trend followers – the travel industry needs to accommodate to all these characteristics! .
 
Catering to this extremely demanding traveler, a handful of operators have become synonymous with luxury tent experiences, including Singita, Abercrombie & Kent, Wilderness Safaris, and &Beyond. Yet, there are limited examples outside Africa, and in the Americas, the concept is still in its infancy. 
 
International hotel brands have very sporadically entered into stand-alone tented camps. Take the example of Four Seasons in Thailand, Aman Resorts in India and Indonesia, Banyan Tree in UAE and Maldives, Six Senses in East Asia, and Taj/&Beyond in India. Most tent concepts are designed to be exclusive and low impact operations, and as such, tend to have 10 to 20 tents, and thus have high operating costs relative to revenues.
 
Having said that, the scope for tented camps and other such concepts is immense at the moment. It all depends on how creative you can be! 
 
Luca Franco has worked with leaders like Strategic Hotels and Resorts, Four Seasons, Ritz Carlton, Bulgari Resorts, Park Hyatt, The Stein Hotels, Icehotel, Marriott Vacation Club International and more; managed a diversified real estate portfolios for the Ferragamo Group and Fingen Group; and served with LLPI and contributed significantly to the successes of Exclusive Resorts, Private Escapes, DCP International. He has deep expertise in mixed-use developments and a track record of success in hospitality and residential projects around the globe with brands such as Four Seasons Hotels, Lungarno Hotels by Ferragamo Collection, Rio Quente Resort, Ritz Carlton Herzlija Hotel & Residences, Israel, Lake Como in Italy, Auberge Residences at Element 52, Colorado, US and more. With Luxury Frontiers, the team has developed luxury resorts and tented solutions for leading luxury hospitality brands, such as Four Seasons, Ritz Carlton, Abercrombie & Kent, Six Senses, Orient Express (now Belmond), Wilderness Safaris, Explora and Amanresorts.

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