Updating perceptions about today’s luxury traveler

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Demand for luxury tourism and hospitality is expected to grow faster than for any other industry segment. This growth is being powered in part by a sharp rise in the number of individuals globally with net worths between $1 million and $30 million. But it’s also resulting from a large and expanding base of aspiring luxury travelers with net worths between $100,000 and $1 million, many of whom are younger and increasingly willing to spend larger shares of their wealth on upscale travel options (Exhibit 1).

The luxury-hospitality market is large, and some segments are growing quickly.

We dug deeper into this ongoing evolution by surveying luxury travelers (defined here as those who spend, on average, $500 or more per night on lodging) to inquire about their preferences, plans, and expectations. Our survey of more than 5,000 luxury travelers was in the field in February and March of this year.1 The respondent pool included travelers from five major, representative source markets: China, Germany, the United Arab Emirates, the United Kingdom, and the United States. All respondents took at least one leisure trip in the past two years.

Findings from this survey, coupled with input from industry experts, suggest that some commonly held perceptions about luxury travelers might be due for reassessment.

Perception one: All luxury travelers are very wealthy

The image that luxury travel conjures is one of vacationers with millions of dollars to their names. In fact, 35 percent of the luxury-travel market is now composed of travelers with net worths of between $100,000 and $1 million.

Luxury means different things to travelers at different wealth levels. High-net-worth individuals (HNWIs), with assets ranging between $1 million and $5 million, tend to trust boutique travel agents, seek privacy and exclusivity, and favor exotic destinations. Very-high-net-worth individuals (VHNWIs), with assets ranging between $5 million and $30 million, are relatively more likely to book large suites to preserve intimacy and tranquility, prefer end-to-end experiences steeped in local ambiance, and may be less focused on hotel brand names. Ultrahigh-net-worth individuals (UHNWIs), with more than $30 million in assets, prefer quiet luxury with personalized service—targeting remote, private destinations, accessible via private airports or helipads, that feature tailored experiences available nowhere else.

Aspiring luxury travelers have their own set of preferences (Exhibit 2). They might splurge on special occasions, prefer visibly branded luxury, demand value for their money, and pay close attention to loyalty program points and benefits. They might be willing to spend big on individual components of their travel—such as a helicopter tour or fine-dining experience—but not on every aspect of a trip.

The aspiring luxury traveler has distinct motivations from other travelers: they prioritize novelty, culture and history, and authentic experiences.

It’s crucial to understand this nonmillionaire segment for two reasons. First, it’s comparatively large. Second, its forays into select prestige elements present opportunities for brands that hope to attract its enduring loyalty—especially as some of its members graduate into higher tiers of income and wealth.

Aspiring luxury travelers often rely on branding to validate their sense that an experience is luxurious. Strong luxury-hospitality brands can explore creating entry-level offerings to engage with this segment. (Indeed, many luxury hotels are already targeting aspirational travelers by offering more affordable standard rooms alongside pricey ultraluxury suites.)

Existing luxury brands can also cross categories to capitalize on this segment. For instance, Bulgari entered the hotel space as part of a collaboration with The Ritz-Carlton Hotel—the luxury watchmaker is expected to have a dozen collaboration-driven properties by 2026. Elle, the global lifestyle brand, has announced it will launch two hospitality ventures: Maison Elle and Elle Hotel. And high-end shoemaker Christian Louboutin opened a boutique hotel on Portugal’s coast.

Perception two: Luxury travelers come from Europe and the United States

The geographical balance of wealth is shifting. Although North America is still home to the most millionaires, it could be overtaken by Asia by the mid-2030s—largely as a result of growing wealth in China.

The rapid growth of wealth in Asia is spurring a boom in regional hotel construction (Exhibit 3). A 2023 assessment of the global luxury-hotel pipeline found that 41 percent of hotel rooms in the pipeline are in Asia, with 43 percent of those in China. The luxury-hotel supply in Asia, both existing and in the pipeline, leans heavily toward larger properties, chains, and franchises, reflecting the industry landscape in Asia as well as a preference among Asian travelers for luxury brands they know and trust.

Asia has become the epicenter of luxury lodging, with momentum building.

Domestic travel is consistently the largest share of travel, so luxury demand in places where HNWI and UHNWI populations are large and expanding will likely be high. Providers in these regions may want to consider how to meet the specific needs and desires of increasingly affluent populations (see sidebar “The chair of Shangri-La on the unique preferences of Chinese luxury travelers”).

Perception three: Luxury travelers are old

While baby boomers do represent a significant portion of luxury spending, 80 percent of the luxury leisure market is in fact made up of people below the age of 60 (Exhibit 4). Spending on travel peaks between the ages of 40 and 60, and younger travelers show an increasing willingness and ability to spend at luxury levels.

Individuals under the age of 60 account for most luxury-travel spending.

Based on the current shape of the market, luxury providers should look for ways to cater to a middle-aged population, which will likely include a high proportion of families with adolescent children. Luxury players might consider devising offerings that can appeal to both parents and teens. Multigenerational luxury travel involving grandparents, parents, and kids is a growing trend, and these families often prefer to book villas that offer privacy and space for large groups.

People in their 20s make up a smaller share of the luxury market, but acquiring customers in this segment is still important. Their lifetime value can be significant, given the many years of luxury travel that likely lie ahead of them. Offerings for younger populations should be tailored to their interests, which tend to cluster around social experiences, authenticity, sustainability, and digital connectedness.

Perception four: Luxury travelers all crave exotic experiences

It’s true that luxury travelers are comparatively more likely to go on exotic and adventure-focused vacations, such as yachting trips or safaris. This is unsurprising, given the higher costs of these types of outings.

However, the largest share of luxury travelers still want to do the same kinds of things that other travelers do. Sixty-five percent of them express intent to go on sunny beach vacations, and 55 percent say they’re planning to book relaxing getaways (Exhibit 5).

Luxury travelers still predominantly take traditional types of trips, but they are more likely than mass travelers to go on specialty trips.

These travelers might not necessarily want a new kind of vacation, but they still want novelty. Seventy-two percent of luxury travelers place importance on visiting a new destination, compared with 44 percent of other travelers. Luxury travelers also travel substantially more than mass travelers—which means that unfamiliar destinations can quickly become familiar ones.

Sun and beach vacations remain the most preferred trips for luxury travelers, yet hotels in the associated locations constitute a relatively low share of luxury-hotel supply (Exhibit 6). Business travel, which skews supply toward cities, may account for some but not all of this discrepancy.

The luxury-hotel supply may not be meeting the demand for sun and beach travel or for mountain and skiing travel.

Taken together, these findings suggest that there could be opportunity to develop new luxury destinations that focus on offering traditional types of leisure or to refresh traditional destinations with revamped offerings that make them feel new even to frequent visitors. Upgrading accommodations (by, for instance, adding villas) or curating experiences (such as unique scuba dives or sailing journeys) could help lure past visitors to book another sunny beach stay.

Perception five: Luxury travelers want 24/7 digital connection

It might seem intuitive that high earners who are likely to spend much of their working time communicating via phones and laptops would demand continued connectivity while away from home. But luxury travelers who responded to our survey are two to three times more likely than mass travelers to say their main reasons for traveling are to meet new people and to disconnect from digital devices (Exhibit 7).

Luxury travelers are more likely than others to cite ‘digital detoxing’ and meeting new people as reasons to travel.

Small-group travel—for example, small luxury-cruise expeditions—is currently in high demand. On cruises, luxury travelers do want assurance that they will be digitally connected. But they also want to feel that they’re getting away from it all, being present in the moment, and meeting new people. Although resorts that are explicitly framed as “digital detox” destinations remain a highly niche accommodation choice, digital detoxing is an important theme both in marketing luxury lodging and in developing on-site offerings. Providers should consider finding ways to create inviting spaces for digital disconnection, such as common eating areas and shared tables.

Perception six: Luxury travelers don’t care about loyalty programs

Are luxury travelers above caring about hotel loyalty points and perks? Not quite. Sixty-eight percent of luxury travelers—compared with only 41 percent of mass travelers—say loyalty programs are an important factor when choosing accommodations.

That said, many luxury travelers look for a different kind of reward from loyalty programs. They’re less focused on accumulating points and redeeming them for free stays. They’re more attuned to the recognition that comes with being a valued loyalty customer and with the attentive service, foreknowledge of preferences, and exclusive privileges (such as access to hotel leadership) it can entail.

Luxury travelers are similarly more likely than mass travelers to care about hotel brands (77 percent versus 53 percent) and government-assigned star rankings (84 percent versus 66 percent). In general, luxury travelers want to trust that the places they choose will feature world-class aesthetics and robust amenity offerings. Brands, stars, and loyalty programs can all help communicate the reputation and perceived quality of an accommodation.

In comparing luxury travelers across regions, it’s clear that consideration of star rankings is uniformly high. But travelers from China and the United Arab Emirates are more likely than others to place a high value on brands and loyalty programs (Exhibit 8).

Chinese and UAE travelers particularly value loyalty programs, hotel branding, and star rankings.

This finding could be influenced in part by the existing lodging supply in those countries. In China, for instance, branded hotels with loyalty programs are the dominant form of luxury accommodation. As Chinese domestic hotel supply develops—and is increasingly dominated by chains rather than independent players—it could further elevate the importance of branding and loyalty.

Perception seven: Luxury tourists are done with resorts

All-inclusive resorts—replete with buffets, standardized drinks, and family-targeted activities—may not seem as if they would appeal to luxury travelers. The truth is that luxury travelers do still turn to all-inclusives for the ease, convenience, and wide variety of instantly accessible activities they can provide. But luxury travelers want these accommodations to feature exclusive offerings and personalization.

To court luxury travelers, resorts might consider offering dedicated concierge desks willing to go the extra mile in booking unique activities and difficult-to-get reservations. Customized dining options, such as chefs willing to cook any meal on demand, can also appeal to this group. In addition, resorts might offer adventurous experiences such as scuba diving, sailing lessons, or guided hikes as part of the all-inclusive package.

Resorts should look for opportunities to use data and research to enable deeply personalized touches. This could include keeping track of dietary preferences (from stay to stay and across properties) or even inscribing guests’ nicknames on their slippers.

Perception eight: Luxury and scale don’t mix

Historically, the luxury segment and the exclusivity it entails have been associated with independently owned, landmark hotels. But there are brands that have successfully scaled luxury accommodation, and there are many elements of scale that luxury players can benefit from.

A few major brands, including Four Seasons Hotels and Mandarin Oriental Hotel, have managed to establish themselves as icons of luxury hospitality. And some groups, such as Leading Hotels of the World and Relais & Châteaux, have been able to unite a disparate set of independent and family-owned luxury hotels under a single, recognizable banner—serving as a trusted indicator of luxury quality at scale and granting smaller organizations strength in numbers.

A global footprint can ease the expansion of brands into new geographies, and it can serve as a hedge against regionally specific risks. A large luxury-hospitality brand can also broaden its focus beyond its core product, expanding across the value chain to become a more holistic experience provider—for example, the ultraluxury brand Aman has branched out into cruise expeditions and jet journeys. And finally, scale creates economies of, well, scale: with more rooms to offer, scaled brands lower their cost per room and increase their efficiency as they centralize functions such as staffing, training, technology, procurement, and operations.

Today, 70 percent of luxury-hotel properties are independent. But the supply pipeline is flipped, with chain and franchise properties accounting for 78 percent of planned hotels. New branded hotels coming online are also getting larger, in terms of total rooms. As luxury-hotel brands get bigger, they must ensure that they can still offer personalized, high-touch service. Achieving scale without sacrificing exclusivity—by, for instance, introducing luxury villas that are adjacent to a larger property—could be critical to success.

Perception nine: The traditional travel agent is dead

It’s true that inspiration for the luxury segment has become deeply tied to social networks instead of travel agents. This doesn’t mean, however, that there is no role left for travel agents to play. Luxury travelers continue to use travel agents instead of online platforms, in part because they simply want someone else to take care of the transactional booking details. Meanwhile, today’s luxury travel agents—who prefer to call themselves travel advisors—are superpowered by technology and data that enable both a personalized touch and a robust, responsive level of back-end service (see sidebar “The founder of Virtuoso on the evolution of the luxury-travel advisor”).

Many luxury travelers now want 24/7 concierges who will maintain a relationship with them across their journeys. These travelers want the benefits of large online networks when making travel arrangements, but they also want agents who respond quickly, know their names, and understand how they like to travel. Subscription-based travel clubs that meet all these needs by giving paying members access to an exclusive, carefully curated selection of properties, activities, and agency services have become an attractive solution, especially for younger luxury travelers.

Perception ten: The luxury market has mastered wellness

The traditional image of luxury is heavy on indulgence: sumptuous dining, an atmosphere of ease, and copious opportunities to splurge. In fact, many luxury travelers are interested in a slightly different vibe. Wellness is a major, ongoing, global trend, and luxury tourists are increasingly looking for ways to put their health—both mental and physical—at the center of their travels.

Mainstream luxury providers still mostly seem to think that wellness equals spas. In fact, luxury consumers now expect a much more holistic array of offerings—including fitness classes (88 percent of our survey respondents say fitness is important on leisure trips), health-focused menus, on-site antiaging doctors, mindfulness programming, and more. Luxury travelers also want to learn about the health and wellness practices that are specific to the places they’re visiting, whether it’s a Mediterranean diet in Italy or Ayurvedic medicine in India. For these travelers, wellness means a healthy holiday they return from feeling fresher and fully rejuvenated. It doesn’t mean one massage scheduled at an odd time because of a packed travel schedule and limited spa staff.

A new crop of wellness hotels is emerging to meet the new shape of demand. For example, the SHA Wellness Clinic, which has locations in Spain and Mexico, offers programming that addresses guests’ health goals—such as longevity, detoxing, weight management, and rebalancing. Guests can book private consultations for personalized food plans and targeted brain-health treatments. In Hawaii, 1 Hotel Hanalei Bay is a property entirely focused on transformative wellness, offering multiday retreats, custom itineraries, medical treatments, an 18,000-square-foot wellness spa, and a 10,000-square-foot fitness space.

The new generation of wellness hotels is likely just scratching the surface in terms of meeting demand volume. Luxury hotels might have a “white space” opportunity to engage with the new type of wellness traveler by making them feel that wellness is integrated into every part of a stay. Meanwhile, many hotels could likely step up their game even when it comes to traditional spa experiences. Spa booking should be easy, availability should be rampant, and flexibility should be constant if the visitor is to feel a true sense of relaxation.

The luxury-traveler population is evolving. Travel players should ensure they have a full and accurate understanding of today’s luxury traveler by critically reexamining long-standing assumptions.

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