Predicting Luxury Travel Trends for 2014

Visionary Marketing for Luxury Brands Predicting Luxury Travel Trends for 2014 Affluent Survey: A survey by the American Affluence Research Center Once again, Strategic Vision has sponsored the American Affluence Research Center’s (AARC) Affluent Market Tracking Study, a survey of the wealthiest 10% of households determined by the Federal Reserve Board based on net worth. I continue to advocate the importance of this kind of research and data collection for industry leaders to gain insights and implement effective marketing strategy in the luxury travel arena. The survey is based on a self-administered questionnaire mailed to a randomly selected national sample of 4,500 households expected to meet the minimum net worth requirement of $800,000. Following a weighting of respondents, the participants have an average residence value of $1.3 million, an average household income of $295,000, and an average net worth of $3.1 million. Read on for their valuable insights… Booking Leisure Travel -- Online Travel Agencies (OTAs) or Traditional Travel Advisors? Survey results I found noteworthy: In this flourishing digital culture, we all know that leisure travelers increasingly use their computers and mobile devices to book travel. While the growth of OTAs is undeniable, the number of those surveyed who continue to work with travel advisors or make a direct call to a branded entity (airline or hotel) still outweighs use of OTAs when combined. Travelers Explore OTAs Of those responding to the question, “Have you ever used an OTA to book leisure travel?” -- 69% said yes. Still, a significant 31% of all respondents said they had never used an OTA. Forty percent of affluent consumers who said they booked leisure travel through an OTA had logged on in the prior three months, and 37% had booked digitally within the last year. Expedia was the OTA most respondents used (40%), with Orbitz coming in second and Travelocity a close third, each with about 23%. Fifty-six percent of those using OTAs were under age 50, and 78% who said they navigated online specified they shopped through a single OTA. Opportunity for Travel Advisor Growth The research found that a remarkable 66% of those surveyed rely on an advisor or reach out to a major brand when booking leisure travel, the ability for affluent travelers to make a direct connection is still an appealing influencer. When asked if they had employed a traditional travel agency to book leisure travel in the past year, 23% of respondents said they had. And 20% of those surveyed said a traditional travel agency was the choice they used most often for booking travel. Forty-three percent answered that they book directly by calling airlines or hotels or using their websites. Of those who book in this way, 30% were under age 50. As a young travel advisor recently told me, “There is so much information out there through OTAs and online resources, the agent becomes the editor/navigator for the client.” Are Hotel Loyalty Programs Important to You? Marketing and branding strategies necessarily adjust with the changing times and consumer habits. In this mobile-driven and online booking climate, a significant number of affluent travelers trend toward brand loyalty in the hotel category. In the American Affluence survey, 63% of those responding said that hotel loyalty programs are either very or somewhat important. Of total respondents, 52% said they were members of Marriott Rewards, 45% joined Hilton Honors, and 32% belonged to Starwood’s program. Overall, the responses of high net worth consumers to survey questions regarding leisure travel booking offer encouraging numbers and promising opportunities for travel advisors to expand their client base as affluent travelers seek a connection and strong brand direction. In Closing Cautious Optimism Looking Forward As 2014 begins and consumers look ahead, a few interesting findings of the AARC survey are worth considering: • The affluent seem to have a slightly better outlook for the economy and their personal wealth than the general public. Almost a third expect their net worth to be higher in March 2014. • The new research reveals a significant 7 point improvement among those surveyed who said they planned to defer or reduce expenditures in the coming 12 months. Only 37% said they would cut back this year as opposed to 44% of affluent respondents in Spring 2013 -- a forecasting of positive spending trends as we enter 2014. • Of 17 product categories tracked in the AARC survey -- such as fine jewelry, major home appliances and designer clothing-- only one, domestic vacation travel, is in positive territory; eight are in the neutral range and eight are in negative territory suggesting a decline in spending. • An encouraging mood and spending plans of the affluent may be carrying through the new year with the stock market hitting record highs on Christmas Eve -- 2014 is a year to watch. As always, I welcome your feedback. Let's keep the conversation going.

Reimagine, Resonate and Reboot

As we approach the last quarter of the year, three words come to my mind with respect to luxury travel marketing today – “reimagine,” “resonate” and “reboot.”  Why? 

• Savvy marketers should be brave enough to know when it’s time to reimagine their brands in order to sustain the life of that brand.
•  To be effective marketers, our efforts must resonate with our target audience. They can’t just resonate with us – they have to be meaningful and impactful to our customers
• If we embrace the ideas of reimagining and resonating – along with new technology – we will likely enjoy a successful reboot, which is often a necessity in the lifecycle of a brand. Think of it as “revival of the fittest.” 

Reimagine & Reinvent

As luxury travel executives, we intimately know our brands – their essence, their defining aspects – but that doesn’t mean our brands are as distinct in the marketplace for affluent consumers and valued travel advisors. That’s why clarity of brands is crucial – showcasing an identity that is distinctive and rich in personality is the difference between being remembered and getting lost in the clutter.

For clarity, you need to understand your brand – and not be fearful of reassessing how consumers and travel partners perceive your brand. Keep your messaging fresh and on-point.  In the luxury space, we shouldn’t try to be all things to all people – it is about being the right thing to the right people.  This principle of “reimagine and reinvent,” as I like to call it, is driving luxury travel brands to create stronger corporate identities and strengthen their messaging.

Today’s emphasis is on exhibiting a razor sharp focus to target the right people.  Luxury travel companies are spending more money on new print advertising campaigns as well as putting money into digital and video/film because of their impact. Who is doing this? Look at Rosewood Hotels & Resorts (they just launched a new “Sense of Place” brand campaign), Shangri-La Hotels & Resorts (they are conceiving new television ads), Peninsula Hotels (the company is working on new creative and a focus on video) and Taj Hotels (they will shortly unveil a new campaign). Full disclosure – Rosewood and Shangri-La are clients.

Are We in Social Media and Technology Overload?

iPad, Kindle Fire, Samsung Galaxy – these names, among others, dominate our daily lives, whether we’re reading about these devices or utilizing them ourselves. And, today’s marketers are tasked with determining how best to take advantage of consumers’ obsessions with these latest and greatest technology ‘toys’ as well as how to effectively incorporate social media (Twitter, Facebook and more) into their strategies. It seems that every recent conversation I have had with marketing executives includes these topics to some extent as the hospitality and tourism industries try to figure out the best way to embrace new technology and communications channels.

In our effort to be innovative and strategic, it is crucial not to get carried away. For example, on a recent trip to London I dined at a well-known restaurant that recently opened following an extensive renovation. As always the food was excellent, but I was disturbed when the professional and efficient sommelier presented the wine list on an iPad. Was this really necessary? Leafing through the pages of a wine list is part of the enjoyment of selecting a good wine. I grew more concerned when that same sommelier had to spend several minutes at a nearby table explaining to the guest how to use the iPad. What was the restaurant trying to prove? Surely, a wine list on an iPad is no more than a gimmick. Is there any added value in the experience or was something authentic stripped from my lunch?

The Crucial Keys to Success - Cultivating Remarkable Experiences & Getting Delivery 'Right'

From numerous research reports on the hospitality and leisure sectors and discussion at tourism conferences, it is clear that leisure travel is back in a big way and consumers are on the move – a tremendous vote of confidence for the luxury travel market.

Embracing Regional Sales Power

With this travel resurgence, major city center hotels and the world’s resorts have a much more balanced mix of high-net-worth guests. Gone are the days when top suites were filled with wealthy Americans or Middle Eastern guests paying top dollar. Today’s mix is much broader with affluent guests from around the globe – Latin America, China, Russia and India, for example – vying for the best suite accommodations. Therefore, hoteliers must broaden their sales and marketing initiatives to include sales trips beyond the East and West coasts of the U.S. to cities such as Beijing, Shanghai, Mumbai, Rio and Moscow. The regional sales office will play an increasingly greater role in driving profitability whether as a member of a chain or representation company.

The Importance of Maximizing Rate

With occupancy back on the rise, hoteliers, cruise lines and airlines should emphasize a focus on maximizing rate. While consumers still are looking for value – not to be confused with discounts – the industry must now employ the very best revenue managers to improve the ADR (average daily rate), which unfortunately, in many cases, still lags behind where room rates were four years ago. Now that consumers are traveling again, they will have to book with a longer lead time in order to secure their preferred accommodations, itineraries and flights – and this will propel travel counselors to work more effectively with their clients to coordinate trips further in advance of departure. Clients unable to plan far in advance will require greater flexibility and more options. How will the travel industry rise to the occasion and meet these consumer needs? Consider ‘delivery’ – in terms of service, experience and value for money – as crucial to your strategic planning going forward.